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Good investigative work EU,
More clues are coming.
The WINNER will receive the coveted "AIM Secret Decoder Ring"
How about a photo clue?
OAG Tomaso
So what we do know
Toms: Clue 1) Their first stop will be in the land of Donzi Speedboats and Vice.
You flew out of Florida and you flew south east (correct general direction of Dominican)
Where you are at the official language is not Spanish (Official language was wrong in Dominican republic. Dominican is Spanish)
You have mentioned french several times? Is that a clue?
Jamaica "is a bit too far to the west"... but if you flew further south, from your location, you would speak dutch but that's too far. So your location is North of a Dutch speaking location and the location you are at is not a dutch speaking location.
Curacau speaks dutch. Aurba is North of that. But they aren't that far apart.
Aurba does not have volcanos but you can see a volcano. I think that's too far. That throws off the Jamaica is a bit too west comment. It makes Jamaica Northwest.
Pirates stopped in the Caribbean islands for salt... so you are in the caribbean. The island pirates hunted boar on has yet to be confirmed but you are south of it.. They dumped pigs everywhere to later come and catch them
Are you in the Virgin Islands somewhere? Or the Bahamas? No volcanos can be a clue to that. Hummmm.
We need more.
Can you swim with pigs where you are at? (You brought up the bacon. ;)
Your compass took you a bit too far to the west.
From where I'll be, if I flew further South, I could speak Dutch, but that's too far.
CLUE.......
No volcanoes here.
Not a boat - but not a blimp, just another jet.
Correct general direction.
Official language is wrong, however.
Port Royal? A town located at Kingston Harbour, in southeastern Jamaica.
heavier-than-air craft... A boat?
Hummmm. This will be fun. I am horrible at geography but I do love bacon.
Tortuga or Hispanola?
And you are off to the Dominican Republic?
(This is why I don't give up my day job ;)
CLUE....
(Or is that Clouseau???)
Pirates used to hunt Wild Boar on an island south of Vitello's destination. They would salt and smoke the pork to preserve it. The French sailors called the preserved meat "boucan" and we refer to it as Bacon. Therefore those who made and ate it were called Boucaneers. That was anglicized to Buccaneers (but not the Tampa Bay variety).
I'm sure this will help everyone's navigation skills!!!!
OAG Tomaso Vitello
CLUE....
(Or is that Clouseau???)
Pirates used to hunt Wild Boar on an island south of Vitello's destination. They would salt and smoke the pork to preserve it. The French sailors called the preserved meat "boucan" and therefore those who made and ate it were called Boucaneers. That was anglicized to Buccaneers (but not the Tampa Bay variety).
I'm sure this will help everyone's navigation skills!!!!
OAG Tom
Not St. Marten, (sp).
More like Rowan and Martin!!!
Hi Jake, Let's hope the investment world can stand it with my status change!!
Thanks,
OAG Tom
Hi Jake, Let's hope the investment world can stand it with my status change!!
Thanks,
OAG Tom
Hey there OAG - Just saw your updated status. Congratulations on (what appears to be) Second Retirement, and all good wishes!
Welcome to the Latest Episode of "Where In the World Is Tomaso Vitello!!!"
Tomaso and his faithful sidekick will be "Leaving on a Jet Plane" tomorrow. Their first stop will be in the land of Ponzi Speedboats and Vice. After a short layover they'll be catching a ride on another heavier-than-air craft toward places known to explorers and pirates. Privateers stopped at their destination in the past to harvest sea salt for curing their provisions.
Tune in Daily for clues...................................
Best wishes,
OAG Tomaso Vitello
Using preferred shares you have to accept that there may be some price movement so your cash balance can fluctuate both up and down some. I try to pick stocks where that is not a lot of downside and more upside if anything. Currently I am using FBRT-E and AGNCO. FBRT-E priced today at $20.69 is a fixed rate preferred with a current yield of 9.1%. Trading years past its original call date in 2018. The par is $25 but the parent company will not call at this price as its cheaper to just buy back shares. No call risk in regards to price. The price can drop some if the Fed decides to raise short term rates but conversely, when they begin to cut you can see a rise in price. At the start of the Fed's raises in January 2022, the price was over $25. The low point was January '23 in the $18's. I'm not looking at any more that maybe 1 more raise in rates at the most so I think this upside only.
