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Hi Ray, I suddenly recall that, I believe, Syncrovest was an early version of Value Averaging. (See Michael Edleson's 1991 book for a more recent version of VA). I think Lichello got the idea for automatic trading in a way similar to Value Averaging and also making the trades a minimum size by requiring a minimum percentage change in value to make a trade and this is what Syncrovest was designed to do. He jazzed it up with Portfolio Control and Safe to make the modern version, AIM. And that has been improved by splitting Safe into buy and sell safe as well as Clive's LD-AIM and other variations out there.
However, neither Syncrovest nor AIM solved one problem, the starting trader with little cash on hand. He looked at dollar cost averaging and then double dollar cost averaging and then came up with Twinvest, which he called "The World's Method for the Small Investor," as a way to start out.
Of course my memory of all this could very well be very faulty.
Best,
Allen
Hi Ray, I seem to recall reading an article or web page about Syncrovest and, if I recall correctly it was basically an earlier version of Twinvest, which is covered in the 2nd, 3rd, and 4th editions of AIM.
I have all editions of AIM, but not the first printing of the first edition, only the fourth printing in 1980. The original was in 1977.
Syncrovest was in 1974 and, as I recall, not all that different from Twinvest. The calculation process was somewhat different but I don't recall exactly what was the key difference, alas. And, alas, we did not have the Wayback Machine in those days so getting the details requires the book but I don't think what one would gain in reading it is worth $50. Of course I could be wrong!
Best,
Allen
Hi Gang, Generally it is cheaper to get used books from Alibris which has several thousand sellers for books alone, including libraries which are culling their shelves or Powells Books which is the largest used bookstore in the world.
Best,
Allen
Hi Gang, WOW! The Dividend Channel I mentioned might be a real "gold" mine. Just playing around with it I came across CEFL. In the last year one might well have had 2 sells and a buy - beta of 53.07% and dividend of ~17%. Only been paying dividends a short while, just the last year, and only been around a short while - Inception Date 2013-12-10 - but very active.
Best,
Allen
Hi Gang, While I was helping a friend with her IRA - she has N0 interest in digging into understanding investing at the moment - I came across an interesting site: https://www.dividendchannel.com Well worth looking at in my humble opinion,
Best,
Allen
Hi Toofuzzy, Thanks for the further explanation of your approach. I see one potential problem with it, though. You say in your first post:
Most excellent K. One question, what are the current %s for the
Hi Toofuzzy, Interesting way of doing it. I set up a spreadsheet with a different buy/sell set of parameters than the online one to achieve roughly the same end.
I'll have to sit down and try doing it your way and compare.
You say
Hi Firebird400, I've been meaning to ask you what parameters you use on FinViz when you go hunting? I've played with it a bit but don't seem to find ones like you've talked about in your "Pocket Change Portfolio."
Thanks,
Allen
Thanks a whole bunch for that info, Tom.
Given that I've only been at this stuff for a bit over 3 years I still have a lot to learn.
Best,
Allen
Hi Toofuzzy, I agree, one uses AIM for setting buy/sell points. Looking at ZigZag is just a way to see the possible number of trades, as you say, but by looking at the % change at the indicated points one can get a better idea of the actual number of trades you might get.
I played with your suggestion as I understand it using the online calculator: " PRETEND you own twice as many shares and make MIN TRADE SIZE 10% PC will be twice the size also."
So PC 10000, shares 1000, buy/sell 10%, minimum shares 5% and I get sell at $11.77, 50 shares, buy at $8.70/50 shares.
Then PC 20000. shares 2000, buy/sell 10%, minimum shares 10% and I get sell at $12.50, 200 shares, buy at $8.33, 200 shares.
I get 4 times as many shares to buy/sell but have a range of 150% instead of 135%. Not good if one wants volatility.
If, however, I set minimum shares to 5% with PC at 20000, shares at 2000 and buy/sell at 10% I get a sale at $11.76 of 100 shares and a buy at $8.70 for 100 shares.
