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Thanks for the feedback Tom. I have a lot of experience with holding positions in a down market and buying the dips to lower my cost basis. For my AIM program I intend to take the dividends as cash. The other parts of my overall portfolio are income producing and I generally take those as cash and reinvest about 70%. I have very few stocks that DRIP. I like that idea about starting with zero or less cash than required. I can use dividends received each month to build up the cash.
Thanks for the feedback. I don't anticipate any issues with using preferred shares as the ones I've picked out for this are currently floating at $24.50 vs a $25 par value. Since it is a float, I don't see the value decreasing even if the Fed goes back to raising short term rates. They are currently yielding 10% so my cash reserve will build up even quicker. My overall portfolio is invested for income but I do have some equity positions in REITS, BDC's, etc. As I mentioned in my original post, I will be trying to manage 3 CEF's within my portfolio as a separate AIM program. Initially, I am going to try and manage these funds using one AIM program, then making choices as to which fund(s) to buy or sell. I won't need to track stock prices just overall stock value which I will be bringing in from the spreadsheet I use to track my investments now. The reason for this is I'm looking to take advantage of any runup in prices to take profits and invest that cash on drops. Previously, I had no problem buying on dips, it was the taking profits that was an issue. Being an income investor, you are sometimes locked into the mindset of not selling as it will reduce your income unless you can reinvest at the same or higher current yield. When I shared my plan on another board, I was told I should select another fund as it was less volatile than one of the ones I was going to use. They didn't understand it when I told them I wanted the volatility.
Good afternoon ZG,
A couple of thoughts came to mind as I read your note and about your plan.
- AIM is generally quite efficient at "timing" when $$$ should go into expanding your share inventory. With that in mind, changing your dividend distributions to be Cash rather than reinvested into more shares might improve things a bit. It's not a lot of difference, but I like efficiency in the Purchasing Department and automatic reinvestment is okay but somewhat brain dead like Dollar Cost Averaging. Instead, AIM will correctly say, "Now's the time to put those dollars to work."
- Closed End Funds move to a greater degree in amplitude of share price compared to an ETF or mutual fund of the same makeup. That gives AIM a greater chance to opportunistically trade that CEF position. That's good news. AIM just might be selling shares when the CEF is trading at a 'premium' to NAV and might be buying when it's trading at a discount to NAV.
- Generally I use a fixed 'ceiling' of cash for bond funds. Jumpy long term bond funds I'd assign a 30% max cash ceiling where shorter term bond funds I'd probably assign 20% or maybe just 15% max cash. When the position is maxed out on cash, instead of selling any more shares, I'll do a 'vealie' (https://web.archive.org/web/20120811055900id_/http://www.aim-users.com/diction.htm#q7) and let the risk run a bit until the cash is diluted enough to justify a trade. (30% diluted to maybe 27%, for instance)
- I've started accounts with zero cash and let the markets and AIM build a cash reserve over time. It can work. Using a bond fund as the initial reserve and letting the distributions build in the cash column is a workable idea. With luck you'll not ever have to sell any of the bond fund to buy in the equity fund. If you do, chances are the bond fund will not tumble as quickly as the stock fund, so it should work out. At worst, you'll be stuck with your long position in the first down sweep of a bear market like essentially all investors not using AIM. After the first bullish period you should be able to get adequate funding of your cash reserve that you'll not really ever look back.
Hope this helps,
OAG Tom
Hi, AIM would certainly give you more disciplined approach. repeatable and consistent approach to manage positions. And I think you wouldn't worry about optimizing it any more once you transition to AIM. I have been using AIM for a few years now and I can say that it really helped my investor psychology in 2022 and 2023. I was calm and waiting for AIM to give me the go ahead to buy and sell. Not worrying about what the market would do and if my timing was right or not. And now that we are in 2024, I can say that my portfolio performance was one of the best I can remember. My suggestion would be to follow v-wave for your cash/equity ratio. If you are using preferred stock as your cash reserve, you just need to make sure you are mentally ok to sell and buy more equity when AIM gives you the signal. It may be hard to do if they are also down when you need the cash. If you are currently in profit on your positions, it should be easy to sell and raise cash. If not, you can build your cash position over time if you are still contributing. That is what I did for a while on some of my positions that were under water and it worked out ok.