AGNCO priced today at $24.17 is a fixed to float preferred meaning at a particular date, in this case 10/15/2024, the coupon rate will float based on a spread of 3-month SOFR plus 4.993 %. At today's price, that floating rate would be equal to a yield of 11%. The current stripped yield is 6.76%. There could be some minor downside especially if the Fed's decide to raise rates but that is balanced by the upside pressure of increase in the coupon on 10/15/24. Between now and Oct I expect the price to gradually rise to close or just over $25. A sister preferred, AGNCN, floated in Oct 2022 and i now priced at $25.45.
I already owned these 2 so was pretty familiar with the terms. If we were at the beginning of a rate increase cycle I probably would have stuck with a money market fund or maybe a preferred from a big name company with not a lot of price fluctuation history. The yields would have been a lot smaller though. I take the quarterly dividends in cash and leave them in my cash account or buy more preferred shares depending on if it looks like AIM will call for a buy at the end of the month or not.
Tom
Congratulations on retiring AGAIN.
Are you going to go back to publishing the Idiot Wave again ?
LIFO = last in first out
Hi Will, Re: RMD..............
"Required Minimum Distribution"
It's the amount us old geezers have to take out of our Retirement Accounts annually. The amount is based in actuarial tables of how long we're expected to live. The idea the government has is to have us deplete our individual retirement accounts by the time we're fully depleted!!!!
OAG Tom
What does RMD stand for?
Will
VWAVE 3.0*
Suggested Starting Cash Value For New AIM Accounts/Positions
Individual Stocks
High Risk: At or above 51%
Neutral: Between 37 and 50%
Low Risk: At or below 36%
Diversified Funds
High Risk: At or above 34%
Neutral: Between 25 and 33%
Low Risk: At or below 24%
_________________________
Week of January 26th
_________________________
Short Term (18 Months)
Individual Stocks: 65% (Down 2 from previous week)
Diversified Mutual Funds or Portfolio: 43% (Down 2 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 49% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 33% (Unchanged from previous week)
Oscillator: 3.11 (Down .24 from previous week)
*See posts #44585 and #44588
Here's the v-Wave histogram for this week. JDerb will be reporting the numbers here soon.
Steady 3-5 Year and the 18 Month is coming back into line.
Note the S&P500 is now at a record high along with the Dow 30 Industrials. The Nasdaq Composite still has a little work ahead to reach the late 2021 former high.
Keep your eye on the target and use careful AIM. Don't forget to compensate for prevailing winds!
OAG Tom
I see I didn't post the rest of my usual portfolios as of year's end. Here they are:
International ETF Portfolio
+13.3% YOY
(17% Cash in Reserve)
10 Common Stocks Composite
+20.05% YOY
(19% Cash in Reserve)
Simple Contributory IRA Portfolio
(20% Cash in Reserve)
All finished the year with gains. Not all were at all time highs but all did well enough.
Best wishes,
OAG Tom
@ZeroGravitas : I’m super interested in using preferred shares as well. How long have you been using the? Can you list a few that you use? I’d like to research more and check them out. Thanks!
Hi T, Re: AIM and Capital Gain Tax.........................
In general it's been my experience that after the first 12 months of AIMing in a taxable account essentially all gains will be considered "Long Term" on a FIFO basis. Most of my stocks I traded over the years the 'inventory" took about 3-5 years to move through my "equity warehouse." So, if the Tax Man is offering a discount in tax rate for long term cap gains, AIM can be very effective.
Best wishes,
OAG Tom
Question: Is it advisable to use AIM in in a taxable account (with highest income tax bracket)?
I'm worried that the short term gains AIM incur would not beat a simple buy and hold portfolio with long-term cap gains.
