Advanced Automatic Investor

[Firebird400]

Hi Mark,
My A. I. is not logging in... Internal Errors #713 and #380, Thanks , Ken

[WinAudit]

tks, will do.

[Toofuzzy]

Winaudit

Check out the other Aim board. That is where most of us hang out.

Reguarding trading costs.

Cost of stock is + commission

Sale of stock is - commission

Dont make it more complicated than it needs to be.

The only rick with Aim is an individual stock going to ZERO ...... Use ETFs instead. They are much safer with Aim

Not Always
Toofuzzy

[WinAudit]

Read Lichellos' 4th edition book years ago and never implemented it. "Too busy earning a living to take control of my investments" is the excuse I tell myself.

I need to do better than buy and hold. Like it or not, I'm a portfolio manager of 401k, IRA, Roth and MM holdings...

I was surprised to find this dedicated group of AIM users. I've dusted off my book and made my excell sheet. No need to create a C++ program for this model, it's so simple. I will be sifting these posts for your improvements to Lichellos' method.

Questions for you:

1). All of the AIM charts/sheets I've seen leave out the transaction costs of market orders. Why? Wouldn't you want to include these trading costs? Except for retirement accounts, there are transaction costs that are detrimental to earnings.

2). Lichello said his system was superior because during periods where stocks were lackluster, paying low dividends or topping out, the cash portion always earned 5-6% interest to supplement the portfolio earnings. Clearly this is no longer true. Anyone find a safe place to hold their cash that earns more than 1% these days?

3). In your opinion, which tweak to AIM provides the best results?

TKS, WinAudit

[Firebird400]

Mark,
My A.I. 3.0 Service pack 8 will not work... Says it's not registered... I emailed you at support @ A.I... Thanks, Ken

[OldAIMGuy]

Hi Ken,

I'll leave the answer to Stock Splits to someone else as I don't have a clue! If you find out how, post an instruction note here.

Best regards, Tom

[kb_ranch]

Thanks so much for your Reply OldAIMGuy.....Do you know how Automatic Investor Software handles, or deals with Stock Splits? The ETF that I'm using maybe getting to the point of doing a split something like a 3:1 split. Do I just do an e!Update and the software will configure the Buy and Sell points automatically at the new lower price range, or am I going to have to figure it out manually? I hope it can figure it out automatically, as this will be a first time my EFT has split since using the Automatic Investor Software.

Thanks for any Help you can give me.
Ken Bradley

[OldAIMGuy]

Hi Ken,
To reduce the Hold Zone size (distance in price between a buy and a sell) you'll need to reduce both the Buy and the Sell SAFE values. After that you can reduce the value of the minimum trade size and reduce the minimum # of shares per trade.

All of these will help narrow the gap between the Buy and Sell recommended prices.

Setting SAFE to zero and min shares and dollars to 1 each would give you the smallest range. Those would be impractical settings, but you can check it to understand the limit.

Reducing the size of the Hold Zone should increase the number of "round trips" trades you get on many stocks, but you need to remember that it also reduces the LIFO gain per round trip. The sweet spot occurs when you get the most round trips at the largest LIFO gain.

[kb_ranch]

Does Anyone Know Anything About Tweaking Automatic Investor? What I'm trying to do is close the gap between the Buy and Sell Points. All the Tweaking that I've tried just moves the to points in unison, i.e. they both move in the same direction. I want them to move opposite of each other. Is this possible?...it doesn't seem like it is. If someone knows a trick to do this please post, or better yet could you e-mail me @: [e-mail], thank you for your help.
Ken Bradley

[kmsb]

Thank you so much for the reply...
will look in to this as per your instruction and get back...

KMSB

[Toofuzzy]

Anything I suggest other than standard settings would be with 20 20 hindsight with the advantage of data mining.

So try 50% cash, 10% buy and sell safe, and 5% min buy, which are the standard settings.

There are other reasons for Aim other than absolute returns.

Would you be willing to sell or hold asit went up?

Would you be willing to buy more at the bottom and not have sold out?