If, using the original parameters instead, and I simply double the base number of shares I sell to 100 I get $1177, or $177 profit (minus commissions of course) as opposed to $588.50 or $88.50 with the standard approach. Assuming the commission is $10 my net is $167 versus $78.50. Quite a difference.
So, using the calculator, it seems leaving the minimum sale at 5% and doubling PC and shares is the best approach.
As to potentially selling out one's position, that seems unlikely given that you still have 90% of the shares you started with. The likelihood of getting sufficient consecutive sales to eliminate your position is incredibly small. Run the numbers on a spreadsheet. Using my version of the BareAIM spreadsheet with $10,000 PC, 10% buy/sell and 5% minimum (well, not exactly as the minimum number is a fixed amount, not a percentage of stock on hand) I would have to get 5 sales to get down to ~200 shares and the price would have to double. Given the relative range and the number of trades that seem typical is seems highly unlikely to happen before there is a drop in the stock price and a buy.
Oddly, if I overrode the sale with double the number in the spreadsheet, it wanted me to buy more right away at the next price up. Weird.
Anyway, it seems to me that combining what you do with paper and pencil with doubling or even tripling the number sold, perhaps even bought, is not an unreasonable thing to think about.
Best,
Allen
Hi Tom,
Happy New Year Tom. About ZigZag, for whatever reason when I open your links the ZigZag does not display so I went to Stock Charts and recreated the 20% and also a 15% chart. See below.
20% ZigZag
15% ZigZag
A point to note: The "Size" has been changed from the default 700 to the maximum of 900 so more time is shown to give one more to see about possible actions one might take. (BTW, if you change the "Bar" from the default of 5 to 3 or 4 you can see even further back.)
Assuming the 20% Safe (10% buy, 0% sell and 5% each buy and sell amount) if one had been in RYT in 1/2014 the first sale point indicated is up ~+27% and the buy would be down ~-20% and the next sale indicated is up ~-48%. Given these figures following ZigZag closely reduces ones buy/sells.
Looking at the 15% Safe (7% buy 0% sell and 4% buy/sell amount) chart the first indicated sell is at the same point and so is the first buy, but then there is a second sell at ~+26% and a second buy at ~-17.5% and the final sell at about ~+42.7%.
Given the figures above and AIM's need for volatility I think it is best to combine the buy/sell calculator with the ZigZag but be sure to look at a variety of percentages for the ZigZag to see what the best combo is.
An additional thought is one might calculate the buy/sell prices as usual but double the actual percentage of stock/ETF to buy/sell in order to make the the actual size of the transaction big enough to be justifiable.
Warmest Regards and Happy New Year to all,
Allen
Hi Ray, In the context of what you have observed it seems like what you are suggesting might be the best option. If the position is that volatile over time then it would make sense but if it was a one time fluke, maybe not.
Probably the best thing to do is look at history and see how many times that much of a swing (or near it) has happened in the past and if there is any correlation to the market as a whole. Rarely do things happen totally out of context. But, like anything else, there are exceptions that happen. Security breaches, tsunamis, earthquakes, and such, that can not be predicted. Was the stock responding to one of those in past tumbles?
What stock was it?
Happy New Year to you and the rest of the gang,
Allen
Hi Hedgebunny, The problem with those numbers is that they do not take into account inflation.
$100 in 1886 ? $1,115.77 in 1986 according to
http://www.in2013dollars.com/1886-dollars-in-1986?amount=100
and $100 in 1986 ? $217.86 in 2016
http://www.in2013dollars.com/1986-dollars-in-2016?amount=100
so from 1886 to 2016 $100 in 1886 ? $2,430.85 in 2016
http://www.in2013dollars.com/1886-dollars-in-2016?amount=100
Given these figures the real gain is not as spectacular as it would seem.
Best, and a Happy New Year,
Allen
Hi Gang, I've been using World Stock Report on my cell phone. I've put a whole bunch of stocks, indexes and ETF/ETNs for me to watch.