Would love to get some perspective on this before I jump in.
Thanks!
VWAVE 3.0*
Suggested Starting Cash Value For New AIM Accounts/Positions
Individual Stocks
High Risk: At or above 51%
Neutral: Between 37 and 50%
Low Risk: At or below 36%
Diversified Funds
High Risk: At or above 34%
Neutral: Between 25 and 33%
Low Risk: At or below 24%
_________________________
Week of January 19th
_________________________
Short Term (18 Months)
Individual Stocks: 67% (Down 5 from previous week)
Diversified Mutual Funds or Portfolio: 45% (Down 3 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 49% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 33% (Unchanged from previous week)
Oscillator: 3.35 (Down .27 from previous week)
*See posts #44585 and #44588
Re: use of LIFO term...
This isn't in reference to taxes but to 'Round Trip' AIM trades.
The gain from where AIM did its last buy to when it signals its first sale. With original AIM the round trip gain was roughly 25% to 30%. With AIM-High, it was closer to 40%. These settings create profitable trades when they occur and are suitable for higher BETA individual company stocks but many ETFs and diversified mutual funds don't have the amplitude of price change to power the AIM engine. At least not frequently.
Sorry for the confusion.
OAG Tom
LIFO? Not Last In First Out? Asking because I could not see the relevance to the usual meaning of this acronym. Thanks.
Hi ZG, Re: Split SAFE possibilities.......
Looking at StockCharts' view of ASG and using their Zig-Zag line to plot reversals can help find an historical sweet spot for the size of the total SAFE (Buy + Sell SAFE). I first look at the number of reversals at various Zig-Zag values and then decide on a total SAFE amount. The idea is to maximize the opportunities for AIM trading while keeping a high LIFO gain with each round trip. If you have just 2 trade opportunities in three years, for instance, with a total SAFE of 40, but you have 5 trade opportunities with a total SAFE of 30, AIM will do more trading for reasonable LIFO gains with the lower setting.
Here's ASG examples with different Zig-Zag levels:
40% Zig-Zag reversals (approximately equal to 40% total SAFE)
https://schrts.co/gqPzTsRF
Here's the same but with 30% ZZ:
https://schrts.co/PhidsgHZ
and once more at 20%, just for fun:
https://schrts.co/sfapdTyi
Note that as the size of the Zig Zag percentage drops the number of 'round trips' goes up. It's not linear and one can get a feel for what might be an optimum total SAFE might be. Generally, we're looking to maximize the number or round trips at a LIFO that gives the best overall return on volatility capture. We can set total SAFE too low and get a lot of round trips but at ever decreasing LIFO gains. If the LIFO shrinks more than the number of or round trips increases, you've passed the optimum point.
In general, I usually look at the Williams%R levels as AIM tends to trade beyond its extremes of -20 and -80. If our ZigZag peaks and valleys coincide with the W%R peaks and valleys that's usually close to optimum. In ASG's quick view, it would appear that a total SAFE of 30% would satisfy goals of reasonable LIFO and frequency of round trips. (just for fun, change the ZigZag to 25 and see what happens)
Next is to then divide the SAFE into Buy and Sell SAFE for your own comfort. If total SAFE is 30%, you could divide it into 10% Buy and 20% Sell if you would like to bias AIM toward accumulation. Reverse those settings and it will help conserve cash. Those decisions will depend upon how healthy your cash reserve is when you start. If you were starting with zero cash, you could even put all the SAFE on the Buy side and zero on the Sell side. That would put AIM in the 'distribution' mode of selling but conserving cash for deep bear markets.
Once a general total SAFE range is determined it's best to leave things alone going forward. AIM will do a good job thereafter. Changing the Split SAFE bias after the initial settings can be self defeating as those decisions might come along with emotional views of the market's future. So, Set and Forget seems to be the best thing.
Hope this helps,
OAG Tom
An update as to what I've done so far.
