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Hi TF,
I have not done any backtesting on this method, so I really am not the one to answer this. I would expect some filtering, but not really much.
Agree that it probably works best for slow movers.
Best,
Rien.
About the updating frequency: this is also very dependent on the stock/portfolio in question. The slow movers would IMHO benefit most from a monthly schedule. But the high octane stuff (for which IMHO AIM was not intended) might faire better with GTC orders, or high frequency updates.
Best,
Rien.
Have any X_DEV concepts been incorporated into any of your algorithms?
Not yet, but it will be as I intend to use that tool for my own X_DEV trading. I will contact you before I do that though.
At the moment I am just working to get the "infrastructure" up. Once that has been done, adding new algorithms will be easy, it will even be possible to use a plug-in concept for further additions. (In theory, if I open up the interface, other people could write algorithms that would be accessable by my tool. However I don't think that there are many Java savvy investors around.)
The beta will contain LTBH (of course), Lump Sum Cost Averaging and AIM-BTB.
Best,
Rien.
Will your java software be able to save many stocks and track them with a record, like you can in Newport?
I cannot really answer this as I do not know Newport's features.
The basic idea behind my SW is that you have "worksheets". A worksheet combines a portfolio with an algorithm, an order-execution simulator and a portfolio updating system. Each of these is configurable. You can have multiple portfolios, each with a single stock or multiple stocks and cash entries. And yes, portfolios can of course be saved to disk.
This may sound as if it is a portfolio management SW, but that is NOT the case. The intention is to use it to study and compare investment algorithms.
But, you will ask, can I use it to track my AIM investments and will it signal buy and sell orders?. The short answer is: Yes. The long answer is that you will on occasion have to resort to "tricks". For example stock splits, stock-dividend etc are not directly available. Hence, it is not a portfolio management tool. You can however always directly (i.e. manually) edit portfolio entries, and as such you can also add splits and more esoteric dividend payments.
Since SW is in general too complex to be described in a few lines, I suggest "wait and see". Wearing my optimistic hat, I still believe to be on-track for a beta release in the next 4 weeks. Initially for MacOS-X, but soon afterwards also for other java platforms.
Best,
Rien.
Rien's software is Mac software
Actually my "algorithm research" SW is in java, that is, it is supposed to run on any machine that supports java.
And I am not that sure that I want to sell it. The first version which would include AIM will be freeware. That is for sure. But past AIM there are a lot of other interesting algorithms, I am not sure yet on which ones I will include, and if that would be shareware.
Remember the Bull Market and the Vealies? It seems like it's some variation of that.
Well..., it isn't. With Vealies I personally feel that one is cheating AIM. But when you enter them at a stop-loss it WILL be sold eventually at about the right price. But it does give you a chance to profit from a mad rush-up in price. Which standard AIM would not.
I suppose this concept is more similar to the MA-AIM; Moving Averages AIM. Here sells are not implemented until the 50 day MA crosses the 200 day MA downward. For buys, the same but when the 50 day MA crosses the 200 day MA upward. I think it was Don Carlson who came up with this idea. And I am not sure that I got the details correct, if anyone is interested, I would need to dig up old links.
Best,
Rien.
Interesting idea. How would you apply this to the Buy side, if you have two Buys in a row? Then what would you do to the third?
It is called a stop-buy. A stop-buy is implemented once the price of a stock rises past the limit value.
Not all brokers offer this option, so it might have to be used "mentally".
Best,
Rien.
Hi Bernie,
Don't know if I explained myself correctly:
The idea is as follows:
1. AIM signals the third sell in a row.
2. You tell AIM that you sold the shares.
3. You tell your broker to put in a stop loss for the number of shares AIM told you to sell.
4. If the stock continues up, you trail the stock with the stop-loss order.
Still stupid?, could be <GGG>, but rest assured I won't contact anybody to buy my SW
Best,
Rien.
Hi LH,
You can never run out of Cash
Since I am thinking of algorithms to include in my SW, how about this one:
Assume a lump sum of $10,000.
That will earn you say 5% a year.
Buy a high yield stock for that 5%.
The yield from the stock will be added to the lump sum, and the interest over the lump sum will be used to buy further high yield shares.
You will never run out of cash that way!. In fact you will never loose your principal it will even increase due to the yield of the stock, only inflation will eat away at it.
Best,
Rien.
Hi Tom,
Ah the good old days! Back when I worried about having too much cash!!
Unfortunately I was not AIMing in those days
I do think however that a modified Vealy concept could be useful; Book the sell as if it had occurred and enter the sell as a stop-loss with your broker. You can then up the stop loss limit as you go along.
A second advantage is that if you have a stop-loss sitting, and AIM wants you to buy, you can make the buy without paying commissions!. Simply reduce the amount of shares to sell on the stop-loss, and book it as a real AIM buy.
For example one could think of "enhancing" AIM with the following rules (Bernie, please click "next" VBG):
A first two sells after a buy are always implemented directly.
