Some AIM History. . .Part 1
Frequently on the AIM Forums the specifics of the AIM Methods are being discussed. On the one hand this is a logical development for AIMers as in the Investment world the AIM method is not openly considered a "serious" investment method in the professional investment circles. On the other hand is such a very simple and logical system as AIM to create profits with a natural feature of equity prices that is invariably an aspect of any commodity that one can think of: Volatility!. . .The Friend of the AIM Investor. . .even though some people are definitely afraid of volatility when they consider getting into investing.
Considering that Buying Low - Selling High is such an obvious investment objective the really surprising thing is that in the main so few people actually do that as a principal feature of their investment activity. . .It is well known that the bulk of the non professional investors. . .the Amateurs. . .wait far too long to step into the Market, and here I want to quote something The God Father of the AIM Investing, Robert Lichello, has written in his book on AIMing:
"The worst thing an investor can do is not to me In the Market."
Although one can, with the right market know-how, take exception to this wisdom to some extend, it is an excellent observation from the point of view that volatility is the Investor's Friend. . .This has been true since the day that investing was invented. . .a few years ago, when primordial creatures crawled out of the mud and developed into humans. . .they invented the idea of profit by buying goods when prices were low and sold them when the prices were high. . .it was the logical thing to do. . . in a volatile world.
In respect of the above you might join me being surprised at an investment article in the Financial Section of the Dutch Telegraaf newspaper, on July 28th of 2012, which was presented with a heading in large bold letters:
Spreading Througth Time
with sub-heading
Periodic investing reduces the risk of bad timing
as if it was something the writer had discovered a day earlier! I could hardly believe it. . .an Old Topic taken out of an Investment Museum, dusted off and declared to be the Egg of Columbus for investors! In it first various banes of investing like buying too late when equity prices had been rising for a long time and the "impossibility" of predicting when prices were right for buying. . .Obviously the writer addressing the general public as he ignored the fact that many investors were consistently doing that which he presumed to be impossible: Investing with skill so that the buying is done at low prices and the selling was done at high prices.
Clearly the author of the article, Manno van den Berg, had never heard of AIMing and he offered a solution for reducing loses in a volatile market by suggesting that periodic investing was the "sliced bread" he had to offer! Investing in Mutual Funds or Bank Funds with a fixed small amount each month would presumably solve the problem of buying at the wrong time. He suggested that over time when prices had dipped low, and then due to volatility the investor would benefit from periodically occurring low prices if he faithfully continued to keep buying equity every month. . .when the prices are low, he explained, the investor would get extra equity shares and that would handsomely pay off when prices returned to their formal level!!! He ignored to explain however that when prices were high the investor would get less equity shares for his fixed monthly investment and that this would create a loss for these buys, relative to the average equity price.
Obviously Manno van den Berg had no idea he was describing a very old investment method that was already in vogue in the 1960-ties as a standard periodic investment technique , and no doubt it was even used even earlier than that. It would have been proper to at least for him give credit to people that had had developed such a periodic investment style years ago.
When I first read The Money Spinner (Chuck Chakrapani, Toronto, Canada) in 1980 about his unique investment system, that in the main was very much like Lichello’s AIM, Charkripani gave due credit to the developers of the Dollar Cost Average method(DCA in which periodic investing of fixed amount of money was the key feature. Chakrapani also mentioned that Robert Lichello had invented a system that was very similar to his Money Spinner but stated that the Money Spinner was not a derivative of Lichello’s AIM. . .I tend not to believe that. . . . From The Spinner and the DCA and Lichello’s AIM I eventually developed my Vortex AIMing method and then I wrote a paper on how AIMing in general was a clever derivative of the DCA method. The essence of this development was so simple any kid could understand AIMing, and in my humble opinion, it made the book of Robert Lichello virtually redundant. . . .too much dressing-up with irrelevant information to make his publication read like a Story Book, rather than an technical manual, like the Money Spinner is.
See Part 2 for the follow-up.
