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Steve..
And remember to subtract your age from 100. That determines how many pages you should read before you decide whether or not you should finish the book. 😎
Take care.
Jon
Tom:
Don't be surprised if you get a bit upset by the histories presented relative to the FED, monetary policy and other such subjects
Thanks for the heads up!
At our age, we need to watch out for potential blood pressure spikes! 😉
Hi Steve, Re: Dreman's book.............
I hope you enjoy it and get some goods out of it.
Don't be surprised if you get a bit upset by the histories presented relative to the FED, monetary policy and other such subjects!!!
OAG
Hi Tom.
RE: Dreman's new book...
Book was delivered last night!
'I found I had to read a section and then digest it for a few hours before moving onto the next. So, it took a while to get through the entire book.'
My review will probably take awhile as well given that it's 480 pages long; inclusive of the substantial notes, references and index.
😲
Off Topic................
For those of you who like cars from the '50s and '60s, and who also like Pink Floyd, here's a video from the 1991 La Carrera Panamericana. I drove in this event in 1991 and 1994 taking 10th in class in '91 and 3rd in 1994. My dad and brother drove in 1992 and also took a 3rd in class.
Hi JD, Re: v-Wave current status...............................
I'd feel more comfortable if we saw the v-Wave closer to the Median value. Still, it's less than one standard deviation from that mark.
As Robert Heinlein said, "Climate is what you Expect, Weather is what you Get!"
The current v-Wave suggests it's a good idea to keep an umbrella handy!
Best wishes,
OAG Tom
v-WAVE 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 May 24th
_________________________
Short Term (18 Months)
Individual Stocks: 65% (Unchanged from previous week)
Diversified Mutual Funds or Portfolio: 43% (Unchanged 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: 1.20 (Down .09 from previous week)
*See posts #44585 and #44588
Hi Steve, Re:Mr. Dreman's book..................
You, having lived through much of the history he discusses, will find much of that interesting. He goes into depth on various market events in dissecting the causes at the time. He also takes his time debunking Modern Portfolio Theory and much of the other investment theories that have been popularized over several decades. He then lays out tenants for some value measures and how history has been very kind to the stocks in those categories compared to more popular coat-tail chasing methods that have been popular.
I'm looking forward to hearing your thoughts in your "book review" when you've read it. I was heavily influenced by his 1977 book, "Psychology and the Stock Market" when I read it back in the '80s. This one is influential as well.
I found I had to read a section and then digest it for a few hours before moving onto the next. So, it took a while to get through the entire book.
Best wishes,
OAG Tom
Thanks Tom.
I added the book to my list at Amazon.
Looks very insightful as you said.
Hi Toof, Re: DHT history on StockCharts......................
Those are some nice stair steps for AIM to climb!
https://schrts.co/xBbukNrK
Nice dividend, too (6%), which offers excellent Total Return over time.
Congratulations on the trade.
Best wishes,
OAG Tom
My GTC on DHT finally filled at $12.50
Sold 12% of my shares.
Toofuzzy
Hi K, Re: ING history since 2019.............
Thank you for the concise summary and comments. Your Total Return (TR) including AIM trades, Price Appreciation and Dividend Capture looks very handsome. I sometimes look at the contributions made by each of these goals. In your case, Price Appreciation has contributed over 36% to the total return. 5 years of accumulated 5% dividend capture on average would have contributed around 25% to total return. It would appear that AIM's Volatility Capture also contributed very nicely to the T.R. With a slight negative "cost price" at the end suggests you've doubled value in that 5 year period or roughly a 14+% average annual return!
It's nice when a Plan works!
Best wishes,
OAG Tom
TIME to provide its benefits
This AIM machine (stock=ING) started 5 years ago in April 2019.
price appreciation
The stock was bought at €12.02 and the last AIM sell was at €16.42. Roughly a price appreciation of 7% per year.
dividend
The dividend is estimated to be around 5% per year.
AIM management
For AIM management two numbers:
a Increase of the number of shares: 2.2 times as many shares at the end versus the number at the start.
b Cost price at the start was 12.02, cost price at the end was €-0.44 per share.
blue line : price green line : PC purple line : cost
Tom's International Equity Warehouse (TIEW) Report........................
Yesterday our International Division had yet another Inventory Reduction. This time it was shares of International Large Cap Dividend (DOL) that were sent via special courier to their new owners.
This 5% reduction in inventory came with a healthy 20% LIFO round trip gain. It's the second sale in DOL so far this year. Shares were purchased in mid-2022, so this hasn't been a fast turn-over of inventory.