Here's the first of the AIM portfolios for the year end:
U.S. Sector ETF Portfolio..............
Cash ticked up slightly in December with a few sales. It's 12% of total portfolio value currently.
The overall portfolio finished at an all time high since starting it in 2009.
All 12 ETFs in this portfolio finished 2023 at or above their 26 Week Moving Average Prices.
Mr. Lichello's AIM manages each sector as a separate AIM engine. The histogram shows the composite.
Best wishes,
OAG
Happy New Year Jon,
The v-Wave is has been waving for some caution a bit in the shorter term and is borderline cautionary now for the 3-5 year end of things, too.
It continues to offer good guidance for us and especially for those using Mr. Lichello's AIM.
I sometimes imagine having him join us for a roundtable discussion. We would show him what we've done with his brain child and he'd comment on our variations on his theme.
As we close out 2023 with pretty good returns we're also closing it with a higher v-Wave reading for 3-5 year risk than we started. I guess that is to be expected with the good overall market returns. Earnings haven't been keeping up with the share price rise over the year. Right now the Value Line P/E shows 17.7 but 12 months ago it was at 16. If we take that as a percentage, that's a 10+ increase in P/E. Subtracting that from the NASDAQ Composite's gain of 43% YOY we might consider the gain to be around 33% with equal earnings relative to price. The same would be true of the S&P500 as well, but to a smaller degree. I guess we could consider this market to be the same as a year ago but more pricy. For fun, let's call it market inflation.
Looking forward, I guess we just have to assume that future appreciation potential is less than it was a year ago. That doesn't mean the markets will go down, but that they will struggle harder to go up from here. Thanks again for another year of v-Wave reports, and friendship here on the AIM BB.
Best wishes for the New Year,
OAG Tom
Hi. A new AIM user but not new to AIM. I bought the very first book back in the 70's but was never able to put an investment program in place. For a long time I had the typical 401K at work. Now I am retired with that 401K converted to an IRA and have it set up to produce dividend income. However, I have this itch to take a portion of my portfolio and convert it into an AIM managed portfolio within my income portfolio. I reinvest about 70 to 75% of my dividends and distributions but on some of my equity focused CEF's I am not satisfied with just watching the price rise up, then fall, buying on dips but not selling. I am growing my positions on the dips but feel I can generate better performance with the disciplined selling that an AIM managed portfolio brings. Of the CEF's that I am currently invested in, I want to manage these with AIM: ADX, USA, possibly ASG. At some point, I may sell out of some of my other equity CEF's and move everything into the AIM group. For cash, I plan to use pinned to par preferred shares where the current yield is 9 to +10%. These are stocks that are past their call date, have a floating coupon rate and will stay close to or over the par value which is $25. I'm going to start with a 65/35 stock to cash ratio. So, if I have say $15,000 invested already invested in USA and ADX, I would just designate $5250 worth of the preferred stock I am already invested in as reserved to use with my AIM portfolio. Kinda complicated I know but I don't want to sell anything to actually generate cash in starting this up and I can keep track of the AIM portion of the preferred stock value on my AIM spreadsheet. I know this may not be the way most investors here would use AIM but sometimes I have felt that I have let money slip away by not selling when I should have then I just ride the price down. I do buy in on dips using my divs but just feel I am missing out on taking some profits to have more to reinvest. I would be interested in thoughts or suggestions, especially if it looks like I am missing out on something.
HAPPY NEW YEAR!
VWAVE 3.0*
Suggested Starting Cash Value For New AIM Accounts/Positions
Individual Stocks
High Risk: At or above 51%
Neutral: Between 37 and 50%
Low Risk: At or below 36%
Diversified Funds
High Risk: At or above 34%
Neutral: Between 25 and 33%
Low Risk: At or below 24%
_________________________
Week of January 5th
_________________________
Short Term (18 Months)
Individual Stocks: 80% (Up 5 from previous week)
Diversified Mutual Funds or Portfolio: 53% (Up 3 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 49% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 33% (Unchanged from previous week)
Oscillator: 3.91 (Down .33 from previous week)
NOTE:
One year ago.