1) Revised the bare bones template that I found in the archive to better suit my needs. That template used an AIM program to run one stock. Since I was basing my AIM on stock value, I took out everything having to do with share pricing and redid the formulas to use share value. No need for minimum # of shares for buying or sales. I went with a minimum transaction value of $200. Those changes did a lot to reduce the data heavy visual aspect.
2) Like the implementation of the split safe so I went with Buy - 5 and Sell 10.
3) I'm using the following CEF funds, ADX, ASG, and USA. I already owned quite a bit of USA and a little ASG. USA is down about 11% in price and ASG -29%. Bought some ADX on Friday to start with. For starting stock value I'm using my original cost for USA and ASG. Fridays purchase cost for ADX. Going with 35% cash to start until I see how things go. Put that amount of cash in two preferred shares previously selected. Entered what I call the original stock value and cash quantities on the first line. I then entered the current stock value on the second line and AIM wanted to purchase $1400 worth because of the decline in value of USA and ASG from my original purchase. I divided up the $1400 between the 3 stocks. The ADX was up a little but I want to build that position some. Allocated 30% to ADX, 40% to ASG and 30% to USA.
4) My next run of the AIM program will be closing prices on 1/31 and then monthly thereafter. I filled in some numbers in stock value just to check and it looks like AIM will want to sell initially at about +15% increase in stock value and buy at about -20%. I'll see how it goes after running it and see if any changes are necessary.
VWAVE 3.0*
Suggested Starting Cash Value For New AIM Accounts/Positions
Individual Stocks
High Risk: At or above 51%
Neutral: Between 37 and 50%
Low Risk: At or below 36%
Diversified Funds
High Risk: At or above 34%
Neutral: Between 25 and 33%
Low Risk: At or below 24%
_________________________
Week of January 12th
_________________________
Short Term (18 Months)
Individual Stocks: 72% (Down 8 from previous week)
Diversified Mutual Funds or Portfolio: 48% (Down 5 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 49% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 33% (Unchanged from previous week)
Oscillator: 3.62 (Down .29 from previous week)
*See posts #44585 and #44588
Thanks for the feedback Tom. I have a lot of experience with holding positions in a down market and buying the dips to lower my cost basis. For my AIM program I intend to take the dividends as cash. The other parts of my overall portfolio are income producing and I generally take those as cash and reinvest about 70%. I have very few stocks that DRIP. I like that idea about starting with zero or less cash than required. I can use dividends received each month to build up the cash.
Thanks for the feedback. I don't anticipate any issues with using preferred shares as the ones I've picked out for this are currently floating at $24.50 vs a $25 par value. Since it is a float, I don't see the value decreasing even if the Fed goes back to raising short term rates. They are currently yielding 10% so my cash reserve will build up even quicker. My overall portfolio is invested for income but I do have some equity positions in REITS, BDC's, etc. As I mentioned in my original post, I will be trying to manage 3 CEF's within my portfolio as a separate AIM program. Initially, I am going to try and manage these funds using one AIM program, then making choices as to which fund(s) to buy or sell. I won't need to track stock prices just overall stock value which I will be bringing in from the spreadsheet I use to track my investments now. The reason for this is I'm looking to take advantage of any runup in prices to take profits and invest that cash on drops. Previously, I had no problem buying on dips, it was the taking profits that was an issue. Being an income investor, you are sometimes locked into the mindset of not selling as it will reduce your income unless you can reinvest at the same or higher current yield. When I shared my plan on another board, I was told I should select another fund as it was less volatile than one of the ones I was going to use. They didn't understand it when I told them I wanted the volatility.
Good afternoon ZG,
A couple of thoughts came to mind as I read your note and about your plan.
- AIM is generally quite efficient at "timing" when $$$ should go into expanding your share inventory. With that in mind, changing your dividend distributions to be Cash rather than reinvested into more shares might improve things a bit. It's not a lot of difference, but I like efficiency in the Purchasing Department and automatic reinvestment is okay but somewhat brain dead like Dollar Cost Averaging. Instead, AIM will correctly say, "Now's the time to put those dollars to work."
