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Last Post: 1/26/2021 1:30:27 PM - Followers: 282 - Board type: Free - Posts Today: 5

A.I.M. Users Bulletin Board
Robert Lichello's "Automatic Investment Management"
(Compliments of Investors Hub!)

While the AIM book is no longer being reprinted, it is available from Amazon for their Kindle for $5.99.

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.

"Gathering 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.

"Adapting 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.

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, has been gathering data from Value Line and formed a highly capable risk-cash indicator for our use. 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:

Median value for the v-Wave is 44%. High Risk is 51% cash or higher for individual company stocks. Low Risk is 36% cash or lower. 
To get a more proper cash level for diversified mutual fund holdings we divide the currenty "Stocks" value by 1.5. This gives us 36% as the high risk threshold and 24% low risk
with mutual funds. 

                                      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.

Here's the Historical v-Wave during various times since 1982:

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:
"" rel="nofollow ugc" target="_blank">http://www.aim-users.com/calculator.htm"; rel="nofollow ugc">http://web.archive.org/web/20120609073103id_/http://www.aim-users.com/calculator.htm

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 ugc" target="_blank">http://www.aim-users.com/cashburn.htm"; rel="nofollow ugc">http://web.archive.org/web/20120610011525id_/http://www.aim-users.com/cashburn.htm

Best wishes,
Old AIM Guy

#44119  Sticky Note AIM has a predictable pattern of "cash burn" OldAIMGuy 01/28/20 02:30:44 PM
#37762  Sticky Note Hi TFO, My apology for directing that last OldAIMGuy 06/05/14 08:07:49 AM
#37457  Sticky Note Re: Newport AIM software ls7550 12/28/13 08:56:43 AM
#36711  Sticky Note Thanks LC, Now they can use the "calculator" again! OldAIMGuy 06/04/13 05:01:59 PM
#36709  Sticky Note www.aim-users.com This is a copy of www.aim-users.com that lostcowboy 06/04/13 09:56:02 AM
#30219  Sticky Note Hi Glen, RE: Calculating the v-Wave................... OldAIMGuy 05/26/09 11:32:16 AM
#45025   Bought a few more shares of GEO today Toofuzzy 01/26/21 01:30:27 PM
#45024   Vaccinations.. I'll get my 2nd shot on Monday. NorthGA 01/26/21 09:20:11 AM
#45023   I hope your apple doesn't fizz out before Toofuzzy 01/26/21 02:17:54 AM
#45022   I also got shot. Toofuzzy 01/26/21 02:15:09 AM
#45021   Hi Tom Toofuzzy 01/26/21 02:08:16 AM
#45020   Here's yet another sign of the times: OldAIMGuy 01/25/21 03:04:28 PM
#45019   Re: Equity Warehouse activity report..................... OldAIMGuy 01/25/21 03:03:09 PM
#45018   Re: Coronavirus vaccinations.................. OldAIMGuy 01/25/21 01:18:50 PM
#45017   Here in California too the vaccine rollout is Adam 01/25/21 12:34:43 PM
#45016   Hi Plexto, Re: investor's Everest Climbing efforts......... OldAIMGuy 01/25/21 08:57:32 AM
#45015   Thanks for the warning Tom. I am starting Plexto 01/25/21 07:01:00 AM
#45014   Thanks TooFuzzy. I will give that a try. Plexto 01/25/21 06:44:50 AM
#45013   Ready to AIM. OldAIMGuy 01/24/21 01:52:49 PM
#45012   Line 5 is Toofuzzy 01/24/21 01:48:15 PM
#45011   Hi NorthGa Toofuzzy 01/24/21 01:32:45 PM
#45010   Thanks much Tom! I chased around a bunch Plexto 01/24/21 12:58:30 PM
#45009   BTW, This is now 10 WEEKS of bearish signals................. OldAIMGuy 01/24/21 12:22:18 PM
#45008   Good morning Saul, Re: Calculator Minimums................... OldAIMGuy 01/24/21 12:08:17 PM
#45007   Good morning JD, Re: v-Wave data............... OldAIMGuy 01/24/21 11:57:27 AM
#45006   Been reviewing a lot of the older AIM Plexto 01/24/21 10:07:07 AM
#45005   Thank you Clive, OldAIMGuy 01/23/21 01:15:16 PM
#45004   Hi CP, Re: Secret Decoder Rings........................ OldAIMGuy 01/23/21 01:08:47 PM
#45003   Welcome back CP!, OldAIMGuy 01/23/21 01:00:22 PM
#45002   VWave 3.0* JDerb 01/22/21 08:21:59 PM
#45001   Hi Tom ls7550 01/22/21 05:52:13 PM
#45000   GRUB! Codypup 01/22/21 05:14:22 PM
#44999   Apologies in advance Codypup 01/22/21 05:14:18 PM
#44998   Sorry folks. Codypup 01/22/21 05:12:36 PM
#44997   It's been a while! Codypup 01/22/21 05:12:30 PM
#44996   Hey everyone! Long time no talk! Codypup 01/22/21 05:12:25 PM
#44995   Hi RT, Yes I was able to get Adam 01/22/21 12:17:53 PM
#44994   H Adam AIM1979 01/22/21 10:59:20 AM
#44993   Hi Toofuzzy, NorthGA 01/22/21 08:26:26 AM
#44992   Hi Everyone, I had a surprising sale in Adam 01/21/21 05:29:10 PM
#44991   Hi Tom Toofuzzy 01/21/21 04:09:02 PM
#44990   NorthGa I would ditch SLV also. Especially in a Toofuzzy 01/21/21 04:04:36 PM
#44989   Good morning N_GA, OldAIMGuy 01/21/21 10:55:15 AM
#44988   Hello Aimers! NorthGA 01/21/21 09:54:53 AM
#44987   Re: another AIM meeting...... OldAIMGuy 01/18/21 10:03:52 PM
#44986   Re: The story of the Three Bears. AIMStudent 01/18/21 07:49:40 PM
#44985   Unfortunately, I was not at the AIM 2000 Plexto 01/18/21 04:58:54 PM
#44984   Thank you TooF. Plexto 01/18/21 04:53:40 PM
#44983   Hello Mr. Veale, NorthGA 01/18/21 11:55:21 AM
#44982   Hi Toofuzzy, NorthGA 01/18/21 11:38:00 AM
#44981   Hi N_GA and welcome, Re: Cash for AIM accounts............. OldAIMGuy 01/18/21 11:18:44 AM
#44979   I think it is time for another meeting ! Toofuzzy 01/18/21 11:01:06 AM
#44978   Hi NORTGA Toofuzzy 01/18/21 10:58:12 AM
#44977   Hi Saul, OldAIMGuy 01/18/21 10:48:46 AM
#44976   I believe it is not the stock that Toofuzzy 01/18/21 10:46:56 AM
#44975   This is the story of the Three Bears. OldAIMGuy 01/18/21 10:28:35 AM
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