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Hi Jon, Re: v-Wave history...................................
Here it is updated with this week's info:
The v-Wave seems to be tracking quite closely to market moves in recent times. Of note this week in Value Line is the average dividend yield has again dropped below the long term median (2.2%/yr) to 2.1%/yr. Value Line's 1700 Stock average P/E sits at 16.2 up from recent weeks. So, stock prices are rising faster than earnings and dividend increases.
Best wishes,
OAG Tom
Thanks for your reply Toofuzzy.
I'm going to stick with the AIM plan for now. At least until an "investor day" in December.
The CEO has just purchased over a million dollars of the stock at these depressed levels. The board of directors have each apparently followed suit.
If I'm comfortable with their plan, I'll continue to AIM. If not, I'll harvest the loss for tax purposes and move on to something else.
If interest rates keep rising (which I think they will), debt refinancing could become an issue for other companies too - especially utilities and telecoms.
Old_john
Your choices are to keep following AIM and if necessary let it go dormant till it goes back up and you have a sale.
Or take your losses and trade it for another security.
I have had the same choice to make in the he past.
As always
Toofuzzy
I have one position that has dropped significantly and has the potential to become a really deep diver.
It has been hurt by rising interest rates and a questionable acquisition. Some of it's maturing debt is coming due in 2023 and will have to be refinanced at higher rates. It has had a good dividend record but some observers think that it is only a matter of time before it gets cut.
It has dropped from a high of 22.50 to a recent low of 9.89 and closed at 10.28 on Friday. 2010 low was 3.40.
My next AIM buy is at 9.48. I will be following the plan as I believe the longer term prospects for this company are good.
Fortunately, some of my other positions have performed much better and are offsetting some of this downturn:
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 November 25th
_________________________
Short Term (18 Months)
Individual Stocks: 50% (Up 13 from previous week)
Diversified Mutual Funds
or Portfolio: 33% (Up 8 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: .89 (Up 1.33 from previous week)
*See posts #44585 and #44588 for Tom's explanation
Hi Tom
Now they don't give you the pretty certificates so it is harder to remember your mistakes.
Toofuzzy
We'll all aware (sometimes painfully) of when an investment bubble starts to deflate. However, "rear view mirror" investors are always looking for the next sector to join near its top.
(27 of the 41 Best Performing Stocks in the latest Value Line are from the Energy Sector)
Can a single sector (in this case the Energy Sector) absorb all the cash flowing out of last year's "greatest" without being inflated as well? Can this single sector activity be sustained?
Mr. Lichello's AIM has been capturing profits and sidelining cash as others have rushed into the Energy Sector with their eyes glued to the rear view mirror.
Best wishes,
OAG Tom
Hi Clive,
Somehow I got lucky and owned only on of those for a very short time! I did own some solar stocks in the '80s that disappeared. I keep stock certificates of those failed companies to remind me to remain humble!
Best wishes,
OAG Tom
1929, in particular a September start month was conceptually a worse start year for AIM, particularly if you were using a 4% SWR. Basically burned through cash quickly to leave you all-in with further and pretty deep declines yet to come. AIM pretty much remained at all-in thereafter for the full 30 year term. However even though all of cash had been deployed within a year or so, that meant you had around 40% more shares than a investor who had lumped 100% into shares from the start, as many might have been tempted to do around that time given how even shoe-shine boys were talking-stocks and many were borrowing as much as they could to buy stocks ... in the lead up to the Wall Street Crash.
That AIM, that was near-as all-stock (but with 40% more shares) went on to do OK, basically supplemented dividends by selling some shares to pay the SWR and carried a retiree through 30 years OK, even at a 4% SWR rate. Only had around 16% of the inflation adjusted start date amount available at the end of 30 years, but still succeeded in a 30 year 4% SWR objective.
The 3.33% SWR was considerable more successful, got back into AIM trading/some-cash in later years and went on to end 30 years with having more than the inflation adjusted start date amount still available.
Of course AIM hadn't been invented back then, at the start of 1929 Robert Lichello was only 2 and a quarter years old (kids like to count part years as for a 1 year old a year is a lifetime :)
Clive
1965 bad case start year
Not so bad. When you have your inflation adjusted money returned via 30 year 3.33% SWR then you have 100% of that money at risk at day one, but have had half of it returned after 15 years, and all of it returned after 30 years. Broadly Averages 50% of your money at risk. If in addition to that return of your money, you also have a 'terminal bonus' of near 70% of the inflation adjusted amount on top, then in total 1.7 times your inflation adjusted money back, against a average 50% of your money at risk, a 3.4x factor, which over 30 years = 3.4^(1/30)=1.042 ... or 4.2% annualized real gain on your average money at risk. In the worst historic case since 1872 (calendar yearly granularity).