- Closed End Funds move to a greater degree in amplitude of share price compared to an ETF or mutual fund of the same makeup. That gives AIM a greater chance to opportunistically trade that CEF position. That's good news. AIM just might be selling shares when the CEF is trading at a 'premium' to NAV and might be buying when it's trading at a discount to NAV.
- Generally I use a fixed 'ceiling' of cash for bond funds. Jumpy long term bond funds I'd assign a 30% max cash ceiling where shorter term bond funds I'd probably assign 20% or maybe just 15% max cash. When the position is maxed out on cash, instead of selling any more shares, I'll do a 'vealie' (https://web.archive.org/web/20120811055900id_/http://www.aim-users.com/diction.htm#q7) and let the risk run a bit until the cash is diluted enough to justify a trade. (30% diluted to maybe 27%, for instance)
- I've started accounts with zero cash and let the markets and AIM build a cash reserve over time. It can work. Using a bond fund as the initial reserve and letting the distributions build in the cash column is a workable idea. With luck you'll not ever have to sell any of the bond fund to buy in the equity fund. If you do, chances are the bond fund will not tumble as quickly as the stock fund, so it should work out. At worst, you'll be stuck with your long position in the first down sweep of a bear market like essentially all investors not using AIM. After the first bullish period you should be able to get adequate funding of your cash reserve that you'll not really ever look back.
Hope this helps,
OAG Tom
Hi, AIM would certainly give you more disciplined approach. repeatable and consistent approach to manage positions. And I think you wouldn't worry about optimizing it any more once you transition to AIM. I have been using AIM for a few years now and I can say that it really helped my investor psychology in 2022 and 2023. I was calm and waiting for AIM to give me the go ahead to buy and sell. Not worrying about what the market would do and if my timing was right or not. And now that we are in 2024, I can say that my portfolio performance was one of the best I can remember. My suggestion would be to follow v-wave for your cash/equity ratio. If you are using preferred stock as your cash reserve, you just need to make sure you are mentally ok to sell and buy more equity when AIM gives you the signal. It may be hard to do if they are also down when you need the cash. If you are currently in profit on your positions, it should be easy to sell and raise cash. If not, you can build your cash position over time if you are still contributing. That is what I did for a while on some of my positions that were under water and it worked out ok.
Here's the first of the AIM portfolios for the year end:
U.S. Sector ETF Portfolio..............
Cash ticked up slightly in December with a few sales. It's 12% of total portfolio value currently.
The overall portfolio finished at an all time high since starting it in 2009.
All 12 ETFs in this portfolio finished 2023 at or above their 26 Week Moving Average Prices.
Mr. Lichello's AIM manages each sector as a separate AIM engine. The histogram shows the composite.
Best wishes,
OAG
Happy New Year Jon,
The v-Wave is has been waving for some caution a bit in the shorter term and is borderline cautionary now for the 3-5 year end of things, too.
It continues to offer good guidance for us and especially for those using Mr. Lichello's AIM.
I sometimes imagine having him join us for a roundtable discussion. We would show him what we've done with his brain child and he'd comment on our variations on his theme.
As we close out 2023 with pretty good returns we're also closing it with a higher v-Wave reading for 3-5 year risk than we started. I guess that is to be expected with the good overall market returns. Earnings haven't been keeping up with the share price rise over the year. Right now the Value Line P/E shows 17.7 but 12 months ago it was at 16. If we take that as a percentage, that's a 10+ increase in P/E. Subtracting that from the NASDAQ Composite's gain of 43% YOY we might consider the gain to be around 33% with equal earnings relative to price. The same would be true of the S&P500 as well, but to a smaller degree. I guess we could consider this market to be the same as a year ago but more pricy. For fun, let's call it market inflation.
Looking forward, I guess we just have to assume that future appreciation potential is less than it was a year ago. That doesn't mean the markets will go down, but that they will struggle harder to go up from here. Thanks again for another year of v-Wave reports, and friendship here on the AIM BB.
