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Hi Too Fuzzy,
I'll take a look at the calculator. Thanks for forwarding it to me. I have to work the next 7 days so I look forward to looking at it when I get a chance. It looks like it's everything it needs to be ??
I agree with you regarding the sectors of the S&P 500. It's funny, last night during my lunch I was pulling up comparison charts of each of the 11 sectors over the last 15 years. Several of them move much more than the others. Some were obviously going to be there, but a couple of them surprised me, especially the industrials. The industrial sector, biotech, technology, in consumer discretionary seemed to bounce around the most. A few others are in the middle, and then there were the laggards.
On a side note, I would have expected energy to be in a better place because it's been so hot the last couple of years. It was pretty much at the bottom historically. There's been so much buzz about the energy trade this last couple of years, that you'd think that she'd be one of the prettiest girls at the party. Not the case. Interesting.
Thanks again,
Dan
Hi NewAimer
You don't need all 11 sectors , you can look at a chart to see which are more volatile and give better results and do you need both consumer cyclical and consumer Staples ? Also I personally would rather own individual REITS.
2X FUNDS are a good balance between volatility and risk.
Toofuzzy
NewAimer
You are on the right path re: stocks vs funds.
For a little more volatility but still safe look at the 2x funds.
Also check out this software I created. It will figure out your hold zone so you don't have to do it every month. I put the max buy and min sell on an index card and then just have to scan it unless I know I will have a trade.
http://web.archive.org/web/20120609073103id_/http://www.aim-users.com/calculator.htm
Not always
Toofuzzy
Hi Dan,
Re: Equal Weight vs Cap Weight.................
Cap weight concentrates our share dollars in the large end of the cap markets and has less "Dollar Diversification" than does equal weight. A cap weighted ETF might have 40% to 50% of the total dollars of investing in just 4 or 5 companies with the smaller caps representing the remainder. Compare that to "Equal Weight" ETFs that might have 10 or more holdings adding up to roughly 30% of the invested dollars per share and you see the difference.
Another thing is whether your portfolio is then Sector weighted equally or an attempt to match the S&P 500 sector weights. (those sector weights vary with time) One can choose equal sector weights and let AIM decide over time as to what sectors are heaviest. I did that initially and then when we had a real big bear market, I'd "rebalance" back to nearly equal dollars per sector. I'm still not sure that's the best idea. The DOTCom Bubble is an example of why this needs to be considered. AIM would have sold mountains of the tech stocks heading into that bubble peak while only modestly selling other sectors. When the bubble started to deflate, the tech sector would suck up a lot of the total cash while repurchasing shares. Would those dollars been better being spent more broadly around the other sectors? What was the portfolio overall risk after 10 years of AIMing heading into 2000? Was it too heavy in Tech or would AIM and its massive cash have moderated that risk?
Re: Rebalancing Systems......................
The problem with rebalancing systems is they can be counter productive during long bullish or bearish periods. Let's assume equal weights per sector to start. The Bull market comes along and all ships rise. However, not all ships are rising at the same pace. So, near the top of the market we have one sector up nearly 50% and another up just 20%. So, do we take $$$ from the one that's up the most and buy more of another sector that's also "up" at that time? What if AIM's telling you to finally sell some of the sector that's now up just 20% after a quiet spell. Rebalancing wants you to buy and AIM wants you to sell.......
AIM's better at the allocation of funds than rebalancing. Maybe just a rebalance once in a while at near market lows or highs might work but I'd want to study it more before venturing an opinion.
I guess the same situation can occur with reconstituting a portfolio back to the S&P 500's sector weights on a periodic basis. You could again have some sectors adding just when AIM is suggesting selling and visa versa.
Just some food for thought,
OAG Tom
Tom. Sectors... Why didn't I think of that?
Hi Tom,
I appreciate your response and I look forward to taking a look at maintaining a position in the separate sectors. Guess it makes sense, not sure why I didn't think of it. As some sectors move, others don't. Lends itself to having a little more sanity to the portfolio. I agree.