Clive
Yearly (since 1872) AIM (Classic) versus 50/50 yearly rebalanced TSM/TBM comparison
I assumed a 3.33% 30 year SWR, return of your inflation adjusted money via 30 yearly instalments, and recorded the final terminal portfolio value measured as a multiple of the inflation adjusted start date portfolio value.
Notable is that AIM was better in the worst case, still had 69% of the inflation adjusted start date amount available at the end of 30 years, compared to 51% for the more common 50/50 yearly rebalanced stock/bond approach.
Similar average outcomes, for which median is IMO a more preferable comparative figure, with both tending to end with around 1.5 times the inflation adjusted start date portfolio value.
AIM was more consistent, had a lower standard deviation in values.
The maximum (best) case outcomes were also similar.
What struck me the most was how over the more recent cases AIM whilst still having done OK, hasn't been as rewarding as 50/50 constant weighted (since the 1970's 30 year start dates). But that's subjective to your interpretation of "risk". Living another 30 years is a lowish probability for some, and leaving a larger inheritance is perhaps less important than the risk of a lower/bad case outcome, for which AIM, at least historically, was safer.
Why the difference? Because when I look at 1985 for example as a start year, that pretty much just sold shares, averaged 76% overall cash (having started at 50%) and ended with 83% cash weighting.
Clive.
Will do jaiml. I've hoarded PC's in the attic for too long and they need a clear out. Not the best environment (often wet London weather) - natural AC (drafty) :) so don't even know if they'll even boot up. The HDD's may have rusted.
Clive
Thanks for digging up the links Clive.
If one day you managed to find that sheet please share it. thanks
Love this board
I still AIM and visit this great board now and then. Good to see members back and posting. Thanks everyone.
Does anyone have that Husky spreadsheet the came up recently? I have a simple backtesting program with several flavours of AIM that one day I plan to publish a web version of. It would be nice to add this flavour.
thanks
The other long term market risk indicator, the v-Wave looks somewhat the same even though it's based on an entirely different database:
Of interest here is how long it took the NASDAQ Composite to return to near parity with the other two indexes after the DotCom bust. Overall, it appears the v-Wave calls out market bottoms better than tops. However, significant periods of early warnings were signaled where caution was preferred.
I'm pleased with both the v-Wave and the MRI's histories tracking market risk.
Best wishes,
OAG Tom
I've been collecting data for a very long time and used it over the years to create the market risk indicator originally called the "idiot wave." That started in 1982. It now has a bit more marketable name of Market Risk Indicator or MRI. So, in honor of its 40th birthday I wrote this risk report last year:
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Since 1982 started it’s been tough to “time” investing in the Stock Market. Overall, Mr. Buynhold has done pretty well. There have been a few worries along the way but generally the Trend has been the Investors’ Friend.
SignalPoint’s Market Risk Indicator (MRI) has been giving us feedback on market activity for 40 years now. Over that time it’s given several strong bullish signals – usually just when most investors were about to capitulate and go to Cash. Our Company’s philosophy of being “constantly invested but variably allocated” with equities and cash has proved its wisdom. The MRI has offered caution at times of market excess and enthusiasm at times of investor disillusionment. Overall, this track record has offered confirmation of the SignalPoint Process’ trim and backfill activities along the way.
Best regards,
Tom Veale
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Recently I've been updating our web site to include all the 'missing' MRI reports. The project is not complete yet but has been progressing with 5 reports per week for a while. Now there's less than a year's worth missing. Here's where to find those weekly risk reports:
https://www.signalpointinvest.com/category/research/
Best wishes,
OAG Tom
Hi K, Re: Mr. L's "How To" book..........................
It's been a while since I last read that story. Thanks for the reminder. Yes, AIM understands the market's seasons and knows when to Plant and when to Harvest.
I just re-read the chapter.
Best wishes,
OAG Tom
Favorite Chapter,
"The Reliefer Who Made a Fortune in the Stock Market" is my favorite chapter. It is a bit sad, but it has a lot of wisdom in it.
I like the answer to this question:
"Mr. S.", I said, remembering my assignment, "what is the mistake most investors make in the stock market?"
"The answer is ignorance. Buy only stocks in things which are necessary, and buy only the leaders: AT&T, General Motors, United Steel, and so forth. They will always win in the end .......
This whole chapter is so good and there is so much wisdom in it.
Thanks, Mr Lichello
Classic AIM is a good choice.
Indeed the managability of AIM and the easy execution of orders, when you are not looking, is very comfortable. I assume that the cash withdrawal in your example is taken from cash, so the equity is only touched by AIM, a natural thing to do. The time/attention spent on AIM is minimal.