Best wishes for the New Year,
OAG Tom
Hi. A new AIM user but not new to AIM. I bought the very first book back in the 70's but was never able to put an investment program in place. For a long time I had the typical 401K at work. Now I am retired with that 401K converted to an IRA and have it set up to produce dividend income. However, I have this itch to take a portion of my portfolio and convert it into an AIM managed portfolio within my income portfolio. I reinvest about 70 to 75% of my dividends and distributions but on some of my equity focused CEF's I am not satisfied with just watching the price rise up, then fall, buying on dips but not selling. I am growing my positions on the dips but feel I can generate better performance with the disciplined selling that an AIM managed portfolio brings. Of the CEF's that I am currently invested in, I want to manage these with AIM: ADX, USA, possibly ASG. At some point, I may sell out of some of my other equity CEF's and move everything into the AIM group. For cash, I plan to use pinned to par preferred shares where the current yield is 9 to +10%. These are stocks that are past their call date, have a floating coupon rate and will stay close to or over the par value which is $25. I'm going to start with a 65/35 stock to cash ratio. So, if I have say $15,000 invested already invested in USA and ADX, I would just designate $5250 worth of the preferred stock I am already invested in as reserved to use with my AIM portfolio. Kinda complicated I know but I don't want to sell anything to actually generate cash in starting this up and I can keep track of the AIM portion of the preferred stock value on my AIM spreadsheet. I know this may not be the way most investors here would use AIM but sometimes I have felt that I have let money slip away by not selling when I should have then I just ride the price down. I do buy in on dips using my divs but just feel I am missing out on taking some profits to have more to reinvest. I would be interested in thoughts or suggestions, especially if it looks like I am missing out on something.
HAPPY NEW YEAR!
VWAVE 3.0*
Suggested Starting Cash Value For New AIM Accounts/Positions
Individual Stocks
High Risk: At or above 51%
Neutral: Between 37 and 50%
Low Risk: At or below 36%
Diversified Funds
High Risk: At or above 34%
Neutral: Between 25 and 33%
Low Risk: At or below 24%
_________________________
Week of January 5th
_________________________
Short Term (18 Months)
Individual Stocks: 80% (Up 5 from previous week)
Diversified Mutual Funds or Portfolio: 53% (Up 3 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 49% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 33% (Unchanged from previous week)
Oscillator: 3.91 (Down .33 from previous week)
NOTE:
One year ago.
Short Term (18 Months) was 30% for Individual Stocks.
Short Term (18 Months) was 20% for Diversified Mutual funds or Portfolio
Long Term (3-5 years) was 43% for Individual Stocks.
Long Term (3-5 years) was 29% for Diversified Mutual Funds or Portfolio
*See posts #44585 and #44588
I may scale it back to MVV (mid caps), QLD or SSO. The 3x from my backtests have been good but it is very volatile.
I would be careful with the 3X funds with AIM.
The 2X funds work well with AIM
Toofuzzy
Looks like from AIM-HI in the book it states that the minimum action must be at least equal to your SAFE value.
Starting my AIM at 60/40 in a few leveraged funds like TQQQ, UPRO and SOXL with $50K in one account and $30K in another.
I'm using the AimBare Excel spreadsheet and using "Starting Buy and Sell Safe %" at 10% per Mr. Lichello's book.
I'm messing around with the Minimum Trades for number of shares and minimum trade. Has there been a recommended default setting? I'm thinking 10% of 100 shares, which would be minimum 10 shares and $0 minimum trade.
MERRY CHRISTMAS!