Once again, Mr. Lichello's AIM tripped trades nicely in sync with the Williams%R and Zig Zag reversals. Accumulation/Distribution history also matches up as AIM was accumulating when others were in Distribution mode, and more recently AIM has been distributing shares while others were anxiously in Accumulation mode.
Maybe I should change my motto to
"Accumulate when others are Distributing, Distribute when others are Accumulating!"
This is one of the components of my international "style" type ETF portfolio. It consists of small, mid and large cap dividend ETFs, small, mid and large cap growth ETFs and one Intl REIT fund and small and larger cap Emerging Markets ETFs.
I'm studying to learn how to say "Profits" in many different languages.....
Best wishes,
OAG Tom
Chief Executive Officer at Tom's International Equity Warehouse
Hi Steve, Re: Research, Scanning and Charting at Schwab......................
I can't say I've ever explored those attributes at Schwab. Generally I use StockCharts.com for charting examples, Value Line for stock screens and researching on mid to larger cap stocks and American Association of Individual Investors (AAII) for micro and small cap ideas.
After finishing David Dreman's book "Contrarian Investment Strategies - the Psychological Edge" I've come to believe his ideas are quite compatible with Mr. Lichello's AIM inventory controls. Dreman's screening ideas are easily searched in Value Line for potential candidates. He looks for low P/E, low "Relative P/E" (low compared to similar companies in similar industries), low Price/Book Value and above average dividend yield as main screening topics. In other words, he's a 'value' oriented investor with deep contrary beliefs. The book is packed full of long term test results as backing of his ideas.
I don't know if Schwab's site has screens for these types of things as I've never looked.
Hope this helps,
OAG Tom
https://www.amazon.com/Contrarian-Investment-Strategies-Psychological-Edge/dp/0743297962/ref=sr_1_1?crid=2AZEIYCRBPAIT&dib=eyJ2IjoiMSJ9.VIYGfP7D3nsZ_oIIL0e2jKAwL80mmvlBKxmWFSnVk1pHhXU8scn47dKwGAW8HRgu-t3qovm443NZsjn8skh3VyZzZvR9-eHenmux8WrP1hWWWH5p7tI_qVaYmSGO0VzLpfxFpCXqMotUKDb8EmZVq61U5V0sbMPx3KzBRhTiarIIw01ZTyRerC0vmmEq7XGYs-NhZ4oL6SAh_TxbTifxTmoalCqKGC9omFu4eJVwdS8.9QJ4Tc5Fsoaux6aM1OasWFAe6WTjMtKhFos0tUQct9s&dib_tag=se&keywords=david+dreman+books&qid=1715686209&s=books&sprefix=David+Dreman%2Cstripbooks%2C651&sr=1-1
Thanks Tom.
I think Ameritrade's GTC orders were also 6 months by default unless you chose a date closer when entering.
Any thoughts on the research options? Scanning, Charting, etc?
Hi Steve, Re: AMTD to SCHW switch.....................
I'd moved my personal accounts to Schwab years ago as part of my company's needs. We had all our client's portfolios domiciled at Schwab after consolidating them from many other locations. My kids, on the other hand were still with Ameritrade and their accounts moved, too, but in the 1st wave of this merger. Theirs went smoothly, but they had to do a bit of work with beneficiary notices and some other stuff.
I heard from a friend this AM that his AMTD account finally moved to SCHW. Schwab consolidated his and his wife's accounts in one master. He used to have to sign in to each separately, so this may be a good thing. So far, so good.
I'm also an investor in SCHW and was in AMTD until the merger. It's been a good trader for me as was AMTD in the past. It pays a modest dividend to help things out during dry spells.
https://schrts.co/dQjfuRbE
That halving of the share price between the peak in early 2022 and the bottoming in early 2023 allowed the Equity Warehouse to add a lot of inventory. Currently it's just $2-3 below where we'll let some interested new owner take delivery of 10% of our shares. Note I use 10% of PC as my minimum order size with SCHW. That gives me roughly a 30% ZigZag range for round trip trades. That plus the dividends makes me smile when it happens.
I hope the rest of the switch goes well. I've found SCHW's interface to work pretty well. It's a bit different from Ameritrade, but once you find your usual functions, it goes pretty smoothly. Little things like under the TRADE button, you'll find a choice of looking at your open orders and another to enter a new order. Once you've entered an order you have the choice of viewing the open orders and also entering another order. So, you don't need to go back to the header if you have multiple new orders to enter. Orders remain in the system for around 6 months before self cancelling.