Toofuzzy

[kmsb]

Can AIM beat this stocks B&H results?
if yes kindly share the AIM settings for the same!!

real stock prices

77.600
80.8
89.2
92.3
113.9
126.6
134.85
150.8
143.15
140.7
151.55
167.55
179.9
189.65
184.95
206.8
217.4
230.9
249.05
252.7
247.1
168.75
170.3
155.65
114.25
127.25
134.15
120.65
67.9
61.3
75.15
61.2
51.3
49.9
77.25
125.6
148.4
159.65
167.25
204.95
236.55
252.85
267.05
249.2
236.6
254.85
285.5
287.85
269.15
294.95
311.1
351.5
359.3
306.05
312.7
262.95
256.45
309.9
305.1
300.35
311.9
310.65
280
272.5
314.5
272.45
238.6
329.95
345.7
367.3
350.35
330.1
339.15
364.25
329.85
382.2
411.45
442.4
464.2
522.05
472.5
428.55
501.4
487.45
461
323.8
243.25
287.5
368.8
368.7
370.1
307.95
304.75
413.5
440.7
569.45
541.9
541.05
571.65
558.5
684.15
710.4
741.65


Thanks
KMSB

[kmsb]

Hi advanced AIM traders...

here is the real stock data for which can some help me to configure AIM settings to beat B&H method????

77.600
80.8
89.2
92.3
113.9
126.6
134.85
150.8
143.15
140.7
151.55
167.55
179.9
189.65
184.95
206.8
217.4
230.9
249.05
252.7
247.1
168.75
170.3
155.65
114.25
127.25
134.15
120.65
67.9
61.3
75.15
61.2
51.3
49.9
77.25
125.6
148.4
159.65
167.25
204.95
236.55
252.85
267.05
249.2
236.6
254.85
285.5
287.85
269.15
294.95
311.1
351.5
359.3
306.05
312.7
262.95
256.45
309.9
305.1
300.35
311.9
310.65
280
272.5
314.5
272.45
238.6
329.95
345.7
367.3
350.35
330.1
339.15
364.25
329.85
382.2
411.45
442.4
464.2
522.05
472.5
428.55
501.4
487.45
461
323.8
243.25
287.5
368.8
368.7
370.1
307.95
304.75
413.5
440.7
569.45
541.9
541.05
571.65
558.5
684.15
710.4
741.65


Thanks
KMSB

[SFSecurity]

RE: Opportunistic Rebalancing...

Hi Toofuzzy. I came across the following article about this and it seems to explain it quite well.

http://www.tdainstitutional.com/pdf/Opportunistic_Rebalancing_JFP2007_Daryanani.pdf

Warmest Regards,

Allen

[OldAIMGuy]

Hi Mark, Re: AIM web pages......................

I appreciate the extra effort you're putting into the resource. THanks. I look forward to seeing the results.

Best regards,

[aptus]

Hello Byculla,

No, backtesting will not be in the new version of Value Stock Selector. Unfortunately the amount of data required to backtest VSS makes it difficult to include this function and still maintain a low price (other analysis programs that include backtesting charge $2,000 to $5,000 per YEAR for this functionality).

However the new version allows you to save your previous analysis results and then scroll through them using the next/previous buttons.

It also allows you to filter on dividend yield (which was requested by users of version 4.0) and includes the company name and industry in the results (another request from v4.0 users).

I've also added a maximum filter to the rating, moat strength and estimated return (apparently some v4.0 users wanted to use VSS to only find bad stocks).

Finally, it includes a watch function that allows you to enter symbols along with minimum and maximum ratings and moat strengths and will alert you if that stock moves outside your selected ranges.

The interface has also been redesigned to use colours so it is easier to interpret results.

Regards,
Mark.

[aptus]

Hi Tom,

I successfully transferred the domain name many weeks ago and started the website refresh then (I thought I'd give it a more updated look although the information would be the same).

Unfortunately I got tied up doing a few other things. So I think it will be a few more weeks before I get the site is up with the new look.

Regards,
Mark.

[byculla]

Will back testing ability be included in the new improved version ?

[OldAIMGuy]

Pinging Mark Hing...................

Any word on when the AIM-Users.com domain and web site might be up and running again?

Thanks,

[aptus]

Value Stock Selector v5.0 needs Beta testers.

If you'd like to beta test the latest version of VSS, please send me an email.

