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Last Post: 10/26/2020 11:56:39 AM - Followers: 284 - Board type: Free - Posts Today: 1

A.I.M. Users Bulletin Board
Robert Lichello's "Automatic Investment Management"
(Compliments of Investors Hub!)

While the AIM book is no longer being reprinted, it is available from Amazon for their Kindle for $5.99.

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.

"Gathering 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.

"Adapting 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, has been gathering data from Value Line and formed a highly capable risk-cash indicator for our use. 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:

Median value for the v-Wave is 44%. High Risk is 51% cash or higher for individual company stocks. Low Risk is 36% cash or lower. 
To get a more proper cash level for diversified mutual fund holdings we divide the currenty "Stocks" value by 1.5. This gives us 36% as the high risk threshold and 24% low risk
with mutual funds. 

                                      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.

Here's the Historical v-Wave during various times since 1982:

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:
"" rel="nofollow ugc" target="_blank">http://www.aim-users.com/calculator.htm"; rel="nofollow ugc">http://web.archive.org/web/20120609073103id_/http://www.aim-users.com/calculator.htm

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 ugc" target="_blank">http://www.aim-users.com/cashburn.htm"; rel="nofollow ugc">http://web.archive.org/web/20120610011525id_/http://www.aim-users.com/cashburn.htm

Best wishes,
Old AIM Guy

#44119  Sticky Note AIM has a predictable pattern of "cash burn" OldAIMGuy 01/28/20 02:30:44 PM
#37762  Sticky Note Hi TFO, My apology for directing that last OldAIMGuy 06/05/14 08:07:49 AM
#37457  Sticky Note Re: Newport AIM software ls7550 12/28/13 08:56:43 AM
#36711  Sticky Note Thanks LC, Now they can use the "calculator" again! OldAIMGuy 06/04/13 05:01:59 PM
#36709  Sticky Note www.aim-users.com This is a copy of www.aim-users.com that lostcowboy 06/04/13 09:56:02 AM
#30219  Sticky Note Hi Glen, RE: Calculating the v-Wave................... OldAIMGuy 05/26/09 11:32:16 AM
#44806   Nothing too scary for Halloween..................... OldAIMGuy 10/26/20 11:56:39 AM
#44805   Nothing too scary for Halloween..................... OldAIMGuy 10/24/20 01:12:28 PM
#44804   VWave 3.0* JDerb 10/23/20 09:00:47 PM
#44803   Hi Tom Toofuzzy 10/20/20 07:23:49 PM
#44802   Hi Toof, Re: Managing Expectations while managing Inventory............ OldAIMGuy 10/20/20 10:46:51 AM
#44801   Hi Tom Toofuzzy 10/19/20 03:38:55 PM
#44800   Hi Tom Toofuzzy 10/19/20 03:38:54 PM
#44799   Hi D, Re: Sector and Country specific mutual OldAIMGuy 10/19/20 01:04:40 PM
#44798   Tom, I've had some success with sector funds and dispatch 10/19/20 12:11:35 PM
#44797   Tom, Thanks for your help. It did clear dispatch 10/19/20 11:25:18 AM
#44796   Good morning D, Re: 'vealies' and mutual funds.............. OldAIMGuy 10/19/20 10:37:53 AM
#44795   Tom, First question is about using "vealie" in the dispatch 10/19/20 08:45:43 AM
#44794   Black Monday - October 19, 1987.................... OldAIMGuy 10/19/20 07:16:35 AM
#44793   Thanks Good, interesting image. OldAIMGuy 10/18/20 03:32:32 PM
#44792   Hi Toof, The problem with such indices is Adam 10/18/20 11:25:12 AM
#44791   Thought you might like this link. Toofuzzy 10/18/20 09:27:34 AM
#44790   VWave 3.0* JDerb 10/16/20 09:13:04 PM
#44789   I think I jinks myself about reaching a milestone. Toofuzzy 10/14/20 06:50:40 PM
#44788   Hi Toof, Re: Post being saved................. OldAIMGuy 10/14/20 08:26:07 AM
#44787   Hi Tom Toofuzzy 10/13/20 11:30:53 PM
#44786   I wrote this book review a long time OldAIMGuy 10/13/20 12:48:03 PM
#44785   Hi Toof, I agree with weeding out deep Adam 10/12/20 05:49:23 PM
#44784   VWave 3.0* JDerb 10/09/20 08:20:49 PM
#44783   Hi TOOF, OldAIMGuy 10/09/20 08:13:30 PM
#44782   My account has reached a milestone today. Toofuzzy 10/09/20 04:52:41 PM
#44781   Congratulations Toof, Re: Sales............ OldAIMGuy 10/09/20 03:17:26 PM
#44780   Sold 5% of my PLUG position at $18 Toofuzzy 10/07/20 11:06:22 PM
#44779   Picture of v-Wave this week: OldAIMGuy 10/03/20 09:28:49 AM
#44778   VWave 3.0* JDerb 10/02/20 08:19:26 PM
#44777   Re: AIM's propensity for accumulating lots of cash ls7550 10/01/20 08:15:17 PM
#44776   Very good advice! I will continue to check lucascostner 09/29/20 11:47:02 PM
#44775   Good morning Lucas and Welcome, Re: AIM's propensity OldAIMGuy 09/29/20 08:25:21 AM
#44774   Good morning Toof, Re: Questions.............. OldAIMGuy 09/29/20 08:14:13 AM
#44773   Lucas Trust me. Toofuzzy 09/29/20 01:19:52 AM
#44772   Greetings! I have a question about AIM investing. lucascostner 09/28/20 11:24:16 PM
#44771   Hi Tom Toofuzzy 09/28/20 07:31:42 PM
#44770   Here's a list of the ETFs I use OldAIMGuy 09/28/20 02:16:43 PM
#44769   VWave 3.0* JDerb 09/25/20 09:30:18 PM
#44768   Tom... Great idea! I’m sure there’s some type of JDerb 09/25/20 01:21:50 PM
#44767   Good Day JD, Re: Birthday wishes...................... OldAIMGuy 09/25/20 01:12:34 PM
#44766   HAPPY BIRTHDAY, TOM! JDerb 09/25/20 12:55:30 PM
#44765   I was thinking recently of how Aim works Toofuzzy 09/24/20 07:05:12 PM
#44764   Hi Adam, OldAIMGuy 09/24/20 02:28:40 PM
#44763   Two AIM buys today both just over 10% Adam 09/23/20 08:19:24 PM
#44762   Thanks Tom Toofuzzy 09/19/20 11:53:20 AM
#44761   Hi Toof, Re: bullish and bearish signals............... OldAIMGuy 09/19/20 11:02:07 AM
#44760   v-Wave Histogram...................................... OldAIMGuy 09/19/20 10:52:18 AM
#44759   Hi Tom Toofuzzy 09/19/20 10:33:11 AM
#44758   Hi Toof, Re: v-Wave ST data............... OldAIMGuy 09/19/20 10:25:08 AM
#44757   Is there an explanation on how / why Toofuzzy 09/19/20 10:17:08 AM
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