Thankfully, I do have enough capital to take a position in each of the sectors. There are 11 sectors, do you take a position in all of them? My only concern is management. Having to draw a line on 11 sectors every month is going to be a bit more labor-intensive, although I could definitely make the time. Have you ever thought about quarterly rebalancing? Seems like you could still catch trends in the market both up and down and it would be a little more conservative with your time. Just curious...
Also, if you don't mind my asking, why not just use the regular SPDR sectors? They are cap weighted, you mentioned you have grown tired of those. Do you mind sharing why you like the equal-weighted ETFs better?
Thank you again,
Dan
Hi Dan, Re: AIM'd SPY vs AIM's 10 SPY Sectors......................
One gains back some performance when the SPY is broken down by business sectors. Each sector then moves on its own (sector rotation) and AIM has the ability to generate a greater number of annual opportunistic trades that way. When all sectors move together, well, then it's extra work with less reward. However, when Energy moves one way and Tech moves another, SPY self cancels AIM's enthusiasm. But when this happens with the various sectors we see certain sectors getting AIM sells while others get AIM buys. Overall AIM is happier as is the user. Here's my personal example:
This has been formally studied by one of our contributors and proves out nicely. I personally have been managing the S&P 500's sectors since the early part of this millennium. I've used several ETF providers but am currently using Invesco's "Equal Weight" sector funds as I have tired of cap weighted funds.
Other simple strategies can be approached in different ways. Where nominal capital is available (say a smaller IRA) I've picked one of the "growth" filtered ETFs and paired it with a higher yield "income" ETF and some liquid cash. The dividends build the cash side when no trading is occurring on the "growth" side. It's worked pretty well so far. Here's what one looks like:
I AIM the VUG and AWF components and let the cash fund both. In this example the "cash" is just the Money Market Fund. It collects the dividends from VUG but primarily from AWF. You can see the significant cash drawdowns in early 2020 and again in 2022. Also highlighted are the three contributions made over time. I like VUG for its purpose of being just "growth" and also its extremely low annual expense rate. Another I've used on the Growth side is RPG.
https://stockcharts.com/freecharts/perf.php?VUG,RPG&n=200&O=011000
If you have enough AIM seed money to do all the business sectors that's great. It will give you a widely diversified portfolio of U.S. based companies. If you want to just do something simple, this IRA example works well, too.
Best wishes,
OAG Tom
Thank you Tom and toofuzzy!
Thank you Tom for the link for the Excel worksheet. I will start fiddling with it when I get a chance. I appreciate you sharing it with me.
Toofuzzy, I totally agree that backtesting doesn't do anything except make me more comfortable with how AIM works. I've done a ton of backtesting by hand the last couple of weeks. Partially because I didn't have an Excel sheet to use and didn't want to take the time to format one. (I'm not the best at Excel.) I also wanted to do it by hand so I understood the mechanics of the AIM strategy. It has definitely done that for me. I have a great feel for how the strategy works.
It's one of the reasons I want to use the method on an ETF of some sort. I don't have enough time to research stocks that I feel comfortable investing in. Indexes move around less but offer the security or at least the reduced risk of going to zero. The reason I use the triple leveraged ETFs is simply to understand the mechanics. Do I think the triple leveraged ETFs go to zero? No, I'm not super worried about that. The reason I've ever used the triple leverage ETFs is because they're capital efficient. If I have $10,000 to invest in the S&S 500, I can invest 1/3 of that into a triple leveraged fund and receive roughly the same returns. I can allocate the rest of the money more conservatively, so for me, it works. I have no problem with the volatility, I have a reasonably strong stomach for it, but I believe balance is key. I don't fear those things, but I certainly respect them and my whole portfolio is not just UPRO or TQQQ. They're a tool like any other. (On a whim, I bought some TQQQ back in 2012. I believe my cost basis, adjusted for splits, is like $1.50. Even though the stock has coming down a lot, I have a pretty sizable profit in that ETF, and it's in a taxable account so I'm still not in a hurry to sell it, but I wish I would have discovered AIM sooner.)The leveraged ETFs do have negatives. They are relatively expensive from a fee perspective and they move around a lot. But that's a positive for the AIM strategy. The AIM strategy likes high beta stocks and ETFs.