I'm looking for 3 to 5 people who will put it through its paces and test it thoroughly. As usual, Beta testers will receive a free copy when it's released.

There are quite a few enhancements that make v5.0 more powerful than v4.0.

Here are a couple of screen shots.



The main Fundamentals Analysis screen.





The configuration screen.



Let me know if you're interested.

Thanks,
Mark.

[e-mail]

[aptus]

Hi Tom,

I hadn't actually thought of that.

Off the top of my head, I think if you held one stock (or a group of highly correlated stocks that you think of as one) and cash, then AIM and Opportunistic Rebalancing (OR) are somewhat related.

However AIM doesn't have a neat way to rebalance between multiple stocks (just between equity and cash).

On the flip side, the OR threshold and tolerance bands are static whereas AIM has a dynamic Portfolio Control. So AIM "rebalances" back to a moving policy benchmark while OR rebalances to a static policy benchmark (with some wiggle room).

I actually think they can complement each other nicely. AIM rebalances individual cash/stock portfolios (the micro level) and OR rebalances multiple AIM-managed portfolios (the macro level).

So AIM takes advantage of an individual stock's volatility and reduces risk at that level while OR takes advantage of uncorrelated AIM-managed portfolios (the holistic view).

And since individual AIM portfolios will usually hold cash, it can make rebalancing easier since it may not be necessary to actually sell individual stocks to rebalance at the Macro level.

On the other hand, Macro rebalancing will require us to interfere with AIM when OR tells us we should rebalance. I don't view this with too much concern because I personally don't have an issue with making non-AIM-directed sales/purchases and manually adjusting the Portfolio Control appropriately if there's a good reason to do so, however I'm sure some AIM purists would not like the idea.

Thanks for bringing this up. I think there could be a few different ways in which AIM and OR could interact. At the end of the day they both seek to control risk and buy low and sell high -- just at different levels.

Mark.

[OldAIMGuy]

Hi Mark,

While a bit more complicated, isn't AIM a form of Opportunistic Rebalancing?

Best regards, Tom

[Toofuzzy]

>>>>I didn't say anything about doubling returns. Perhaps you read the following sentence and thought it was referring to returns...

"The Daryanani study showed that an Opportunistic Rebalancing strategy more than doubled the calendar rebalancing benefits over a wide range of market conditions." <<<<

Yeah I guess that is what I saw. Like I said it doesn't seem to make much difference to me and by his reference calendar year rebalance doesn't help much either (if .25 is a doubling of improvement then calendar year rebalancing is .25 better than not rebalancing ?) I personally think the improvement of rebalancing is much greater than that compared to dollar cost averaging or buy and hold. My thoughts are just subjective though.

I think the important thing is to rebalance and mainly between stocks (funds) and fixed income either by using AIM, calendar rebalancing, or Opportunistic Rebalancing. I don't know how to make sense of his analysis though. What am I missing?

Toofuzzy

[aptus]

Hi Toof,

I didn't say anything about doubling returns. Perhaps you read the following sentence and thought it was referring to returns...

"The Daryanani study showed that an Opportunistic Rebalancing strategy more than doubled the calendar rebalancing benefits over a wide range of market conditions."

Daryanani stated this in the Executive Summary of his paper.

Regarding tax sheltered accounts, I agree these types of accounts would be best. However not all investors are U.S.-based and there are countries that don't have the long-term/short-term tax rates like the U.S. has.

In addition, Opportunistic Rebalancing can make sense even for U.S.-based investors using taxable accounts.

First, if you've been buying shares over time, some of these shares could have been purchased more than a year back. These are the ones you can sell when you rebalance.

Secondly, Daryanani talks about tax costs under the section, "Costs of Rebalancing" in his paper. So in some situations it makes complete sense to rebalance this way in a taxable account.

The main reason I like this method is because it's based on price rather than dates. And since price is really what creates a portfolio's imbalance, it's logical to use it as the prime determiner on when to trigger a rebalancing event.

Regards,
Mark.

[Toofuzzy]

Hi Mark

I read the original source article and he claims only a .25 to .3 basis point advantage. How do you go from that to doubling returns?

