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Re leveraged funds
I use a few leveraged funds.
Sticking with the 2 X funds will help a lot.
As Tom wrote: You can increase BUY SAFE by 5% with each buy. I reset it back to 5% when I have a sell.
Toofuzzy
I am up 13.8% for the month. But that includes rolling / selling various options.
Toofuzzy
Thanks Tom
So those are all still just made up of large cap companies from the S+P 500 ? Correct.
It would be interesting to have equal weight large value fund. Maybe P/E between zero and 25
Toofuzzy
Hi BW and Welcome, Re: AIM and leveraged ETFs.................
While AIM can't run out of "Shares" in a rising market, it can and does run out of "cash" when markets take a severe, quick downturn or a prolonged, slow decline over months. Following this thought, Cash is actually the more 'precious' part of the portfolio in that it isn't unlimited.
Even with non-leveraged investments the Cash side of AIM needs to be understood. The AIM Cash Burn Rate
( https://web.archive.org/web/20120610011525id_/http://www.aim-users.com/cashburn.htm )
helps to plan for downturns in the market. Knowing what size decline will deplete Cash can help you in deciding at what rate you will set up your AIM engine for burning its primary fuel.
Splitting the SAFE into a buy SAFE and a sell SAFE might be a start. Then you can stage how much resistance you want to assign to each side of AIM's activity. Beefing up the Buy SAFE and lowering the Sell SAFE from AIM's traditional 10% can tilt its activity toward conserving Cash.
You may find that running out of cash isn't a function of Volatility as much as it is a function of Trend. Compounding daily or weekly declines will suck hard on the Cash Straw far more than the price bouncing both up and down. In 2022 we saw the major indexes decline overall for the entire year. That's a long time to be tapping the Cash Reserve no matter whether you update frequently or not. Every time AIM buys, it makes it easier to buy again. Crowding too many buys together can exhaust the cash well before the market has tired of going down. In a perfect world we'd run out of cash exactly at the bottom.
Understanding "Market Risk" might help in planning how and when to spend AIM's cash. For instance, if you were to overlay the v-Wave Risk indicator as a control device for AIM buying, it might delay one's first few buys in an extended market decline.
As an example, if you inhibited AIM from buying any time the v-Wave was above its Median value it would have delayed any buying in 2022 until probably April or May. That might have eliminated some of AIM's less efficient buying early in the decline and preserved cash for deeper discounts.
Another idea that is used by several AIMers is to add to the Buy SAFE with each sequential Buy. If SAFE is 10% at the start of the decline, then it would move to 15% on the Buy side after the first buy. Then it would move to 20% with the second sequential buy, etc. This increases the needed discount between buys and helps to conserve cash. Only when AIM gets a Sell trade and recovers some cash does the Buy SAFE move back toward 10%. This might help your overall cash utilization.
I hope some of this helps you in attempting to tame these high leverage ETFs for AIM's use. AIM is responsive to both Frequency and Amplitude of Price Reversals. Long upward or downward trends can muck up things a bit if not anticipated with some minor rule changes. Also, what might work for an S&P500 Index Fund might not be effective for a 3X Leveraged fund. AIM benefits from adjustments tuned to the 'personality' of the selected investment.
Best wishes,
OAG Tom
AIM - Using 3X Leveraged - Cash Shortages
Esteemed individuals!
I've been back testing AIM using 3x leveraged ETF's (I used SOXL). I've used monthly, weekly and even daily runs to see what the returns may be. Running tests at 50/50 Stock/Cash with amounts ranging from $1000 each up to $10,000 each. One thing I keep running into is, due to the volatility, that inevitably, I eventually run out of cash when the market is on a deep drop off leaving potential gains unrecognized.
Interestingly, the monthly re-balance doesn't appear to run out of cash, however, has the lowest return. The weekly, generally runs out at some point with the dollars required to fund to be sometimes more than the initial investment.