VWAVE 3.0*
Suggested Starting Cash Value For New AIM Accounts/Positions
Individual Stocks
High Risk: At or above 51%
Neutral: Between 37 and 50%
Low Risk: At or below 36%
Diversified Funds
High Risk: At or above 34%
Neutral: Between 25 and 33%
Low Risk: At or below 24%
_________________________
Week of December 29th
_________________________
Short Term (18 Months)
Individual Stocks: 75% (Up 5 from previous week)
Diversified Mutual Funds or Portfolio: 50% (Up 4 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 49% (Up 1 from previous week)
Diversified Mutual Funds
or Portfolio: 33% (Up 1 from previous week)
Oscillator: 4.23 (Up 1.06 from previous week)
*See posts #44585 and #44588
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Assistants The Grabber Toofuzzy |
Here's a handy "Quick AIM Calculator" for finding the next AIM directed Buy and Sell prices for your portfolio holdings:
A.I.M. Users Bulletin Board (AIMUSERS): Thanks LC, Now they can use the "calculator" again! (advfn.com)
While the AIM book is no longer being reprinted, it is available from Amazon for their Kindle for $5.99.
http://www.amazon.com/How-Make-Stock-Market-Automatically-ebook/dp/B002VKJ1EI/ref=sr_1_1?s=books&ie=UTF8&qid=1395757939&sr=1-1&keywords=lichello
Mr. Lichello wrote the book on AIM in 1977. In the mid-'80s he put an infomercial on AIM on late night TV and attempted to sell his workbook and audio tapes.
(1) How To Make $1Million In The Stockmarket Infomercial - 1985 - YouTube
It's a reasonable review of the AIM method for those who are unfamiliar.
Run A Successful Equity Warehouse
Welcome to the AIM Users Bulletin Board. This is the thread to post your thoughts, questions and comments on the use of Robert Lichello's Automatic Investment Management for handling the risk of being involved in the Equities markets.
The AIM strategy gives the user LIFO gains of 20% minimum if the method is followed "by the book." It is ideally suited to those seeking long term investment growth while managing the risk of being invested.
Thoughts on being a successful Individual Investor
I wrote this book review a long time ago. It's a trader's interpretation of
Sun Tzu's "Art Of War." I related it to AIM as best I could.
------------------------------------------------------------------------
Mr. Lundell says, "Today's financial markets are the last bastion of unabashed conflict.....
To participate, you must be your own general, devising a strategy, gathering information, executing your plan, and adapting to the situation."
How can we use AIM and the v-Wave for strategic and tactical planning to carry out Mr. Lundell’s requirements to participate in the Equity Markets?
"Be your own general"
You are in charge. You are responsible. When you win, you benefit. When you lose, only you are to blame.
a) Broad trends persist. Discover them. They will survive boom and bust.
b) Don't contemplate engaging in war while beholden to another. They could become your ruler!
To me this means "Stay away from Margin Buying unless you are certain of victory."
c) Establish and maintain a "Baseline of Survival" for your command.
This is the "income" side of my overall portfolio.
d) Know that reality is governed by Darwinism; Long Term Survival belongs to the fittest.
"Devise a Strategy"
Our strategy is to sell inventory into market strength and to buy into market weakness. Robert Lichello's AIM algorithm provides us with a systematic approach to follow that employs this strategy.
a) Sell quality merchandise to all those willing to pay.
b) Buy quality merchandise when the price offers reasonable hope to resell at a profit.
c) Let the allocation of resources and inventory be governed by the course of the market and AIM's guidance.
"Gather Information"
Today there is no excuse for not being informed.
a) Differentiate between information VOLUME and QUALITY.
b) Differentiate between FACTS and OPINION.
c) Find good sources of judgement where you cannot act as judge.
d) Information is trusted only when provided by those proved trustworthy.
"Adapt to the Situation at Hand"
The v-Wave measures general U.S. Market Risk (and may be sensitive to world market risk) from low to average to high. This helps you gauge the situation by:
a) Gauging your initial cash reserve requirements on new investments
b) Gauging your on-going cash reserve requirements on established investments
c) Judging whether to establish a bias for accumulation or distribution
d) Possibly starting no new AIM accounts when the v-Wave is showing High Risk
e) Possibly ignoring all AIM Buy Signals during v-Wave High Risk events.
f) Following all AIM buy and sell signals during v-Wave Average Risk events
g) Possibly ignoring all AIM Sell signals during v-Wave Low Risk events
h) Re-assessing your "Baseline For Survival" at times when AIM has your account heavily in Cash
i) Always attempting to beat measured inflation by 5 basis points minimum after all taxes and living expenses are paid. If you do this consistently, in good and bad markets, you will be winning long term
j) Possibly using "vealies" when your positions are cash rich relative to the v-Wave. Limiting supply helps to keep Momentum player’s Demand high.