While in a tax sheltered account I can see it as another valid way to rebalance, I do NOT see it making sense in a taxable account where you would want to wait a year and a day to take the gains when you rebalance to make the gains long term.

Toofuzzy

[aptus]

In case you haven't visited the Value Stock Selector site recently (or don't know about it), I've posted an article that explains the Opportunistic Rebalancing strategy.

You can find it here --> http://valuestockselector.com/investment-articles/opportunistic-rebalancing-ultimate-rebalancing-strategy

I also maintain an investment blog at the site here --> http://valuestockselector.com/blog

Regards,
Mark.

[1step]

Hi Mark

thank you

1step

[aptus]

Hi Neko,

My apologies for the delayed reply. I haven't been on iHub for a few months now.

I'm still working on the new Pragmatic Investor 3.0 software (which is cloud-based software that runs in any browser and on any device with a modern browser -- such as smartphones and tablets).

However this is not yet available.

The previous version (2.0) is not for sale any longer.

I'll post here once PI 3.0 is released.

Regards,
Mark.

[aptus]

Hi 1step,

VSS will run on any intel-based Mac with an appropriate emulator (e.g. Parallels, VMWare or Oracle). You can also install Windows using Bootcamp and VSS will run.

However since VSS is purely Windows based, it won't run on OS X.

There is a scaled down version of the VSS single stock analyzer here --> http://valuestockselector.com/online/

Regards,
Mark.

[aptus]

Hi 1step,

I recommend waiting. It's not very often in this type of market that excellent stocks with strong moats (i.e. 5 or 6) appear at the price required for the default Margin of Safety.

One change in the latest Service Pack (SP3) of VSS I made was to add an extra filter. So if you are running SP3, you can change the Minimum Rating to 70 (however I recommend you leave the Minimum Moat Strength at 5, the Margin of Safety at 50% and the Worst Case Return at 12%).

I use the 70 minimum rating and I check the "Show when current price greater than Buy Price" box on the Configuration window. This lets me see if the current price is near the maximum buy price.

Regards,
Mark.

[Toofuzzy]

How does delaying AIM trades by using a 13 and 30 day moving average crossover compare?

If you just used a MA crossover to trade you would get wiped sawed but you can use the crossover to delay the AIM trades to the recoveries or the start of a pull back.

Toofuzzy

[ls7550]

Active investors cost themselves 1.2% by buying and selling at the wrong times. Financial advisor's tend to spend their time trying to convince investors not to follow their emotions - but to be more Spock like. AIM has a tendency to lead you towards being more Vulcan than human.

[ls7550]

Around four years ago I ran some extensive tests of AIM over a range of periods and assets and came to the conclusion that if you weighted to the same average stock/cash weightings as what AIM averaged over the investment period and periodically rebalanced (yearly or at bands such as +/- 40% i.e. start with 25% weight and rebalance back to 25% target weighting if the weighting declined to 15% or less or rose to 35% or more) then you came out with similar overall results. In that context AIM might lose out in practice as it tends to trade more often (higher trading costs). The plus side however is that AIM automatically navigated to reasonable weightings - whereas that average weighting couldn't have been known in advance for the fixed weighting approach.

If for instance it was more appropriate to initially weight to say 40% stocks/60% cash fixed weightings over the investment period than it was to weight to 50-50, then AIM would tend to have averaged closer to 40-60 weightings over the investment period.

MPT efficient frontier is a conceptual thing. The efficient frontier is dynamic and can't be predicted in advance, only measured with hindsight. AIM has the tendency to navigate close to the efficient frontier. Whilst (generally) there will be more (and less) rewarding alternatives, being close to the efficient frontier provides the better risk adjusted reward.

Clive.

[1step]

Hi Mark


advanced autopmatic investing also works on the mac. Mac users can now use your program.

1step

[1step]

Hi Mark

Though few stocks show up on the screen your program is very usefull.. It gives me entry prices.
etc. when i use the single stock option.

I read my past posts and din't mean to imply your program isnt productive. It is that everything is out of whack. IN other times the average yielsd of sp was 4 % not like now about 2%. To me it means everything is over bought. Your program is just reflecting and warning the buyer to be aware. I also like the asset allocation function.

I just wish times were more normal.




1step.