I've traded around my TQQQ and UPRO positions for probably 8 years and have done pretty well..... the reason I like the AIM strategy is that it has a slick math formula. A math formula that more or less makes buy and sell decisions easier. But at its core, it's trading around a position. Something an old investing mentor introduced me to over 20 years ago, and I've refined it a little since, but not as rule-based as AIM.
The reason I like the ETFs for the AIM strategy, is because AIM has historically done a great job of creating a large cash hoard by virtue of it's formula, and even though there were sizeable downturns in the market in 2018, 2020, and 2022, AIM generated a decent cash pile as relative insurance should one of those ETFs go to zero, you wouldn't lose your entire initial investment. Although I think it's unlikely, even for leveraged ETF, to go to zero. But it's hard to argue that it could take a decent beating should we have another period like we've had so far on 2022. But who really knows? I'm perfectly comfortable allocating a small percentage of my portfolio to a leveraged product to help juice my overall annual CAGR. If one goes to zero, it wouldn't ruin me or anything, as most of my investments are in regular ETFs of some sort.
I have begun to use AIM on some of the more stable ETFs like the SPY and QQQ. As you know, the problem is that these don't move around as much........ and AIM is far less effective at generating higher returns unless it is generating buys and sells....... AIM can go several years without generating a sizable buy or sell order in some of these. It's essentially buy and hold at times. The leveraged ETFs, even when rebalanced monthly, generate more selling and buying, an essential component when trading the AIM method.
Thank you, toofuzzy. I appreciate what you're saying. It's good to be reminded of some good old-fashioned logic once in awhile. I promise that your point here is not wasted on me.
Hi Dan,
Here's an ancient Excel spreadsheet for you to try and also modify to your own needs. It's shown on this AIM page and you can d/l it.
https://web.archive.org/web/20120623150522id_/http://www.aim-users.com/aimware.htm
I'm sure there are others here with newer ones, but this will do the basics of AIM in Excel.
Best wishes,
OAG Tom
Hi Dan
Back testing doesn't really do anything except to make you more comfortable on how AIM works.
You already did you that.
What would it tell you if you back tested ENRON, GE, or TSLA ?
Past results do not tell you what the future will bring.
I will say that ETFs are safer except for the 3x leverage funds which if there underlying drops 30% will get close to zero.. I have used 2x funds successfully with AIM.
Perfection is the enemy of good enough.
Not always
Toofuzzy
Thanks, Tom. Great look.
Take care.
Jon
Good morning JD, Re: v-Wave with a trend line thrown in.........................
I tried to drop in a trend line showing where there was price change during above and below median risk periods. I used the green-ish S&P 500 line as reference. With that in mind, it would appear the S&P 500 is possibly still slightly on the "value" side of the line.
Have a great week,
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 August 12th
_________________________
Short Term (18 Months)
Individual Stocks: 42% (Up 7 from previous week)
Diversified Mutual Funds
or Portfolio: 28% (Up 5 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: -.76 (Up 1.46 from previous week)
*See posts #44585 and #44588 for Tom's explanation
Hi Tom, RE: VMRXX,
2.07% at yesterday's close... Quickly running up... Can't remember Mr. Lichello's cash holding %?... seemed it was 6% or so, I'd have to look it up... Again, nice to see idle cash coming off 0.01% for 14+ years, which was insanity, fake, and phony... Best regards, Ken
AIM Spreadsheet??
I don't really know much about excel, I wondered if any of you had a contact who could build a spreadsheet in excel for me. Something that I could just input the price monthly and it would do the calculations for my backtesting. I'm an RN, I know absolutely nothing about excel really. I have never used it.
I have no problem hiring someone to do it, but maybe you all use someone already that sorta understands what AIM is? I could try to find someone, or possibly take a course to figure out the formulas for the cells. I just wondered if you knew anyone who has had any experience with AIM.
Thank you,
Dan
Hi Dan,
Mr. Buynhold made $179k while being 100% invested/at risk while AIM made $149k while far less of the portfolio was at risk.
This brings up the topic of risk adjusted return. Look up ROCAR in the subjects already discussed for you. It's "Return On (average) Capital At Risk." If two methods of investment management have the same total return but one did so with just half as much at risk, it has the higher ROCAR value. It's a way of grading portf management.