Short Term (18 Months) was 30% for Individual Stocks.
Short Term (18 Months) was 20% for Diversified Mutual funds or Portfolio
Long Term (3-5 years) was 43% for Individual Stocks.
Long Term (3-5 years) was 29% for Diversified Mutual Funds or Portfolio
*See posts #44585 and #44588
I may scale it back to MVV (mid caps), QLD or SSO. The 3x from my backtests have been good but it is very volatile.
I would be careful with the 3X funds with AIM.
The 2X funds work well with AIM
Toofuzzy
Looks like from AIM-HI in the book it states that the minimum action must be at least equal to your SAFE value.
Starting my AIM at 60/40 in a few leveraged funds like TQQQ, UPRO and SOXL with $50K in one account and $30K in another.
I'm using the AimBare Excel spreadsheet and using "Starting Buy and Sell Safe %" at 10% per Mr. Lichello's book.
I'm messing around with the Minimum Trades for number of shares and minimum trade. Has there been a recommended default setting? I'm thinking 10% of 100 shares, which would be minimum 10 shares and $0 minimum trade.
MERRY CHRISTMAS!
VWAVE 3.0*
Suggested Starting Cash Value For New AIM Accounts/Positions
Individual Stocks
High Risk: At or above 51%
Neutral: Between 37 and 50%
Low Risk: At or below 36%
Diversified Funds
High Risk: At or above 34%
Neutral: Between 25 and 33%
Low Risk: At or below 24%
_________________________
Week of December 29th
_________________________
Short Term (18 Months)
Individual Stocks: 75% (Up 5 from previous week)
Diversified Mutual Funds or Portfolio: 50% (Up 4 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 49% (Up 1 from previous week)
Diversified Mutual Funds
or Portfolio: 33% (Up 1 from previous week)
Oscillator: 4.23 (Up 1.06 from previous week)
*See posts #44585 and #44588
Good morning Darth and Welcome,
We look forward to hearing of your efforts and successes with AIM. I've been at it since January of 1988 and have been talking about AIM on various bulletin boards since Al Gore invented the Internet. I first read Mr. Lichello's book in 1986 and modeled my own portfolio for the year 1987 - an interesting year in the markets. Mr. L's AIM kicked my butt that year and so starting the following January, I switched over to AIM 100%. (well, some Twinvest activity also was happening)
Don't miss the collective Q&A page here:
https://investorshub.advfn.com/AIM-"In-Depth"-Q&A-992
...and the two Value Line Model Portfolios that seem to give us some interesting choices for fuel for our AIM engines:
https://investorshub.advfn.com/A-I-M-Value-Line-Stocks-aim_VL-1010
Best wishes for the Holidays and the New Year,
OAG Tom
Hello!
I just wanted say that I just found this board after googling AIM randomly today. As a longtime AIM user; which in turn has been very profitable; it's good to see the AIM discussion going! I never even knew about this board; so glad to have found it - I am finding JDerb's VWave interesting.
Cheers.
Thank you, Tom. very helpful.
I have at least 3 stocks I have stopped buying because
1) I didn't have the funds anyway.
2) They kind of crashed and burned.
PLUG, STKL, and MPW
Since I had IRM called away from me with a hefty price increase some more cash hit my account.
I decided to add more shares of MPW and nearly doubled what I own.
Toofuzzy
Hi J20, Re: Contributory IRA history.............
Here's a bit more detail on the simple IRA to which I contribute.
Vanguard's growth ETF is what's the principal driver here. The Flexshares income fund is where most of the cash is stashed along the way.
The biggest problem with VUG is that currently it's around $300/share. So, in the early days a single share buy sent the account heavily into the "growth" side. Now that there's some accumulation, a single share doesn't wreck havoc with the Equity/Cash ratio. During VUG's slump of 2022 and into 2023 I was able to buy shares consistently while the price/share was below the 26 week Moving Average. Since early 2023 the cash has been rising slowly. It's currently right around 20% of the portfolio value as of the end of November.