[1step]

vss on a mac

Hi Mark

I was able to run vss on a mac. I down loaded oracle's virtual box. Installed xp on it . down loaded vss and ran a scan .Even on a mac only two shares turned up suitable for your system. Any way people can run your program outside of a pc.

1step

[1step]

HI Mark

With VSS i still get 2 or 3 recommendations. Should I set different paramaters or just wait till there is more selection?. If different parameters then what values?

What do you do?

1step

[OldAIMGuy]

Hi B, Re: Besting the SPX......

My long term test of using AIM with SPY showed significant improvement over Buy/Hold in total return and especially on a risk adjusted basis. My test was for most of the first decade of the New Millennium. I don't have the numbers handy, but at the time I ended that test, SPY was down about 15% for Buy/Hold and AIM's management of SPY was showing a positive 15%. Don't remember any specifics but that was the general story.

Even with its lower volatility compared to business sector ETFs, SPY offered enough movement during 2000 through 2010 to have AIM improve total return.

So much depends upon the start and end date that much of the idea of besting an index with a "system" is negated. In general, if a stock or fund drops about 50% and recovers to full value, AIM will improve return on that investment about 25% to 30% over Buy/Hold. Each cycle adds to that improvement. In smaller cycles AIM will add less, obviously.

Volatility capture is just one aspect of investing. There are many ways to work on it with AIM being a very structured and consistent one.

Best regards,

[byculla]

So it would appear that AIM provides almost the same perfomance as B & H but at a lower risk. No 20% p.a. advantage.
Is there a management system that beats the S&P as that is the oft stated standard?

[Toofuzzy]

>>>> AIM does not appear to have an advantage during upward periods<<<<


Well DUH!

First if you are not 100% invested in stocks at the bottom you can't possibly perform as well as buy and hold.

Second AIM has you selling as the market goes up so you are not holding as much stock at the top.

That is like saying AIM does better as a stock declines compared to buy and hold. Well of course it does.

First you are starting with 50% in cash so you have invested to lose and second you are buying more at lower prices.

You need to compare AIM to a diversified portfolio thru at LEAST one market cycle.

Toofuzzy

[OldAIMGuy]

Hi M, Re: Risk and Return, further comments.........

This comes from Howard Marks' book, "The Most Important Thing - Uncommon Sense For The Thoughtful Investor"......
(ISBN: 978-0-231-15368-3 )

High absolute return is much more recognizable and titillating than superior risk-adjusted performance. That's why it's high-returning investors who get their pictures in the papers. Since it's hard to gauge risk and risk adjusted performance (even after the fact), and since the importance of managing risk is widely underappreciated, investors rarely gain recognition for having done a great job in this regard. That's especially true in good times.....

Best regards,

[OldAIMGuy]

Hi M, Re: AIM performance compared to Buy and Hold........

One needs to understand other aspects of investing besides total return. If Buy/Hold is 100% invested, for instance, then Buy/Hold is 100% at risk for whatever the market does. If AIM, on the other hand performs equal to Buy/Hold but does so with an average of just 75% invested over the same period of time, then it has had superior risk adjusted return even if the total return is the same.

There's also "Upside/Downside Capture" as a measure. If one is using AIM and consistently captures 90% of the upside moves of the investment while only capturing 75% of the downside moves, then again each cycle will put the AIM closer to Buy/Hold and with enough cycles, surpass buy/hold in total return and performance.

AIM is a very long term business plan for investing. It takes many price cycles to do its work effectively.

I hope this helps in your thought process. I came up with a method of gaining perspective on AIM vs Buy/Hold or Market Timing. It's is called ROCAR. (Return On Capital At Risk). It's acually return on average capital at risk for the length of the investment period. If one takes the total return percentage and divides it by the average amount that has been at risk, then one gets a risk adjusted return.

Let's say that Investment A returns 12% for Mr. Buynhold. Mr. AIM invests in the same Investment A but uses AIM as the guide over time to manage the risk of the investment. Mr. Buynhold is 100% invested for the total time frame, so his ROCAR is 12% divided by 1.00 which is still 12%. Mr AIM managed a 9% return on his AIM managed investment in the same security. However, he was, on average over the same time frame, only 70% investes. His ROCAR would be 9% divided by 0.7 or 12.85%. In other words, the same investment worked harder than Mr. Buynhold's over the course of time.