You can grade buy/hold and AIM in such a way. It tells us how well the method is working the "at risk" portion of the portfolio.
Best wishes,
OAG Tom
Hi Tom, Re: May Sellout,
It was just coincidence... But it sure worked out well... Food fight speculation on FRBK proxy fight seemed to be cooling off, it just seemed like the right time... Now consolidating at a much lower level, seems like any positive announcements going forward should jolt the stock back upwards, especially now the food fight is over for control of the board and bank... Best regards....
Love all the information!! Thank you very much
I appreciate everyone thus far who has responded to my post. I was just trying to get some ideas on how I can move forward with the strategy. For the last 20 years, I've had pretty good luck with a simple rotational strategy with a simple moving average. Although I've done very well with the strategy, I just wanted to diversify my strategies a little bit. I don't have a $1,000,000 portfolio, but it's growing and I feel like it's grown enough to start diversifying my strategy base rather than relying on just a simple rotational methodology.
Anyway, some of the responses regarding minimum trade sizes and possibly splitting the safe criteria differently between buys and sells are a great help. I actually did some preliminary backtesting, by hand, the last couple of days. Many of you said a higher volatility underlying is best. So I randomly chose the Nasdaq leveraged ETF, the TQQQ, and just for the heck of it back-tested it from January 2015 to July 2022. I would have gone back further and still might. The problem is that the split-adjusted price of the TQQQ back in 2010 when the ETF was launched, was like .08 or .15 cents and the share count gets crazy.....
I used some straightforward criteria that you guys had mentioned. I didn't make any trade, whether a sell or a buy unless it was at least 10% of my stock value. That seemed to filter out many trades. Additionally, I didn't start with the original "by the book" allocation. I started with an 80% stock and 20% cash allocation. I have the latest edition of the book and Lichello recommended the 80/20 split.
We've been in an unprecedented bull market rally since 2009. I'm sure that skews the results. Nevertheless, I took a hypothetical $50,000 and invested $40,000 into the TQQQ and 10% in cash. As you all can imagine, the AIM method over those roughly 7 years threw off tons of cash. My final number was a total portfolio value of $199,173. Of that, The cash balance in July of this year was $127,146, and the equity value was $72, 027. The overall compound annual growth rate was over 18%. Pretty impressive considering the amount of cash generated in the portfolio. I didn't make any accommodations for the cash. That's raw growth. I did not estimate making any money on the cash just sitting there. I figured if I can do something with that at some point it's just gravy, but I was curious as to what I might end up with just by trading the methodology on a higher beta underlying like the TQQQ without interest or dividend payments influcing the numbers.
Although that was impressive, because we were in such a strong bull market, buy and hold did better during that time. Buying the TQQQ and holding it during the same period would have netted you around $229,108. A compound annual growth rate of around 24%.
Takeaways? I was impressed. Although the AIM portfolio grew at a lower rate, it did so with much less volatility. This is definitely something I'm going to be employing in a portion of my portfolio. I want to keep tinkering with some rules and see if there's some way to reduce the amount of cash just sitting there and deploying it in some fashion. I also understand that a huge market downturn would have exhausted my cash, but it didn't I don't know......It will be fun figuring it out. No strategy is perfect, but this holds promise.
I'm open to any and all criticisms. This was just raw data on a hypothetical investment of $50,000 through the covid crisis and the current bear market conditions. Look forward to contributing here and sharing what I find out and I appreciate all of your input!!!
Dan
Hi Ken, Re: Repurchase.......................
Was that a "Sell in May....." decision or just coincidence?
OAG
Update, Repurchase
Repurchased my entire portfolio back at a 10.22% discount from my May18th sell out... 71 % Stock... 29% Cash... "Profit from your ideas"
Hi Tom, Re: VMRXX,
VMRXX now at 1.99% , yesterday's close... Best regards, Ken
Hi Dan - a couple-few other things, now that the coffee's finally kicking in a bit.
* Waiting period before a second buy : When prices are falling, AIM wants to burn through cash buying more of the now-cheaper "inventory" to hold for later sale. Someone (likely Tom Veale again) came up with the notion of enforcing a 30-day minimum wait between consecutive buys as a hedge against running out of cash in a downturn.