The third (and further) sells in a row is then implemented as a stop-loss sell.
Of course the same can be applied to the buy side as well.
Best,
Rien.
Thanks Tom, I have arrived at this conclusion too:
My recommendation now is to only modify the Sell SAFE and always leave the Buy SAFE at 10% minimum. You can inflate it, but it shouldn't be reduced below Mr. Lichello's standard.
We don't have to be afraid selling, but we should when we are tempted to buy. Simply because there is an end to buying, but none to selling. Nevertheless, seeing it in writing really drove the point home once again. So thanks!,
Best,
Rien.
Hi Karel, that makes two of these things in Holland, that is one heck of an elitist club!.
(Come on Conrad, you can do it!)
Best,
Rien.
Well, my parents don't speak french
BTW, my name is often used at the roulette wheel, coincidence?
Best,
Rien.
These sources of free TA and free streaming quotes ..., and I do need them.
Oh no, you don't! VBG
Remember, this is the AIM board Very-Very-BG,
Best,
Rien.
The only one I know is from island (www.island.com)
The "tracker" is not really a tracker as it gives only a snapshot:
http://data.island.com/ds/tools/bookviewer/htmlbook.jsp?STOCK=rmbs&submit.x=9&submit.y=3
Best,
Rien.
Hi Bernie,
I am writing SW, and as such I have to consider all kinds of variations. Besides I love tinkering just as much as RL did, VBG.
Best,
Rien.
Hi Pete, I know. I never considered it a flaw, but there are those who do. As I said the discussion on it happened a few 1000's post back and was pretty exhaustive. VBG.
Best,
Rien.
Your second post got it right Peter.
Confusion reigns supreme
Oh boy!
Anyhow, it does not change the point that I made in the original post.
Best,
Rien.
Thanks Karel, (I've been juggling too many flavors of AIM lately! )
Best,
Rien.
Linda:
You are doing nothing wrong.
Example:
Initial investment:
1000 shares at $10 = $10,000
PC = 10.000
Price drops to $2,
10.000 (PC) - (1000 shares * $2) = $8,000
$8.000 - 10% safe = Buy order over $7.200 = 3600 shares
New PC = 10000 + 50% of 7,200 = 13,600
Share price goes up to $2.20 =>
13.600 - (4600 * 2.2) = $3,480
$3,480 - 10% safe = Buy order over $3.032
As you see, even though the price went UP, AIM still generated a BUY order.
Hope this helps
Best,
Rien.
Hi Linda, yes that is correct.
We have had a great time (GGG) on this (and the Fool's) board talking about this Lichello "Flaw".
Conrad considered this a flaw, while several others consider it a feature.
Lichello himself has written something to the line of "... this was the hardest part to design into the algorithm..."
Basically when the stock has dropped very far, AIM will "ease" into the new situation. After all, after such a drop, it might drop further, in which case you will be glad that you did not buy "enough" the first time.
Or slightly more mathematically, this is caused by the increase of the Portfolio Control after a buy order.
Try the same in Newport, it should give you the same results.
Best,
Rien.
Linda:
The AIM-Calculator is in "maintenance" mode. That is, I don't add features to it any more, I will only update it if an incompatibility or bug is found.
I spend most of my spare time (I have a full time job and family) on either MacStoXs or my soon-to-be-announced Java stock-algorithm performance analyzer (Anybody got a nice sounding name for that one?, SAPA doesn't sound too great, GGG).
Both of these will eventually have one or more implementation of the AIM algorithm in them. MacStoXs will be mac-only, but the Java app should work on all platforms (that support java).
I would really appreciate it to have beta testers on all possible platforms for it. I have a volunteer for windows already, so if you would cover mac-os...
(Any Linux user out here?)
I hope to have a beta of the java app early next year, or if I am lucky, end of this month.
Best,
Rien.
A new windows version, Windows RG, get a sneak preview here:
http://www.deanliou.com/WinRG/WinRG.htm
(Still laughing)
Best,
Rien.
Hi Linda, I am using it myself for my own AIM trades so I am pretty confident that the calculator itself is OK. Are you sure you hit 'ENTER' (or return) after you edited the fields?
If the problem persists, then let me know exactly what number you entered, and I will check it out.
Best,
Rien.
Hi Linda,
You can certainly do so with the AIM-Calculator. You can also use the lower box (Portfolio Update Parameters) in the window to do just that. I.e. you select "buy", fill in the amount of shares and the amount of money, then hit "Update", and the Portfolio box (shares, control and cash) will be updated automatically.
Best,
Rien.
Yes, Peter you got it right, the Control in the AIM-Calculator is the same as the Portfolio Control of AIM.
Best,
Rien.
Hi Larry, I don't use Windows myself, but recently I read somewhere that there are people who misuse the windows messaging to distribute ads. These ads pop up if you have an inet connection, even if you don't have the browser active. The solution was to turn the "receive messaging" option off. Unfortunately I don't know how, but I guess someone else can fill you in.