The 0.5% increase of the SWR is nice,
Best K
1966 was a bad year to start retirement/drawdown, one if not the worst cases, after 4% SWR withdrawals ended 30 years with relatively little portfolio value remaining. AIM in contrast with a 4% SWR ended the 30 years with a third of the inflation adjusted start date portfolio value still available.
Stocks = S&P500 in the following image/data
Clive
https://www.signalpointinvest.com/team/ (Tom/CIO) has a more recent photo to the last mental image one I had in mind from a good decade+ ago
Has a longer history also :) 2008
In the article section, Sequence of Returns risk article, and another possible option is to phase retirement. Start your retirement portfolio/asset allocation a year earlier, with a third of the total retirement pot, than your actual retirement date, and just let the cash that throws off build up in your cash account. Then load another third in at your retirement date, and then the last third a year later, using the cash built up from the first loading along with some additional cash set aside as the income in-fill until you get to the end of the first year of retirement. Averaging in that way avoids lumping all-in at the worst possible time. Even a single year difference in start date can make a massive difference to final outcome. Combined with AIM like add-low/reduce-high, along the way and overall you're more inclined to hit a 'average' outcome that is good enough and is significantly better than the worst case outcome.
IIRC a 1969 retiree really struggled whilst a 1970 retiree did better. Similar for a 2000 retiree, having averaged in across 1999/2000/2001 or 2000/2001/2002 ... was better than having lumped all into retirement in 2000 alone.
Clive
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 November 18th
_________________________
Short Term (18 Months)
Individual Stocks: 37% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 25% (Unchanged from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 42% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 28% (Unchanged from previous week)
Oscillator: -.44 (Up .04 from previous week)
*See posts #44585 and #44588 for Tom's explanation
Interesting it has matched SPY for the year so far.
Toofuzzy
I never did like airlines ( gravity ) or retail ( tastes change )
Toofuzzy
DSCF looks like a somewhat AIM like style fund
https://disciplinefunds.com/faqs/
Hey K, Re: Airline Stocks.............................
My one airline stock lost a lot of altitude, became a sea plane and then a submarine! It should still come up for air soon. It was profitable pre-Covid but has struggled to make money since then. Staff shortages have been a detriment.
Mr. Buynhold is down 80% from my start. AIM has trimmed that loss to -43%. Not good, but better than otherwise. My share count is up +315% at this point. It's being treated with my AIM "Black Swan" option. (If the price/share rises by +25% above the last buy, I'll sell 10% of shares to recover some trading cash) Then I'll use those last two prices (last buy and last sell) over and over again until the price/share finally moves out of this terrible current range.
It's trading at 0.12 Price/Book Value (book value = $11.65/sh; Price/Share = $1.40) and there's a modest short position on the stock. It would be a bargain for some other airline to buy at this price. I'm glad my entire net worth isn't invested here!!!
I also own a catch-all Airline ETF , symbol JETS. It's up 20% from its recent low point and is profitable from my starting point. It's still 23% below its next AIM sell target, however.
Best wishes,
OAG Tom
Airline taking off
My airline stock (lufthansa) is selling again and the machine is currently at +10%.
The stock-entry was at 15 euro, we are now a bit over 7 euro, so it's nice to sell again (thank you Mr Lichello). B&H would be still down over 50%.
Best K
Hi Tom
Greying has won the race with me also.
Toofuzzy
Hi Tom.
I recently told this story, but in summary:
Early 80's I had just stuck my toe in the investment world via an investment club with some work associates. Left it after a year when we moved to Texas.
A few years later, I caught Lichello's infomercial, middle of the night, and was intrigued, but didn't want to invest the ~$300.
Not long after, Andy, my father in law visited us here in Texas from our hometown in Milwaukee and he asked me 'to find the fatal flaw in this AIM thing'.
He had spend the $300 and gave me photo copies of the entire program.
Never found the flaw.
I found Tom's original site and reached out to him. Andy and I subsequently visited with Tom in Port Washington and the rest is history. We go back home to the lake house every year and have visited with Tom a few times over the years. We also went to both AIM gatherings in Vegas.
Sadly, Andy passed away 6 years ago. But it was so nice to see Tom again at Andy's Memorial Service.
Hi Toof, Re: Aging, Determinism and Free Will...........................
I was just reading about A.I. and Determinism vs Free Will and wanted to quote Mr. Tomlinson....
“I have no choice but to believe in free will" - S. Tomlinson
- from Randy Wayne White, "The Mangrove Coast"
My hair has had a 20 year race to see if it will fall out or turn gray first. At this juncture, Gray is winning....