* Minimum trade size : I'm not sure how applicable this is any more, given that it's possible these days to make very small trades, commission-free, at some brokers, but you'll likely see mention of setting a minimum trade size as a percentage of PC (typically 10%). When trades cost at least $10 a side, this made more sense to me than it does with fractional share, commission-free, trading, but I've kept it in my own AIM tracking anyway. Although, I'll admit, I've dropped it to a lower percentage with some stocks that would otherwise trade pretty infrequently. (It might be smarter to just rotate those stocks out altogether in favor of something more volatile. I kind of hope this comment will get some responses from the wiser heads here; I'd like better input on it myself.)
* And speaking of volatility : AIM likes to cycle cash into a stock at a (relatively) low point and back out again at a (relatively) high point. Since no one's getting any younger (unless we start figuring age in Centigrade, which has been a huge win for me) the more often it can complete a cycle, the better for us. Sites like stockcharts.com can show this graphically via the "Zig-Zag indicator" - giving you a picture of how often a given stock or ETF cycles through a swing of whatever percentage you enter. Here's an old message that talks about this. (Depending on how you set SAFE percentages and the minimum trade percentage, you may want to think about different values for the zigzag than 30%. Another point where I'd benefit from other people's insights myself ...)
With kind regards,
--MIJ
Hi Toof, Re: Renewable Energy companies and ETFs...................
These haven't been easy stocks to manage. AIM's done okay with most of the ones I've followed, but not without some occasional angst. Here's SPWR's one year history on StockCharts:
https://schrts.co/yXWXMNSA
Here's some others I follow:
FSLR, LIT, RRX, JCI, ORA, GNRC, FAN, HASI, WOLF, and PBW.
In the above listed Stock Charts graphic you can type in each of these other tickers and get a feel for their common features. Almost all of them started to be accumulated at the beginning of July. And, almost all of them had been whacked to some new lows shortly before that.
AIM's "next Sell" targets are mostly pretty far away from today's prices on these stocks. Most need a minimum of +15% to get there. A couple, even more.
They do have some "entertainment" value!!!
Best wishes,
OAG Tom
Bought some SCCO today and have order in for WPM
TOOFUZZY
Hi Tom
I owned SPWR for awhile but decided they were not razer blades and that eventually the market would be saturated.
Toofuzzy
Hi Dan and Welcome, Re: AIM mods that seem to work, long term.................
The great thing about this board is there is usually someone who will fill in the blanks when some of us are napping! A big "Thank You" to Jake for filling in here.
The internet was kind enough to archive the old AIM Users web pages in fairly complete form. There's lots of info there and, while not updated any more, it should help you.
https://web.archive.org/web/20120830055133id_/http://www.aim-users.com/index.html
Also, here on i-Hub we have an AIM Q&A page. Again, lots of useful ideas there for how to tame your AIM.
https://investorshub.advfn.com/AIM-"In-Depth"-Q&A-992
Please feel free to ask questions any time. We all learn from them.
Best wishes,
OAG Tom
Hi Dan,
I can think of three things that differentiate AIM "by the book" (or "BTB") from the way it's evolved here, mainly due to the work of Tom Veale :
* Split SAFE : Instead of setting SAFE at 10% for all transactions, SAFE is broken out into Buy SAFE and Sell SAFE. Typically people seem to be using a 10% Buy SAFE and a 0% Sell SAFE
* Managing the cash percentage : Keeping an eye on cash as a percentage of the total portfolio value is a good idea; AIM tends to build cash. Tom Veale came up with the notion of the V-Wave, which is updated here weekly, as a rough way to set a desired percentage of cash based on the current (perceived) market risk. Its recommendations vary depending on whether the portfolio is trading an individual stock or an ETF or mutual fund.
This leads into
* The "Vealie". AIM sometimes recommends a sale at a point when the portfolio has a lot of cash already. Tom Veale developed the idea of recording a virtual sale - updating Portfolio Control by adding half the amount that AIM recommends selling, but not making an actual trade. This effectively resets the AIM buy and sell points without adding further cash to an already cash-rich portfolio. People started to refer to this as a "Vealie".