Recently I noticed an interesting action on the part of two ETFs, DRV, Drexion Daily Real Estate Bear 3x and DRN, Drexion Daily Real Estate Bull 3x. The two almost perfectly match their moves but in opposite directions. On down market days DRV is up and DRN is down, like today, 12/21/2016. DRV up 4.17% while DRN is down 4.28%.
By comparison VIX and its inverse, XIV, don't always move in opposite directions. Today VIX is down 1.57% and XIV is down 1.91%.
The DRV/DRN differences has been pretty consistent over the last couple of months and might provide a signal if the market changes direction rather than bouncing around in a fairly narrow range.
The VIX/XIV has been nowhere near as consistent over the same period of time.
Best,
Allen
Hi Firebird400, It's interesting to look at some of the parameters behind your selections. It seems that one of the keys in your selections is the volatility, a great choice for AIM. ODP has the following:
Historical Volatility 68.8%
Market Cap 2.7B
P/E Ratio (TTM, GAAP) 4.35x
Annual Dividend/Yield $0.10/2.04%
Beta 3.3
% Held by Institutions 91.79
Historical Volatility and Beta are both high but I have a question. With over 90% held by institutions it would seem to me that the only time there would be any significant move would happen when the stock would tank and they would bail, driving the price down further. What would make it rise again and therefor get back on the AIM path?
Thanks,
Allen
Hi Adam, I don't know about other states, but my understanding is that California and most other states count capital gains as ordinary income.
However; I was wrong about the brackets for the Federal capital gains rate. I don't know where the exact break is but the rate is 15% for an individual up to about $180k total income or so for positions held over a year but 25% if held less than an year. The figures are a bit more complicated than this as the exact rate depends on your other income, deductions and other stuff that play a part and the resultant tax bracket.
There is a calculator at:
https://smartasset.com/investing/capital-gains-tax-calculator
That can take into account which state you are in.
Best,
Allen
Hi Toofuzzy, Yep, you are correct, but I don't fall into those brackets. I didn't bother mentioning it as, I hope, none of us are members of those brackets. Life is tough enough.
Best,
Allen
Hi Tom, With over 77,000 pages in the IRS Tax code you can be forgiven a mistake or two. :)
Plus, I have an advantage you might not have, my girlfriend is a CPA and tax accountant and has been studying the changes for the 2016 tax season.
I don't do FIFO because the price when you get in may not be at the bottom so one might wind up earning more than if you set it for "highest price" as TDAmeritrade let you do. Doing this has let me save a bit a couple of times, especially with inherited positions.
Best,
Allen
Hi Tom, Investopedia begs to differ about tax rates:
Hi Gang, Possible heads up:
Hi Toofuzzy, I'm actually sitting on almost 65% and yet getting about 2.9% income on the total, both cash and positions. Only slightly above inflation but okay to sit on for a while while the market direction becomes clearer and I figure out what to get into next.
Plus I did a sale on a position that typically has a larger dividend in January. I'm avoiding a wash sale and will buy it back after the 16th. With luck the price point will stay below what I bought them at. Currently it is ~$4 below purchase. I don't expect it will stay that low. With luck I will have reduced my basis and yet collect $0.72/share in January, about 4.5% for the month, and miss $0.032/share in December, about 0.2%.
Best,
Allen
Hi Gang, Speaking of volatility, take a peak at DGAZ! 10%+ change multiple times in the last few days.
https://ca.finance.yahoo.com/quote/DGAZ?p=DGAZ
Best,
Allen
Hi Gang, I was just listening to Richard Wolff, the economist, and he reported that a number of cities, Paris, Madrid, Athens, and Mexico City, say they will stop the use of all diesel powered cars and trucks by the middle of the next decade.
He said Tokyo is joining the group as well by expanding what was already in place.
Add in the Volkswagen says they will not sell diesel vehicles in the US in the future and we may be at the beginning of a significant change that might affect oil prices.
This might be something to keep an eye on.