Is there a suggestion in circumstances like this in the real world? Should I be starting with different ratios or inject a select amount of cash periodically? Should there be a re-balancing every so often? If so, how do you prevent a re-balance at the incorrect or inopportune times?
Any advice is appreciated.
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 February 3rd
_________________________
Short Term (18 Months)
Individual Stocks: 47% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 32% (Unchanged from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 46% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 31% (Unchanged from previous week)
Oscillator: 2.66 (Down .22 from previous week)
*See posts #44585 and #44588 for Tom's explanation
Re: Sandbox Stocks............
If Monday closes well, my "sandbox" portfolio of ten stocks will have erased the 2022 loss of 13.45% completely. As of yesterday the account is up 15.2% for January.
The Cash Reserve dropped from 36% at the close of 2021 to just 16% of the account value while Mr. Lichello advised me to buy shares over the year. Thanks Mr. L! (oh, and there was a distribution of cash as this is an IRA and I'm ancient!)
Best wishes,
OAG
Thanks Jon,
I found the same thing this AM. I've been having spotty internet issues, so thought it was "local."
Best wishes,
OAG Tom
As of 6 AM PST this morning, Value Line has not released the February 3rd
summary with the data used for the VWave. I will check again later this
morning and post the numbers ASAP.
Regards.
Jon
Hi Toof, Re: Sector ETFs..................
1) All but one are "equal weight" sectors. Here's the list:
The "Watch %" Column value is what the change in share price is from when it was configured with the Equal Weight sectors in 2016. All Sectors are in this portfolio and have been since it was first assembled in 2008-09 as a U.S. Sector ETF strategy. I'd used cap weighted sectors and different suppliers of the ETFs before settling on Invesco's product. It was originally "Guggenheim" but was purchased by Invesco some time ago.
2) XLG is there to increase exposure to the very largest cap stocks in the S&P 500.
3) I think the equal weight ETFs per sector have equal or better dividend yield than their cap weighted siblings. Volatility is similar but not the same.
4) I guess I've always liked the idea of equal weight better than cap weight. Cap weighting is a popularity contest having little to do with most "value" metrics, so maybe I have a bit better value tilt to this portfolio than if I'd chosen I-Shares sectors or another provider.
Hope this helps,
OAG Tom
Tom
Do you own all of the equal weight S+P 500 sector funds ?
If not which ones?
Why did you leave some out if you did?
Would the cap weight ones have more volatility?
Toofuzzy
What was your reason for going with the equal weight funds.
P.D.Q. - Pretty Darned Quiet!!!
This seems to happen any time the markets get funky. The i-Hub Boards hardly get any posts. In the mean time:
- US Sector ETF Portfolio - 9 of the 12 holdings are now back within 10% of their "Next Sell" AIM targets.
- International Style ETF Portfolio - 6 of 9 holdings are now back within 10% of their "Next Sell" AIM targets.
- Sandbox 10 Stock Portfolio - 4 of 10 positions are back to within 10% of Sell targets.
- UBA Universal ETF Portfolio - 5 of 16 positions are within 10% of their Next Sell AIM targets.
There has been nice improvement in these stances since the start of the New Year. I've had
a few AIM sales so far but also a few 'vealies' since some sleeves never used much of their cash.
Best wishes,
OAG Tom
Hi Jon, Re: v-Wave motions.....................
The short term bullishness has all been used up and we're back near the Median value.
The longer range forecast has been slowly rising in risk posture for a while and is also right
around the Median value. Indexes are flattish to slightly up for the YTD but nicely up from
their lows posted in the last Quarter of 2022.
It appears the v-Wave continues to give good counsel. Upside potential and Downside risk
are in balance at this point.
Best wishes,
OAG Tom
I asked AI Chat to write a Haique about AIM investing.
"A.I.M.mindfully investing,
Future gains it's calculating,
With precision and speed,
Stock market, it will lead."