Best wishes,
OAG Tom
I started counting backwards at 50 and expect I will die bald, with no teeth, in diapers after regressing far enough.
Toofuzzy
“Progress is cumulative in science and engineering, but cyclical in finance.”
Looking at my World ETF (World Blend), it(the linear trend line) grows at around 8% per year and the ETF price oscillates around that trendline:
The price has two components: growth and oscillation. Using AIM we typically buy when the price is below the trendline and sell when the price is above the trendline.
A buy is subsequently growing above 8%.
A sell is selling something that grows less than 8%.
B&Hers dont want to sell because the price goes up at 8% and subsequent buys could be above some of the previous sell prices. The thing with AIM is that it typically buys at over 8% growth and it also buys more shares than it sells, acquiring more and more shares. A deep dive as in march 2020 creates a quantum jump in AIM's value and shares on an increased value growth path while B&H will simply return to its previous static growth path.
Finance could also be cumulative while experiencing cyclical quantum jumps in value.
Best,K
Some interesting reading here:
https://www.ft.com/content/b1aa763e-592a-49e8-99a2-e836a31df8b9?shareType=nongift
It reminds me of the book I read last year:
"Extraordinary Popular Delusions and the Madness of Crowds"
It would appear that Mr. Lichello's AIM helps defeat the negative aspects of this statement:
American author James Grant: “Progress is cumulative in science and engineering, but cyclical in finance.”
With Mr. Lichello's AIM, that cyclical aspect of Finance becomes a driving force for wealth building over time. That is, of course, true as long as we don't add to the lavatory's wall paper of failures.
Best wishes,
OAG Tom
When you learned of Mr. Lichello's AIM, what was your first thought of why it might be useful to you?
During the second half of the nineties I visited the American Book Center in Amsterdam.
(10% discount for students, teachers and members)
Browsing through the investment-book section there was this small book "How to make $1,000,000 in the stock market automatically". I opened the book and read a bit. The first thought was: "mesmerization".
I was a Long-suffering investor, who sorely needs a "Money Machine"
Best, K
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 November 11th
_________________________
Short Term (18 Months)
Individual Stocks: 37% (Up 12 from previous week)
Diversified Mutual Funds
or Portfolio: 25% (Up 8 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: -.48 (Up 1.43 from previous week)
*See posts #44585 and #44588 for Tom's explanation
Lichello had a PLAN.
I had been using a full-service broker who I relied upon to provide buying opportunities. He had a brilliant economic mind and was very well educated. But in terms of selling at a profit or buying more when a stock was down - he was either clueless or perhaps, somewhat deceptive.
I had read many "investing" books prior to discovering AIM. This was the only book that provided a specific, unemotional roadmap. I should correct myself as there was another titled "The Money Spinner". Similar to AIM.
The initial drawback for me was the wide "holding zone". In retrospect, this is in fact is an important feature.
I put stock investing on the shelf when I bought a rental property after in 1987 crash. I did OK but would have done much better had I Aimed a portfolio of good quality stocks.
Today, I'm Aiming 10 stocks with a single cash reserve. I'm on my way...
When you learned of Mr. Lichello's AIM, what was your first thought of why it might be useful to you?
For me, I'd already ridden the Stock Market Rollercoaster for a while and had always chastised myself for not having cash to buy when the real bargain prices came along. The amount I would risk in a single investment was based on what was available to invest at the time.
(note the size of the RED (invested portion) of the graph doesn't change much through the long bullish period)
It wasn't until probably a full market cycle had passed that I began to realize AIM's "risk containment" aspect. I'd started my official AIMing in 1988 after a year of modeling AIM against my own seat-of-the-pants management. 1988 was a year of recovery after the Oct 1987 "crash." So, AIM was in full Sell mode for much of '88. At the end of that year a bundle of cash had built up but my dollars at risk were quite steady through the 12 month period. That's Risk Containment at its best.
This histogram shows that AIM ability quite nicely. During the rising price period AIM took profits and capped the dollars at risk nicely. Then when the buying started, through the rise in Portfolio Control from those buys a new maximum risk amount was established. Right now the price/share of that equity is rapidly approaching the point where AIM will again cap the dollars at risk and start to sideline cash. The price/share is just 3.5% below the Next Sell price as of this AM.
When this next Sell takes place, it will realize a 33% LIFO profit on that last buy. What a nice way to keep risk contained.
Best wishes,
OAG Tom
Added to my HR and WPM holdings today.
Toofuzzy
Worldwide high dividend fund
March 2020 was enormously beneficial for this dividend fund.
At this moment dividend percentages are (interest on cash is neglected, for now):
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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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