While you can't deposit ROCAR at the bank, it helps us to understand the risk adjusted return on the investment. Cash when not being utilized, is essentially giving us a risk free rate of return. So, if an investment in SPY turned a 93% total return for Mr. Buynhold, and Mr AIM turned in an 85% total return it appears that AIM failed the test. However, if it turns out that AIM only was 70% at risk on average and turned in a total return that was just 8 percentage points less that being 100% at risk, then which is superior?

The goal then is to achieve the best total return AND the best risk adjusted return. THis is true whether we're market timing, sector switching, AIMing or Lump Sum Buy/Hold. The market timer who turns in 12% but is invested 100% for only 80% of the time has a higher ROCAR than does Mr. Buynhold for the same return. Same with AIM. The system that provides consistently higher ROCAR for the same total return is the system that is truly winning.

Best regards,

[Maraplex]

Here are some back tests. Daily testing is recommended in the software, so I did both daily with default settings (improvements) and monthly with conservative settings (original). DD=daily default and MC=monthly conservative. BH=buy and hold. The leveraged ETFs, SSO and DDM began in July 2006 so that's were I started some of the testing. Tests started with $10,000 and assumed a $6 commission per trade.

7/1/06 to 1/11/13 (flat):
SPY: DD 32%, MC 31%, BH 32%
SSO: DD 0%, MC 44%, BH -1%
DDM: DD 22%, MC 56%, BH 22%
IWM: DD 31%, MC 35%, BH 31%
MSFT: DD 29%, MC 32%, BH 30%

1/6/03 to 1/11/13 (up):
SPY: DD 84%, MC 85%, BH 93%
IWM: DD 132%, MC 75%, BH 152%
MSFT: DD 28%, MC 34%, BH 29%

2/6/00 to 1/11/13 (flat):
SPY: DD 31%, MC 54%, BH 31%
MSFT: DD 32%, MC 57%, BH 32%

2/1/94 to 1/11/13 (up):
SPY: DD 258%, MC 119%, BH 331%
MSFT: DD 1302%, MC 216%, BH 1228%

The monthly conservative (original) setting showed a clear advantage during the first flat period for the leveraged ETFs, SSO and DDM. MC also showed an advantage during the second flat period. AIM does not appear to have an advantage during upward periods and because of multiple trades during these times, it also ends up with fewer shares along the way, as compared to buy and hold. However, the DD setting did do well with MSFT from 1994 forward, slightly beating BH.

There was one microcap stock that stood out from 20 others tested from 1/6/03 to 2/11/13:
MIND: DD 808%, MC 430%, BH 1006%, Aggressive 2589%. But, none of the others tested stood out like this using the Aggressive settings.

Perhaps someone can share their personal success story using AIM and give additional tips on how to maximize it.

[byculla]

Thanks for your revealing posting. The beauty of programs like AI that support backtesting is that they unemotionally support or debunk a methodology. There are many a management systems that sound logical and appear to be the acceptable Holy Grail in investing but it is only by proper backtesting that they can be confirmed or debunked.

Could you be more specific and post your various results so as to enlighten us all. There appear to be many AIM followers but I do not remember seeing any systematic analysis of item by item ie. etf's etc. ( no stocks as stocks depend very much on choice ).

AIM is a stock management program and daily, monthly, yearly are just data points. If it is doing it's job then it should be able handle any and in theory all the way down to even 1 minute data points. I suspect that many have accepted the logic of AIM without doing any rigorous backtesting. AIM might not hand you a loss but is it as good a management system as it could/should/would be ?

[Toofuzzy]

If you bought the S+P 500 in JANUARY of 2000 and held till now you are either losing money or just breaking even. AIM would have had you buy more into the dips in 2003 and 2009 ? and sell some and take profits in 2004 -3006 and during the last upturn. You would have made money with less risk and less emotion.

AIM is not meant and will not work if used DAILY. It is meant to be checked ONCE / MONTH

I find AIM is safer with funds and particularly indexes. They can NOT go to zero like individual stocks can as you buy more as they go down.