Best wishes,
OAG Tom
Thanks Tom.
Good info as usual.
BTW: Not sure if you're still with TD Ameritrade, but the switch to Schwab happened today.
Seemed to go well. My GTC orders are still there which was a good thing.
After all these years, it will take a bit to get used to the new interface, but that's OK I guess.
I haven't looked at any of the other features yet (especially research) but I will as necessary.
Here's the latest on Value Line's Dividend and Growth Models:
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=174404408
Both lists offer happy hunting grounds for those taking AIM.
Best wishes,
OAG Tom
v-WAVE 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 May 17th
_________________________
Short Term (18 Months)
Individual Stocks: 65% (Unchanged from previous week)
Diversified Mutual Funds or Portfolio: 43% (Unchanged 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: 1.29 (Up 1.29 from previous week)
*See posts #44585 and #44588
I finally Called in the shipping department and had them sell about 8% of my WPM at $54.31 today.
DHT is getting close to a sale also with a target of $12.06. Meanwhile it pays a decent dividend while I wait .
Toofuzzy
Hi K, Re: UBA portfolio.....................
Mine has been very quiet for a long time, too.
There's been very healthy volume with the latest rally. Accumulation/Distribution also has looked good. AIM seemed to know it was time to do something for the Cash position.
I've had a sale of two in the gold surrogate IAU, but until the DGS sale, it's been pretty sleepy.
Best wishes,
OAG
Yesterday the warehouse shipped out 5% of the Emerging Markets Small Cap Dividend shares. We had to dust them off as they were in inventory for a long time.
The sale was a good sign.
OAG Tomaso
April Results Roundup............
Tom's Sandbox of 10 Stocks......
Down 2.04% for Month; Up 2.7% YTD
80% Invested
International Style ETF Composite of 9 ETFs
Down 2.19% for Month; Up 1.4% YTD
82% Invested
Tom's Retirement Account
Down 3.26%; Up 7.5% YTD
79% Invested
Tom's US Sector ETF Composite
Down 4.37%; Up 2.4% YTD
85% Invested
Not the greatest month but considering everything, April turned out okay. It was surprising to see International ETFs down less than the US Sector portfolio for the month. Cash Reserves are still healthy, if a bit on the low side. Overall, no buys were generated in April.
Best regards,
OAG Tom
Thank you JD, Re: v-Wave Current Image...........................
It seems that wasn't a very serious correction recently.
Even current events didn't shake the markets very much.
Still, the markets don't seem to be at bargain basement prices.
It's good to keep some dry powder on hand for future hunting seasons.
Best regards,
OAG Tom
v-WAVE 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 May 10th
_________________________
Short Term (18 Months)
Individual Stocks: 65% (Up 3 from previous week)
Diversified Mutual Funds or Portfolio: 41% (Up 2 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 48% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 32% (Unchanged from previous week)
Oscillator: .0 (Unchanged from previous week)
*See posts #44585 and #44588
Income portfolio - 3 buys on weekly basis
A world hidiv ETF(euro price only) aimed with a gold ETF(euro price) had buys the last 3 weeks.
In terms of gold, hidiv went down a lot which resulted in 3 buys.
With fiat money in stead of gold there were no buys.
The div% is around 3.5%, that could be added to the portfolio picture, over 14 quarters approx. 8% could be added.
A country with a sovereign wealth fund could energize their gold holdings with such a portfolio ?
Kind Regards, K
Hi JD, Re: v-Wave movement...................
While the 3-5 Year vW didn't change, that's a nice reduction in apparent market risk for the shorter range 18 Month view.
v-Wave Vigilantes will be keeping an eye on the long v-Wave as well as the shorter one to see how we navigate this recent correction.
Best wishes,
OAG Tom
v-WAVE 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 May 3rd
_________________________
Short Term (18 Months)
Individual Stocks: 62% (Down 3 from previous week)
Diversified Mutual Funds or Portfolio: 41% (Down 2 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 48% (Unchanged from previous week)
Diversified Mutual Funds
or Portfolio: 32% (Unchanged from previous week)
Oscillator: .46 (Unchanged from previous week)**
**Previous week should have been .46 instead of .0
Problem with spreadsheet; not the messenger!😎
*See posts #44585 and #44588
Hi JD, Re: v-Wave and its current signal...........................
The Index trimming we've seen in the last week shows just how much a surprise event can
affect a market that was showing signs of risk stress already. Note that RISK didn't get worse
because of the tensions, it relaxed a bit as share prices declined. Value Line's P/E dropped
nicely along with the index declines. It's "Appreciation Potential" improved as the markets
gave back some of their recent gains. That improved our v-Wave's current outlook. It's not
yet back to bargain levels seen in late 2022 so keep some powder dry.