I've likely forgotten something that some of the older and wiser people here can add (well, I'm old, but I ain't wise, so I keep my fingers crossed and hope for the best).
With kind regards,
-MIJ
Hi Folks,
I'm new to AIM. Just finished reading the book. I was looking forward to starting to implement it with a portion of my accounts. I want to spend some time on the board learning, but I wonder if you all had any "must see" posts to get me going. I see some references to a "Veale" methodology, can you share a post that might explain what changes this Veale methodology includes?
Thank you!!
Dan
Hi Tom, Re: VMFXX,
VMFXX hit 1.84% at last Friday's close... I look for it to top 2.30% by the end of August... Best regards, Ken
Re: Value Line's Model Portfolios for Income and Long Term Growth.........
Here's the latest scans from Value Line for these two strategies. Note they include the original starting date and price of each position.
The "growth" portfolio has a very slow turnover rate, which should be expected with its 3-5 year time horizon. This makes the components good potential AIM candidates as AIM takes TIME.
With the rapidly changing interest rate environment the "income" portfolio has had some higher turnover. The market decline improved the average dividend level of Value Line and new stocks therefore met the goal of being above average yield.
Best regards,
OAG Tom
Hi Ken, Re: Short Term Interest Rates............................
In just three weeks we’ve seen the 13 Week Treasury Coupon rate rise from under 2%/yr to over 2.5%/yr. The rate started 2022 at 0.076% so has risen dramatically in just 8 months. While not great news for borrowers it should offer some relief for savers.
Best wishes,
OAG Tom
Hi Tom, Location...
Looks like that ticket sold in Des Plaines, Illinois was actually closer to you than me geographically... Money market funds now appraoching 2% quickly and that's nice to see that idle cash is moving again... Almost repurchased my last position from May 18th Friday at a much lower price, but looking like another down draft today, so i'll wait for later in the day and take full advantage...
You should have bought a Power Ball ticket for that Billion dollar prize!!!
Congratulations!!!!!!
Looks like my double
clicking mouse problem showed up again, so on to a new mouse... Which means I now have mice right? Again, update here, 100% Cash, 0% Stock since May 18th... Nice to see cash, money market interest rates rising again after over 14 years near zero... "Profit from your ideas"
Post 46000
Okay , what did I win? 100% cash since May 18th, just for an update...
Post 45999...
................
Post 45999...
................
45998.......
............
45998.......
............
45997........
...........
45996.....
.........
45996.....
.........
Here's some AIM history with a "mature" company....................................
In this example, I've capped "max cash" at about 50% of portfolio value and used "vealies" when that's satisfied. This is quite a bit of activity in the last three years but all that cash put back to work could offer some pretty good future harvests.
Best wishes,
OAG Tom
My various portfolios thru July:
U.S. Sector ETF Portfolio
International "Style" ETF Portfolio
Tom's "Sandbox" 10 Stock Portfolio
Tom's Simple Contributory IRA
There's still Cash held in Reserve should last week's action not continue. Reserves are low but are enough for another round of buying should that opportunity become available.
Have a happy Weekend,
OAG Tom
Some good news for Retirees in the U.S.
Actuary tables for life expectancy were changed for a longer life expectancy so Required Minimum Distributions will be less.
https://www.msn.com/en-us/money/retirement/good-news-for-retirees-rmd-formula-changing-for-first-time-in-decades/ar-AAYvggL?ocid=entnewsntp&cvid=053dd620ad134eb89f7915527662e9f7
Best wishes,
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 August 5th
_________________________
Short Term (18 Months)
Individual Stocks: 35% (Up 17 from previous week)
Diversified Mutual Funds
or Portfolio: 23% (Up 11 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 42% (Up 1 from previous week)
Diversified Mutual Funds
or Portfolio: 28% (Up 1 from previous week)
Oscillator: -2.22 (Up 1.58 from previous week)
*See posts #44585 and #44588 for Tom's explanation
Here's an AIM example with a solar company's stock. The investment was started in 2014, so has had time for some "sunrises" and "sunsets."
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=169533667
At 5 minutes per transaction if the account started with $10,000 value, the hourly rate for AIM's management would be $1628/Hr!!!
Have a great weekend,
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.
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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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