Introduction
Robert Lichello's AIM is an acronym for Automatic Investment Management. AIM and modifications are a very popular investment management technique. It makes little or no use of technical analysis (TA) or fundamental analysis (FA) and so usually requires less management time than TA of FA trading and management. Yet it frequently provide much better returns than buy and hope (buy and hold).
Portfolio Control (PoCo) Adjustment in a Non-Inflationary Environment
The AIM Portfolio Control (PoCo) is the main feature of the AIM algorithm for determining how much stock (or mutual fund or ETF) to buy or sell at various price levels.
In a non-inflationary environment, there would be no need to adjust (index) PoCo except in the happy circumstance that a stock price increased dramatically. In such a case, there would be many more Sell transactions than Buys, so the cash portion of an AIM account (one stock, mutual fund, or ETF plus the cash) would get to a level that you might consider excessive in relation to the value of the stock still held.
In such a case, you might do a "Vealie" on the PoCo. That means increasing the PoCo. A Vealie has the effect of moving the buy-sell hold zone up, so that it becomes a little harder to sell more (conserving stock), and easier to buy more (using up some of the excess cash).
Unfortunately, We Are in an Inflationary Environment
Because we are in an inflationary environment, I recommend indexing the Portfolio Control (PoCo). Why and how to do this is discussed on my website at
http://www.bean-d.com/cpt/inflation-cpi-adjust.php
My unequivocal position is that if you do NOT index your PoCo for the results of inflation -- the increase in the Cost of Living -- you will be Buying and Selling improper amounts at various prices.
This is serious, not trivial. If you do not index PoCo, what you may think are acceptable results may in actuality be a diminishment of your capital.
Discover the details at "Indexing the AIM Portfolio Control for Inflation".