Best wishes,
OAG Tom
Thanks, Tom. Your kind words are much appreciated. Least I could do with all of the time, patient and complete explanations and effort you have contributed over the decades helping all of us become better AIMers while at the same time generating discussions, ideas and strategies that benefit everyone.
Take care.
Jon
Hi Jon and Thanks!,
For those of you who don't know JDerb, he was kind enough to take over the v-Wave updates for me back in around 2008 when I joined my partners in forming an investment advisory. Another AIM user, MinstrilMan, also helped out during the transition. Compliance reasons kept me from that and posting here for quite a while. I had to keep a bit lower profile for those reasons.
Jon has been steadfast in keeping us all up-to-date all this time and deserves a round of applause from us all!
Best wishes,
OAG Tom
v-WAVE 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 April 26th
_________________________
Short Term (18 Months)
Individual Stocks: 65% (Down 12 from previous week)
Diversified Mutual Funds or Portfolio: 43% (Down 8 from previous week)
__________________________
Long Term (3-5 Years)
Individual Stocks: 48% (Down 1 from previous week)
Diversified Mutual Funds
or Portfolio: 32% (Down 1 from previous week)
Oscillator: 0.00 (Down 1.39 from previous week)
*See posts #44585 and #44588
Hi Adam, Re: AAPL and AIM.......................
My own AAPL position has AIM triggers at $150 on the buy side and $206 on the Sell side. Those are for 10% of Portf Control size orders.
It appears our AIM engines are tuned to similar signals.
Best wishes,
OAG Tom
Even though the market is down from its peak I'm still not getting buys except for AAPL which I covered by selling a put one month in the future at 155.
Hi Will, Re: v-Wave and "Timing....."
While the v-Wave wasn't built for being a 'timing' device, it could offer some insight that way. The problem becomes the length of time for these cycles. How long can we await a 'better time" to be starting an investment? If nothing else, the v-Wave offers some caution right now if one starts a new AIM engine with the suggested starting cash held in reserve.
Best wishes,
OAG Tom
Thanks Tom,
I've been away from the site for a while, been busy on a refurb project. Just the snagging to do now.
Sold some stock before the financial year end to transfer the funds into a tax free account (ISA in the UK). I was simply going to repurchase, until I saw your post. Will hang onto the cash for a little while longer. Perhaps when the 18 month wave drops below the long term one?
Will
Hi Darth
I see Jon answered the question but to make it a bit clearer.
I knew I wanted to sell some shares, I thought it might keep going up, but didn't want to risk it going much lower if it didn't go up.
So I placed an order 2% below the last high price ( a trailing stop ) . So as the price moves up the price I would sell keeps moving up ( trailing by 2% )
You can set the trailing % any amount you want but 2% to 10% is typical.
A risk is that a security will fall a lot overnight and the order will fill a LOT lower, in which case a trailing stop limit order would be better but that might not fill at all.
Stop limit orders are an order you can place , I am not sure a TRAILING stop limit is an order you can actually place.
I suggest you Google " stock order types"
Toofuzzy
Good morning JD, Re: v-Wave current status..............
The bothersome shorter term 18 Month view isn't very encouraging.
Another Market Risk Indicator I follow shows three components rising in risk this week with two in their Caution range, one in Neutral and one in Proactive. Overall, it's in its 4th week out of the last 6 of being in its own Caution range with risk expanding this last week.
Even if I didn't turn on the TV News, I'd be feeling a bit cautious about starting any new positions at this point. There were better times in the Past and will again arrive in the Future for new AIM engines.
Best wishes,
OAG
v-WAVE 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 April 19th
_________________________
Short Term (18 Months)
Individual Stocks: 77% (Unchanged from previous week)
Diversified Mutual Funds or Portfolio: 51% (Unchanged 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: 1.39 (Down .12 from previous week)
*See posts #44585 and #44588
Thanks Jon.
It was truly impressive. And I saw the one in 2017 as well.
I was just better prepared this time.
Best quote of the day was from my typically cynical, little, 65 years old brother...
.
..."This is Kick-Ass!" 😆
Outstanding, Steve. Seriously.
Thanks for sharing.
Take care.
Jon
Somebody spilled Red Ink all over my portfolio holdings today!!!
(not enough to generate any AIM trades, however)
OAG
Maybe next April 1st!!!
Still waiting on the surge!😂😂
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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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