Best,
Rien.
Thanks for all the replies about VectorVest, I personally could never use a system that I don't understand completely. From your replies and their website, I gather that they will not fully disclose their system, so I'll leave that road unexplored.
Best,
Rien.
Hi Steve, yes there is probably more than meets the eye, and the report is automatically generated. As I AIM the stock I tested, I am quite familiar with it. The long term is good (IMHO), short term it is overbought (heavily so). Thus my verdict would be OK long term, but right now not a "value play", and certainly not a buy. (I just sold!)
The key is that they generate an automatic advice, based on invisible input parameters. From the looks of it, they must have some future expectation, i.e. they must have an analyst (intern or extern) that provides this input. And as with almost every system: the output can only be as good as its input.
And this is IMHO their shortcoming. Without knowing their assumptions I cannot judge their result.
They may have a good track record, that is something I don't know, and cannot find out without spending money (and experience it myself?). For me, that is not good enough.
Best,
Rien.
Thanks, I tried it with my no-longer-a-deep-diver. They did indeed paint a bad picture, and topped it off with a BUY recommendation.
Strange....
Best,
Rien.
Anybody here familiar with VectorVest?
http://www.vectorvest.com/
What is it?, I would just like to know the broad lines, no trade secrets
Best,
Rien.
Hurray!, one of my deep-divers is a deep diver no more
Just had my first sell in ...oh, don't know how long.
Feels gooood.
(Sorry about that, now back to our regular program)
Best,
Rien.
The nice thing about catching it once, is that you don't have to worry about it again
Just something on the list that you can tick off...GGG
Best,
Rien.
Not intentionally no. But he used the data of the 60's and 70's. And that data did not include a 1929 type of event. Also he (to my knowledge) never mentioned that kind of event.
Having said that, I also think that he would not have changed his algorithm one little bit. After all, he was looking for solid companies. To my knowledge he did not use high-beta stocks to improve returns. I assume he would rather advise to be patient, and stick to "boring" companies.
Best,
Rien.
Hi Bernie,
Nice site, didn't have that one on my list yet. Thanks.
Of course there is such a thing as "added value"
Best,
Rien.
Hi Conrad,
Is investing in the Stock Market Useful work?
Yes,... err, NO, errr,... Yes Huh?
In fact, we are a service/information society. Thus yes it is "useful work" in the sense that it keeps all us non-productive "workers" busy, and leave the producers get on with their thing.
Otherwise we would up growing our own food, and you wouldn't want to that would you? (GGG)
Best,
Rien.
Hi Myst,
You are right, and yet the BTB'rs are right too.
A shoe shop sells hundreds kinds of different shoes, and for a good reason. They found that people don't all want the same shoe. Yet they all need shoes.
If you want to get from A to B, shoes are recommended. However it is not the shoe which gets you there. True, some shoes are better suited to a specific terrain, but it is still the effort of the (wo)man wearing the shoe that gets him(her) from A to B.
Which reminds me: when will you start an XDEV fund?
Best,
Rien.
Hi Bernie,
One thing that most people miss I'm afraid is that the period from about March,2000 to the present is unparallelled in the past.
Not quite, the parallel to 1929 is there. But it is outside of the window where RL (an abbreviation I also use for myself GGG) devised AIM for.
I am reading a book called "Stock Cycles". That is a very interesting statistical analysis of the stock market (as represented by it's index). And it shows that we are not living in a "special time" at all. The author wrote the book in 1999 and early 2000. He predicted a secular bear market starting "probably this year, but at the latest in 2004".
If you like a bit of statics and market models, then its a very worthwhile book.
Best,
Rien.
The question on averages, requires a definition before you can calculate it in a meaningful way(so that others can understand it).
This is soooo RIGHT!
While writing my SW I also wanted to put in an average purchase costs. But I could not figure out how to calculate it!. Oh, be sure, I could calculate several different types of averages, but none of them did actually make sense. They would yield a value, BUT SO WHAT?. What would be the meaning of such a value?. In the end I gave up, and consolidated the numerals on:
- Total Proceeds
- Total Expenses
- Realized Gain
- Stock Value
- Unrealized Gain
These are all the number I NEEDED.
Best,
Rien.
I think that the lower price after the split is the reason. For one, the lower price will make stock seem to be cheaper. And another factor is that people are maybe prepared to bid , say 10 cents above the current price (on a limit order). Then that 10 cents is a greater percentage of the stock after the split than before the split.
Compare this with volatility, stocks priced below $10 are usually more volatile than stocks priced above, say, $100. (Note: just judging by my own observation, not a scientific research)
Best,
Rien.
Thanks Conrad, yes, that makes sense. As I already replied to Tom, I wanted a pure comparison of "which is better". Even though I agree to the position that deep divers will need a very careful consideration.
Thanks again, that was very educative for me.
Best,
Rien.