Forget all the "improvements" and try to understand standard AIM first. What other method can you use to invest with and not have a "realized " loss EVER ! (yes you will have unrealized losses as you are buying)

You can also buy LARGE, SMALL , FOREIGN, REIT, and you age in BONDS and just rebalance ONCE/ YEAR

Toofuzzy

[Maraplex]

Backteseting the AIM system with the AI software.

I recently started the AI free trial and want to commend you for developing this software. It is very versatile and much better than competitor products for AIM. I was very excited about discovering AIM and after reading all of the reviews about the Lichello book on Amazon, I thought it must be an incredible strategy. But, when I back-tested it using your software, I found disappointing results. I did many tests, some going back to 1980. Then I focused on the last ten years reasoning that the grand bull market was over during this time, there were very significant gyrations in the market over the last ten years, but in the end, the market rose during this time period. However, very few of my AIM tests were able to beat a buy and hold strategy for the same instrument using a “daily” setting. I tested index ETF’s, leveraged ETF’s, commodities, and many individual stocks, most of which were small cap and microcap with strong fundamentals and higher beta’s . Of my tests, maybe 5% of the AIM tests beat a buy and hold strategy for the same instrument. I tried the various strategies, Default, Classic, Aggressive, Medium, with and without various filters. The results were mostly disappointing, to the point where I am not sure I would even want to do this strategy for long term investments. If the market stayed sideways, like it did in the 70’s when Lichello developed it, then AIM would probably be superior. But, the moment the test endpoint is significantly above the starting point, the AIM system seems to become inferior. If my conclusions are incorrect, please show me. I’m now looking at the Value Averaging system which appears to consistently outperform the market and even has extensive research to back it up. However, the returns on this system are only marginally higher than a buy and hold strategy – but it has consistency. I’d rather do AIM and get higher returns as you have suggested – 20% sounds very good to me. What am I doing wrong?

[neko]

Hi Mark

I was curious if you ever got your pragmatic investor soft ware running. If not is an older version available?

Would I be able to purchase it?

Neko

[nagpada]

Couldn't agree with you more. It appears that in AI you have attempted to incorporate all the discussed moderfications. Most importantly the ability to back test these and optimise per input is supremely helpful.

Apart from the dissappointment that thus far I have not been able to get AI to work on my computer, something that I would very much like ( it gives an error upon launch ). All the discussions center around data points that are far apart i.e. day, week etc. One can get the same feel and faster feedback using closer data points i.e. 1hr., etc. Below 1hr. one encounters too much noise. I read that this data too is available free.

Does AI generate and plot a chart ? Have you or anyone else tried running AIM against renko etc. bars which give different picture of market action.

I encountered a trading software which relied on management to make it successful. Though only 1/3 of it's trades were winners, it,s management of them gave the software a positive expectancy. Now one of it's users coupled the software with range bars. In doing so he was seeing a different picture. His win % shot up ( shooting fish in a barrel was his description ) and coupled with the trade management this software offered his earnings were greater than others. A good trade management platform is a major positive. This management software is used by daytraders and long term investors. A good management software should be able to manage all scenereos irrespective of the data points choosen.

[OldAIMGuy]

Thanks Mark, The blended ingredients are what make the overall business plan robust. AIM by itself is interesting but can act like an engine without a governor. Adding some other components that influence how the basic engine operates and then providing the proper fuel improves thing considerably.

Finally installing the engine in a proper chassis that can handle the potential performance is needed. Overlaying macro portfolio design, diversification, risk monitoring and selection has been the crux of my work for a very long time. One must have a robust chassis and a robust engine for best performance.

One of the "rebalance" activities that is done wrong is the timing of the rebalancing. Some use specific dates or anniversaries. The problem with that is if the markets are high at the time of rebalancing, then one is selling the highest flyers and buying more of other equities that have also risen in value. Potentially this leads to a "buying high" illogic for a portion of the portfolio. Letting either a market risk assessment or the buying activities of a diversified portfolio of AIM engines dictate when to rebalance seems to work better.

We'll have to discuss this more at another time.

Best regards,

[karw]

Hi Mark,

Thx for the article on opportunistic rebalancing!

Kind Regards,K