Sounds about right
Toofuzzy
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 27th
_________________________
Short Term (18 Months)
Individual Stocks: 47% (Up 7 from previous week)
Diversified Mutual Funds
or Portfolio: 32% (Up 5 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 46% (Up 1 from previous week)
Diversified Mutual Funds
or Portfolio: 31% (Up 1 from previous week)
Oscillator: 2.88 (Up 1.17 from previous week)
*See posts #44585 and #44588 for Tom's explanation
With AI so smart
But alas, it’s at capacity
Leaving us to wait
For a chance to chat
With its wisdom and wit
We long to be part
Of its conversation
But for now, we sit
On the sidelines
Patiently waiting
For the day
When ChatGPT
Is ready to play
Again.
Hi Toof, Re: v-Wave Short and Long Term projections and Cash Recommendations.........
The graph shows the Short Term v-Wave has been lower for a few weeks.
I think it is indicative of the market bottoming process that has been going on for almost 6 months now. I think we can consider the shorter term v-Wave as sort of a lead indicator. When it's falling rapidly or rising rapidly and crossed the longer term v-Wave it appears to be leading the way toward either lower or higher risk. Right now both are nearly at the Median value. That indicates upside potential and downside risk are in reasonable balance. The "trend" isn't very big, but would seem to show for the latest 6 months that risk hasn't changed much on average, just wiggled around. Maybe the movement is symptomatic of the markets' volatility.
Best wishes,
OAG Tom
Do I have the right.
The % cash recommended for long term is higher than short term.
Does that mean anything ?
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 20th
_________________________
Short Term (18 Months)
Individual Stocks: 40% (Up 10 from previous week)
Diversified Mutual Funds
or Portfolio: 27% (Up 7 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 45% (Up 2 from previous week)
Diversified Mutual Funds
or Portfolio: 30% (Up 1 from previous week)
Oscillator: 1.71 (Up 1.26 from previous week)
*See posts #44585 and #44588 for Tom's explanation
Hi Steve, Re: Figgie Pudding....................
This year's turned out really well. It didn't last very long!
OAG
Hi Tom!
Ahhh.....Your annual Figgie Pudding post. This one may be the prettiest so far. You must be watching HGTV.
I also noticed you posted it to LinkedIn this year.
So in honor of your long term commitment to this dish...
He posts it each year
Figgie Pudding Recipe
It looks really good!
I had the luck to see this image posted on LinkedIn this AM and found the image most instructive for those of us who use Business Sector ETFs. Of interest in looking back at 2022 is how much variance there was from one business sector to another (+65% to -39%). This graphic shows several things: 1) room for reversion to Mean, 2) impact of weights per sector in the S&P 500 and 3) why using AIM to manage the S&P500’s Sectors can potentially be more profitable than just owning the SP500 Index fund.
If we'd attempted to out-guess the sector performance based upon history we could have done very well or very poorly with such dispersion! Certainly ignoring the Energy sector would have hurt. And, concentrating on the Info Tech sector could have also hurt. In general, for me, AIMing each of the sectors in a single strategy did well for me. I was still 'down' for 2022 but quite a bit less than the S&P500 itself.
ETFs have made sector AIMing easy and profitable for me.
Best wishes,
OAG Tom
Thanks Ken, I'm saving the link for posterity. somewhere!
Best wishes,
OAG Tom
Hi Tom, Re: Link...
Here's the link...
https://archive.org/details/msdos_AIM_300_shareware
Now that's something cool. I don't think I've ever seen any notes on this version.
This was released about teh same time Bob Norman, Dave Rattatori and I were working on the DOS version of Newport. We'd already build a working version in Lotus123 but Newport took some time as it included graphics and history building.