"Execute your Plan"
Set the plan in motion; know that it takes time for realization. Follow the plan without hesitation allowing the goals to be realized. The strategy is sound so execution is all that is required.
a) Buy when the plan says
b) Sell when the plan says
c) Be very patient when no buy or sell signals are being generated
Reading Mr. Lundell's interpretation of Sun Tzu's work will help you focus on your own plan. It will arm you with knowledge of what others not using AIM are doing in the market. Understanding Short Term Trader's strategy and tactics is like having a spy in the enemy's camp. AIM users can profit by knowing just how these people think and act. AIM acts as almost a mirror image of what goes on in a trader's mind.
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The v-Wave........
Mr. Lichello used fixed cash starting levels; first it was 50/50 then 67/33 and in the last edition of his book 80/20 for the Equity/Cash ratio. This "one size fits all" approach is like a broken watch that shows the correct time twice a day but is wrong the rest of the time!
Minstrlman, a regular contributor here, helped gather data from Value Line and formed a highly capable risk-cash indicator for our use. Since then, J Derb continued his work each week. As an adjunct to the AIM methodology we now have a Cash Indicator which helps guide our starting and ongoing Cash Reserve level of AIM relative to measured market risk. It can be used as a general market barometer or specifically with the AIM method. The v-Wave (or VW) is derived from the Value Line "Appreciation Potential - Next 3-5 Years" (VLAP) indicator shown weekly in their Summary and Index Section for their 1700 stock edition. Looking back through V/L's history we find the peak Appreciation Potential occurred 12/23/1974 at +234%. Our continuous database starts January of 1982 and we scaled our "zero cash" to the market risk low point of early that year. We take the VLAP and manipulate it to get an indication of how much cash should be reserved for diversified mutual fund AIM accounts. It should be multiplied by your stock or portfolio's BETA to get the cash reserve level of less diversified or more aggressive holdings.
v-Wave Weekly Cash Reserve Indicator For AIM Users
Current years of the v-Wave:
For diversified portfolios the Median value for the v-Wave is 29.5%. High Risk is 34% cash or higher for individual company stocks. Low Risk is 24% cash or lower.
To get a more proper cash level for individual company stocks multiply the current "Diversified" value by 1.5. This gives us 51% as the high risk threshold and 36% for the low risk boundary.
Looking at the cumulative risk of the v-Wave gives another perspective:
Cumulative v-Wave is calculated by taking each week's v-Wave Stock value, subtracting the median value from it and adding it to the previous total.
Significant historical events are shown nicely here and the v-Wave's response at those times.
v-Wave Calculations can be found at #30219. The data are a work-in-progress for now.
TooFuzzy provided us with a handy "Quick AIM Calculator" Here's a link to that page:
A.I.M. Users Bulletin Board (AIMUSERS): Thanks LC, Now they can use the "calculator" again! (advfn.com)
(follow the link on the above page)
AIM has a predictable pattern of "cash burn" in a declining market. Depending upon the SAFE settings AIM will generate new buy orders sequentially as share prices decline. It can be helpful to know in advance about how deeply AIM is going to draw down one's cash reserves. This link is to the "Cash Burn" AIM page. It shows various end points based upon the starting cash reserve level. Here's a link to that page:
"" rel="nofollow noopener noreferrer ugc" target="_blank">http://www.aim-users.com/cashburn.htm"; rel="nofollow noopener noreferrer ugc">A.I.M. Cash Burn Rate (archive.org)
Best wishes,
Old AIM Guy
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