Best,
Allen
Hi Ken, on another subject, but related to finding the right positions for a portion of my money, except for some old positions that bring in good dividends I have disposed of enough that I have a fair amount of cash on hand that I want to invest but I'm waiting until after January 20 plus a bit to see which way the market will likely go given how long in the tooth the bull market is. So, finding a good set of parameters for sifting the possibilities is very important to me.
Best,
Allen
Hi Ken (AKA Firebird 400) Thanks for the pointer to finviz. I am currently using TDAmeritrade which does have a screener but I think I did not find it all that useful when I played with it a while back because I did not have a good sense of what criteria/parameters I should use. Perhaps we could have a discussion of that here. It's clear that AIM does best with volatility but I'm not clear about the best way to evaluate for this.
Now XBKS, I thought we were talking about a reverse split and didn't notice a merger. I'm not sure that makes all that much difference unless the number of shares goes up significantly.
Best,
Allen
Hi Gang, Re: XBKS, I got curious and went back and looked at its history. On April 28th, 2011, they did a 1:25 stock split (1 new share for 25 old shares) but did not get a boost in price. EOD on the 10th was $0.61 but after the split it was only equivalent to $0.594/share EOD on the 11th. And it kept dropping day by day over the the next month, getting down to $0.4412/share on May 12th before starting up to peak at $1.0516 on May 31st. Then it went on a deep dive down to $0.0444 by the end of 2012, bouncing around on the way. I have not run an AIM analysis but it looks like it might have been a good one for Firebird's Pocket Change Portfolio.
The prices per share are the equivalent to the share count before the split.
Best,
Allen
Hi Adam, Firebird, As Adam says, the reverse split will make it possible for institutional investors to get in; however, that does not seem all that likely to me.
The reason is that currently XBKS has a float of roughly 230 million shares and about $600 million capitalization. With a 10 to 1 reverse split they will have only about 23 million share, much too small, I would think, for institutional investors. Typically the big guys don't do all that much when there are only small amounts of stock available to trade because they have so much money they need to park. When they purchase, unless they ease in very slowly, it makes the price jump and they don't like that.
If you have 60 billion under management, like #25 on Lipper's list, VMFXX, getting only a $1 million dollar position puts them in the position of having to manage way too many positions, potentially as many as 60,000. Way too expensive to do.
A number of people, including AAII, say that staying with small cap positions is more profitable because they move around more because there is not the steadying force of large institutional investors. Since AIM needs volatility to work at its best it seems reasonable to stay with the small cap positions.
Look at what you've been doing Firebird with your Pocket Change Portfolio. All low priced and small cap. Seems like you stay out of the way of the big guys and do well by doing so. Wish I knew how to find those positions so I could a small portion of my money to work this way. You said you are using Automatic Investor, right? Does it help you find these positions or is there another tool/website you are using?
Warmest Regards,
Allen
Hi Firebird, Mostly a reverse split is good for stock price from what I've seen. It seems as if it is not good if the company is verging on bankruptcy, but don't take my word for it as I've only seen one and looked at several others history.
I'd guess based on this limited experience that you will gain about 2-5% in the transaction.
Best,
Allen
Hi Firebird, ROCAR is return on capital at risk, right?
I keep confusing it with 'Return On Risk-Adjusted Capital - RORAC' - same letters but different order and which I don't truly understand.
Thanks,
Allen
Hi Gang, Saw something interesting that might be a help in the future. Not sure if this is just a one-off or if it is common. My sense is that the BOLSA, one of Mexico's stock market indexes that we often see here, tends to react rather fast to events. Take a look at the image below. Sorry it is not sharper but it is from the newspaper today.
It appears that the BOLSA was a leading indicator being a week or so faster to get to the first bottom and not dipping as much when the rest went down again.
Also it seems worth noting that all of the European Indexes were slightly delayed in hitting bottom compared to the US ones, making them lagging indicators.
What to do with this info? Paying attention to the BOLSA for indications that the bottom is on its way might be the first step. Then looking at the European Indexes as being validators that the bottom has been hit and is past once they start up might be worth paying attention to.
Who knows? Might be just a fluke for this past year alone.