Thanks,
OAG Tom
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 13th
_________________________
Short Term (18 Months)
Individual Stocks: 30% (Down 5 from previous week)
Diversified Mutual Funds
or Portfolio: 20% (Down 3 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 43% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 29% (Unchanged from previous week)
Oscillator: .45 (Down .03 from previous week)
*See posts #44585 and #44588 for Tom's explanation
Hi Tom, RE: 4.24% Idle Cash,
Nice to see idle cash pulling in over 4% to start the year... That's getting to be much more "book" like numbers... Best regards, Ken
https://investor.vanguard.com/investment-products/money-markets
It's good to be reminded once in a while why it is we need a systematic investment management model for guidance. 2022 proved to be one of those years. Even 2021 was, but for different reasons. 2021 proved AIM was wise in controlling risk buildup as markets were going upward. 2022 proved AIM was on the job to shift Cash Reserve back toward equities as markets sagged. Here's how it looks over time in several different of my strategies:
U.S Sector ETF Summary:
(compared to S&P500 Total Return Index = -18.11%)
International Style ETF Summary:
(Compared to MSCI World Index = -18.14%
10 Stock "Sandbox" Portfolio Summary:
Modified Twinvest Simple Contributory IRA:
All in all I'm pleased with inventory control and cash management through a tough couple of years.
Happy New Year,
OAG Tom
Happy New Year to one and all.
I am so grateful for all of the (AIM) advice that I have received this past year.
May you have a wonderful 2023 ...
with much prosperity, happiness and great health.
My sincere best wishes,
old_john
HAPPY NEW YEAR, AIMers!
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 6th
_________________________
Short Term (18 Months)
Individual Stocks: 35% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 23% (Unchanged from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 43% (Up 1 from previous week)
Diversified Mutual Funds
or Portfolio: 29% (Up 1 from previous week)
Oscillator: .48 (Up 1.36 from previous week)
*See posts #44585 and #44588 for Tom's explanation
Here's a note I sent to a friend who was worried about 2023.
Remember that you can't harvest unless you plant seeds. AIM calls for buys when it's a good idea. It calls for sells to control extending risk beyond what was desirable at the start. It's rarely wrong in its assessment.
If an investor never has cash to buy when prices are reasonable, the seeds can't be purchased. If an investor never sells to contain risk inflation there's never any cash to buy seed. Markets are cyclical. Buy from the Scared, Sell to the Greedy!!!!
Keeping it simple is important.
(letting my inner Neanderthal shine through!!!)
Happy New Year to All,
OAG Tom
Thanks, Tom. Great perspective.
Happy New Year!
Take care.
Jon
Hi Ken, Re: MyStocks..........................
I had a demo (maybe still do) but it wasn't fully functional.
Happy New Year,
Tom
Hi Tom, RE: MyStocks DOS Program,
"There was a similar one back in the DOS days called MyStocks"... I'd like to find a link to download the "MyStocks" DOS Program... There seems to be another, much newer, not related program of the same name available for download now... But I wanted the DOS version from 25-30 years ago... Maybe somebody on the board can find it... Best regards, Ken
Good to see you again, Sam!
Take care.
Jon
Thanks JDerb for the Wave info! Looks like time to begin allocating cash.
Still Aiming...
Sam
MERRY CHRISTMAS, AIMers!
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 30th
_________________________
Short Term (18 Months)
Individual Stocks: 35% (Down 12 from previous week)
Diversified Mutual Funds
or Portfolio: 23% (Down 9 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 42% (Down 3 from previous week)
Diversified Mutual Funds
or Portfolio: 28% (Down 2 from previous week)
Oscillator: -.88 (Down 2.73 from previous week)
*See posts #44585 and #44588 for Tom's explanation
Hi Tom,
Thanks for the link on your recent commentary! New 52 week low yesterday again, so I stepped up and bought more... FRBK hit $2.07 yesterday so the purchasing department was busy again... Taxes???? Thoughts of booking the loss have quickly gone away here... FRBK has been in a huge "food fight" for control of the bank, but that seems to be settled now... Quarterly reports are now coming in and getting back up to date, and the annual meeting has been set for next month... A hostile offer for up to 45% of the bank was rejected months ago at $3.50 a share... I see a new CEO was just named and put out on media this morning, and the stock is up 10% premarket already... Disclosure forms have been signed lately, which tells me a buy out could come soon... I'd like to book the losses, but it could go up like a rocket at the snap of a finger, then I'd miss all the value of AIM ... Winter Storm Warning here next 2 days, I'm sure the same up there in Wisconsin... Purdue plays LSU in the Citrus Bowl Jan 2nd, are you giving me the Boilers and 56 points? :) Best regards, Ken
I have been doing more options than stock buys.