The RAVI cash side of the account looks like a pretty dramatic move on occasion, but if you look at the scale, you'll see the big dips weren't really very big in price/share. Just today I took surplus cash (from contributions) and bought some more shares of RAVI at $74.86. It's currently earning at an annual rate of 5.24%. So, it's helping all on its own.
The additional shares bought in VUG during the downturn of 2022 kept the total value (first graph) pretty constant even though the share price declined by nearly 1/3. Dollar Cost Averaging would have been overpaying during the 2020 thru 2021 rally where Twinvest only occasionally added shares here. Then, in 2022 the emphasis shifted and allowed Twinvest to be adding shares as the price declined. I'd have to 'run the numbers' but I think Twinvest might be ahead of DCA over this time frame.
Hope this helps,
Tom
Thanks JD, Re: v-Wave rising risk profile......................
It appears that much of the shorter term appreciation potential has been 'used up' with this most recent rally.
The longer term v-Wave remains below its worrisome "Caution" level by two points currently. That's also two points above its Median level.
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 December 22nd
_________________________
Short Term (18 Months)
Individual Stocks: 70% (Up 3 from previous week)
Diversified Mutual Funds or Portfolio: 46% (Up 1 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 48% (Up 2 from previous week)
Diversified Mutual Funds
or Portfolio: 32% (Up 1 from previous week)
Oscillator: 3.17 (Up 1.15 from previous week)
*See posts #44585 and #44588
Hi J20, Re: Questions.................
1) The composite 10 stock portfolio is an IRA account and the cash is held in the same overall account structure.
2) Thanks for the simple IRA comment. I use a slightly modified Twinvest with the incoming deposits and the indicated investments. Instead of Mr. L's original 75/25 split between equity and cash, I started with 80/20 to be a bit more aggressive. So, my Twinvest Code is based upon that more aggressive split.
3) When I retire and are no longer contributing to that simIRA, I'll convert it to a Roth, probably. (I'll have to check on that)
Have a great weekend and happy holidays,
OAG Tom
Hi Tom, do you keep the composite 10 stocks in one account with combined cash reserve? Congrats on the simple IRA. Impressive growth. Is that only managed by twinvest? do you plan to convert it to AIM?
Jeff-
Hi IW, Re: ........Feels quite weird.............
Me, too. But I could get used to selling again if it continues!
I had three sales this AM and one 'vealie.' It makes me smile.
Thanks once again, Mr. Lichello!!!
Here's my broker's stock as AIM'd by me since AMTD was merged into SCHW......
Lastest sale was a 40+% LIFO and the position is up 100% since the merger.
Best wishes,
OAG
My systems are screaming SELL SELL SELL.
Feels quite weird.
Will
VWAVE 3.0*
Suggested Starting Cash Value For New AIM Accounts/Positions
Individual Stocks
High Risk: At or above 51%
Neutral: Between 37 and 50%
Low Risk: At or below 36%
Diversified Funds
High Risk: At or above 34%
Neutral: Between 25 and 33%
Low Risk: At or below 24%
_________________________
Week of December 15th
_________________________
Short Term (18 Months)
Individual Stocks: 67% (Up 2 from previous week)
Diversified Mutual Funds or Portfolio: 45% (Up 2 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: 2.02 (Up 1.24 from previous week)
*See posts #44585 and #44588
November, 2023 Close for my various AIM accounts:
10 Stock Composite Portfolio
(AB, CRSP, DOW, EPD, GNRC, JBL, MESA, PRIM, SCHW, WPC)
International "Style" ETF Composite Portfolio
(DEM, DGS, DIM, DLS, DOL, EFG, PIZ, SCHC, VNQI)
U.S. Business Sector ETF Composite Portfolio
(RSPC, RSPD, RSPF, RSPG, RSPH, RSPM, RSPN, RSPR, RSPT, RSPU, XLG)
Contributory IRA "Twinvest" Portfolio
(VUG, RAVI, Money Market Fund)
November proved to be beneficial in the recovery of earlier gains. All portfolios are "up" for the Year-To-Date. All accounts Cash Reserve levels range between 82% and 88% at the close of November.