Best,
Allen
Hi Toofuzzy, What I was trying to do was to summarize my learning curve.
In saying: "...never say never as it is bound to happen" I was attempting to say that I should not let my analysis too tightly govern my actions as the "market" is not rational and it will behave irrationally. As an example, VNR is now down $0.25 from yesterday's aftermarket price. Why did it not continue up? Who knows, I sure don't.
When I said: "What I should have done with the GTC is have it be for 3 or 4 times as many as I did, only about 1/2 of 1% of the cash on hand" I should have looked closer at the total risk in dollars rather than react fearfully about what was happening. Had I put in about 2%, as is commonly suggested as a maximum to spend on a single action, I would have the potential to have made between $5,000 and $10,000 instead of $1500-$2500 that is now possible.
"Hey, gonna be shot for a bear, might as well be shot for a grizzly." is an old family saying that if you are taking a risk, take it all, not just a toe's worth.
Warmest Regards,
Allen
Hi Toofuzzy, Yep, I figured the comment was for me. Sorry about asking complex questions that require lots of writing but if I don't ask I won't learn. Obviously you've spent lots of time thinking and working at this stuff, as evidenced by:
Hi Gang, I bought VNR at $1.62 back in March, thinking that since that was ~5% of the high back in 2014 it wouldn't go much lower before heading slowly up as oil recovers a bit. Wrong, Wrong, Wrong!!!
I AIMed it and got both buys and sells, making a nice, small amount of money until it started dropping in August. I saw an opportunity to protect myself by selling a call waaay out of the money at $2 and since I had reduced my basis through AIM to $0.90 it made sense. As a goof I put in a GTC for $0.50 and VNR hit that on 11/18. Then, to my surprise, it started heading up and in the last few days it has leaped up to $1.40 today after market. But I can't sell as it was a covered call for April 2017 and there does not appear to be a way to buy back the call. We'll see what happens next.
A couple of lessons for me: never say never as it is bound to happen. What I should have done with the GTC is have it be for 3 or 4 times as many as I did, only about 1/2 of 1% of the cash on hand. Hey, gonna be shot for a bear, might as well be shot for a grizzly. I got too scared that it might go OTC or out of business.
Oh, well. I guess I'll just have to settle for ~100% return in a bit less than a year, plus, of course, the money I got as a premium for the call.
Best,
Allen
BTW, I just noticed that Yahoo Finance now has charts for analyst's estimates and actual results. VNR has beat the estimates all the last 4 quarters.
Hi Toofuzzy, Taking up standup comedy, eh?
Hi Toofuzzy, The real cure for Affluenza is a better wealth distribution and more rational taxation system.
Back in the days of the Civil War, the Union Tax form in 1865 had only two questions on one side of a postcard! I saw it with my own eyes at a small town museum about 40 years ago and it has stuck in my mind.
Now we have 4 million words in 77,000 pages according to what what I saw a few years ago, but a recent article by a Hoover Institution on War, Revolution and Peace member said there were over 700,000 pages. (Personally I think that includes all the private rulings, not just the tax code.)
Given that size, it seems clear that manipulation by those who can afford the lawyers and accountants is likely to be rampant. Given that Trump has apparently not paid income taxes since 1978, according to a program I heard on NPR, it is clear we have a problem. Even Warren Buffet talks about this.
Oh, well.
Best,
Allen
Truly wonderful, Tom. It is the info, views, and approaches that we share that makes this forum great.
You said, "Guggenheim's (S&P 500 Equal Weight Sectors) scored the "Best"." This is in alignment with some other things I've read recently.
Now that the tryptophan sleep has had a chance to wear off, do you think the market seeming to have gotten past the Trump craziness means anything?
Best,
Allen
Hi Toofuzzy, You asked a question and I thought about it.
Hi Toofuzzy, Thanks for the explanations. Helps a lot.
As to a private e-mail, I don't have that here so do you mean regular e-mail? I think I have that, I'll have to check.
Best and Happy Gobble Gobble Day,
Allen