But just had some STKL put to me and bought back some January calls and am placing orders to sell Dec $12.50 calls.
Also sold VET calls and a lot of WPM CALLS for Feb and Jan 2024
Toofuzzy
It's not too late! Time to get Steamed about some Figgie Pudding!
-------Christmas Figgie Pudding Recipe-------
(From my wife's side of the Family tree)
Pudding:
1 – Cup of vegetable oil
1 – Cup Brer Rabbit Molasses
24 – Fig Newton bars (usually one large package or two smaller packs)
1 – Cup Milk
1 – Cup Raisins (best if soaked in a favorite liquor overnight)
½ - Cup chopped Pecans
½ - Cup flour (whole Wheat if available)
1 – level teaspoon of baking soda dissolved in one tablespoon of water
½ - teaspoon of Nutmeg
1 ½ - tablespoons of corn meal
1 – teaspoon of Allspice
½ - teaspoon of Ginger.
1 – pinch of Salt
(Note: if you use chopped Figs instead of fig newtons, increase the flour to 1 full cup)
Sauce:
¼ - Cup of melted butter
2 – whole eggs, beaten
1 – Cup of Powdered Sugar
1 – Pint of heavy whipping cream
1 – tablespoon of vanilla extract
Optional – a splash of your favorite brandy, rum or other liquor
---------------------------------------------------------------
First pour the milk over the fig newtons in a large mixing bowl. Stir them around until the “cookie” part gets soft from the milk. Then use a potato masher to create a paste of the mixture. Add all the other Pudding ingredients except the Raisins and mix well with a large fork. Lightly stir in the raisins, trying not to bruise them.
To best steam the pudding, use a Bundt pan and a kettle large enough to accommodate the Bundt pan. This cuts steaming time in half. Transfer the Pudding mix to the bundt pan, filling it to about ¾ full. Next cover the bundt pan with a sheet of aluminum foil. Carefully cut the foil where it covers the hole in the center of the pan and fold the foil down. Fold the foil tightly at the edges as well. Add an inch of water to the kettle and put the bundt pan in the center on a steamer tray. Cover the kettle and simmer on Low for 1 ½ hours. (Note if you make the pudding in a regular bowl, cooking time will be around 3 hours) Let the pudding cool in the pan for at least 1 hour and then carefully invert it onto a serving plate.
The pudding can be prepared a day in advance, eliminating the effort when trying to prepare the rest of the meal. Rewarm the pudding just before serving. I warm it on the Medium setting in the microwave for one minute at a time until it’s just above room temperature.
To prepare the sauce, combine the eggs, melted butter, vanilla, optional liquor and powdered sugar and stir well with a whisk or beaters. It should ‘run thickly off a spoon’ when mixed. If it isn’t thick enough, keep adding more powdered sugar until the consistency is right.
Whip the cream until it is fairly stiff. Combine the whipped cream and the rest of the sauce and mix gently with a rubber spatula. The sauce can be chilled in the refrigerator until served.
To serve, cut a generous portion of the warm pudding and place it on a plate. Douse the pudding with plenty of the Sauce. The pudding is black and rich and the sauce is pale yellow and thick.
-----------------------------------------------------------------------------------------------------
Merry Christmas Everyone!
OAG Tom
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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.
-------------------------------------------------------------------------------------------------------------
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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