Mr. Lichello continues to steer a proper course through these tricky seas.
Best wishes,
OAG Tom
Congrats Firebird.
I am surprised you cash level is that high at this stage of the market cycle.
Hi Steve, Re: Punchbowl................
I was 21 years old and had just taken my physical for the Draft when I first saw it. It was quite moving for me.
Best wishes,
OAG Tom
Cash and Stock.........
2 sells this morning, 51% Cash and 49% Stock...... Right between the short and long term recomendations... Profit from your ideas!
That's a fantastic site for a cemetary!
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 8th
_________________________
Short Term (18 Months)
Individual Stocks: 65% (Up 3 from previous week)
Diversified Mutual Funds or Portfolio: 43% (Up 2 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 45% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 30% (Unchanged from previous week)
Oscillator: .78 (Down .07 from previous week)
*See posts #44585 and #44588
RE: Punchbowl Crater
Thanks Tom!
I was not aware of it, but it explains that hint.
I just recently found my secret decoder ring. It seems to be helping. I just sold some GEO and deep in the money calls( in lue of owning the stock ) I bought on WPM.
Toofuzzy
Thank you, Make It Jake! Post # 30219 was exactly what I needed. very helpful.
Hi Jeff - Not JDerb, but I can answer part of this.
The VWave just uses the VL Appreciation Potential - Next 3-5 Years value. The calculation is shown in one of the stickied posts (#30219). However, the Short Term VW value is dependent on the 18-Month value, which I think has been published for only 3-4 years now -- a different data set. The risk regions are related to the "classic" VWave values. It's probably not a perfect measure, but it works surprisingly well to help guide how much cash you should try to have on hand.
(I don't know how the Short Term value is calculated ; it doesn't seem to use the calculations from the stickied post above. @JDerb / @OldAIMGuy - if you could use a backup, I calculate VW weekly and would be glad to fill in if it's ever helpful ; all I'd need is the formula for the Short Term value.)
The diversified value is just the "raw" VWave divided by 1.5. The rationale is that with an ETF or mutual fund you're probably safe keeping a lower cash reserve than for a single stock. Beta doesn't come into it, so far as I know.
Hi JDerb, do you only use Value Line "Appreciation Potential - Next 3-5 Years" data for VWAVE? Is there any other data/parameter used to create VWAVE? Also, what is the difference between Short Term and Long Term? does it use the same VL data with different time durations?? btw, what defines high risk, neutral and low risk diversified? do they refer to beta? thanks, Jeff-
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 1st
_________________________
Short Term (18 Months)
Individual Stocks: 62% (Up 12 from previous week)
Diversified Mutual Funds or Portfolio: 41% (Up 8 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: .85 (Up 1.33 from previous week)
*See posts #44585 and #44588
National Cemetery of the Pacific - Punchbowl crater in Honolulu.
It is a humbling place to visit. I was 21 years old and 1-A Draft status when I was last there. I was awaiting a letter from my Uncle Sam as to what uniform I would be wearing for the next couple of years.
As it turned out, the draft bill stalled in Congress and they never got to my lottery number. That was a lottery I "won" by losing!
Thanks for asking,
OAG Tom
'Nobody drinks Punch from a bowl'?
1) descendants of royalty are still around.
2) milwaukee to Dallas to Honolulu.
3) yes, I thought Jon's idea was interesting, too.
The weather is better than Wisconsin. This is my first time back since 1971.
OAG
Congrats Will!
I didn't know that Hawaii still had a monarch.
But at least I wasn't alone in guessing Belize.
Jon: You used ChatGPT? Clever, but I guess that 'intelligence' is more 'artificial' than we thought!
Tomaso: You and Jane musta taken a wrong turn in Albuquerque! ☺️
DING DING SING DING!!!!
WE HAVE A WINNER!!!
A secret Decoder is being prepared for you!!!
OAG Tom
A pure guess based without any logic Hawaii except that it is warm, not close to the continent, travel between cities is not by car.
All I've got so far.
Will
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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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