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Thank, you. Your method looks good too, but it is rather Vortex-like, in that you always take the last executed price as reference point. That is indeed a very important divergence from AIM.
I wish you well with your personal florishes to AIM. With all my interest in AIM variants, I try to keep to standard AIM in practice (as far as is possible for me). But to satisfy my curiosity: what florishes do you use?
Regards,
Karel
Hello Bernie,
as a matter of fact, I was not 'sure' that the extra info would bite you. If I had been, I would have left it out. I just wanted to give my picture to you (and to anyone listening in). I am still interested in your opinion.
Regards,
Karel
Hi Husk, to give an example:
Say your next buy comes at $2 and you buy 100, which makes $200. I go for 10% gain in $ and want to keep 10% of those shares too, so I want to sell 90 shares for $220 and $2.45 is my target for those 90. If you want to (I did), you could add the transaction costs. The AIM was to accumulate shares! I succeeded (but mostly down)!
Regards,
Karel
Ah, Bernie, perhaps you could explain our disagreements? You just mention their existence and go on with a spreadsheet with a (for me) unclear relation to whatever they are. And I didn't make 'an initial buy'. I have come scale trading down from $3.95 to $1.81, with 9 buys and 2 sales. At that point I had my 760 shares. In July I restarted the account as an AIM account. I missed the $1.93 mark twice, because I had set a more ambitious AIM at first. The current hold zone is wide enough, however My first AIM sale came at 1/2/03, my second sale yesterday (1/22/03). My AIM setup is hampered by the smallness of the account, but otherwise it is as standard as I can get it. I can afford no Safe, and I use a minimum $ amount for transactions that amounts to about 15%, which gives me more or less the spread of AIM BTB.
Regards,
Karel
Well, as it was a kind of AIM inspired scale trading, I'll guess it's not too off topic.
Scale trading is: buy at a drop of X% (and again and again) and sell at the next higher point (scale). So start with a buy at 10, buy at $9, buy at $8.10, sell all $8.10 shares at $9, etc.
My version varies the exit point. I noticed that AIM sells less shares than it buys (when buy and sell are equally far away from the AIM mid point). So my exit point became: sell for a 10% profit with 90% of the shares (so you'll need about a 20% rise). That's all!
Regards,
Karel
Hi Bernie, there you go:
When did you start your selling? I changed from scale trading to AIM on 7/16. I used the then current price of $1.58 as baseline. I bought/had 760 shares.
How much of your shares have you sold? First sell 129 @ $1.93 (no LIFO loss compared to price paid). Second sell 111 @ $2.31 (small LIFO gain).
How many shares are left? Shares left: 520. Hold zone: $1.84 - $2.80.
Selling RAS and AMC would about double the position.
Regards,
Karel
Thank you AIM! (And Automatic Investor!) I am currently using AIM to sell out of a position, and it works nicely. But now I have a problem! Because when selling out works so nicely, the stock (LRT) is becoming more attractive again. It is far from being the dividend king it was when I bought it first (and I scale traded down on the strength of that). But I have always been kind of patient, because the recent dividend drop seemed to be caused by temporary extra costs (new drilling). Anybody with ideas on LRT?
But perhaps I should stay with the decision I made when I decided to sell out of LRT: not to buy a company I don't understand. The question then becomes: what to do with the LRT money? There doesn't seem to be an oil ETF, and the energy ETF (IYE) I found pays next to no dividend. Perhaps I could use my other dividend stocks (AMC and RAS) to get something approaching an acceptable size for a position in IYR or ICF? But the price in the 70s is a bit cumbersome... Comments appreciated.
Regards,
Karel
Hello Tom and LC! Very interesting, all this! I tend to agree with Tom: usually this not a problem with AIM, except for those stocks that trade in a relatively narrow range. (And yes, also when you buy whenever AIM allows it. But that is not a problem with AIM.) And then LC's setpoint (PC/Shares) or a Cash Reserve that doesn't get back to 'normal' levels are a warning that something is going wrong in your account.
In case people notice this happening, what should they do? Probably a reset is good enough. But I am reminded of the problem of a constant dollar plan, where cash starts running up in a cycle. AIM's cure was to add something to the reference amount after a buy (PC_new = PC_old + Buy/2), but now cash gets depleted. So in principle, one might consider changing the divisor from 2 to something greater. In the opposite case, where cash keeps running up (from one cycle to the next!), you could make the divisor smaller.
Regards,
Karel
Sure it is real. Every month he delivers, he gets $100 from each subscriber. Every month he doesn't, he pays them back (or those who complain). Easy money. For him, that is.
Regards,
Karel
Hi LC, thanks for the observation. As my illustration was not an attack on AIM but on the Lichello Cycle, this only confirms my suspicions. Don't ever measure AIM variants with their results against the Lichello Cycle. It's a fraud! (Fun, though.)
Regards,
Qarel
Hmm, do two wrongs make a right? Don't think so this time. I'll retract everything and state the opposite:
To take up my line of reasoning and to correct it: PC grows after each buy and so the hold zone will rise after each residual buy is only partly correct. PC does grow after each buy, but Share Value grows twice as much. As a result, PC - SV becomes less, so the price has to drop more to get SV low enough to trigger a buy. So when the price remains the same, and there is a residual buy, the hold zone will drop with each residual buy.
Regards,
Karel@DiggingUpMySDR.com
`The same, of course, I meant,' the King hastily said, and went on to himself in an undertone, `opposite--the same-- opposite--the same--' as if he were trying which words sounded best.
Regards,
Karel@lookingglass.com
$1,000,000? Make that $16,312!
The effectiveness of AIM in the Lichello cycle is partly due to the cycle itself. I rewrote the cycle so that it would go from 10 through 4 to 10 in 180 data points, with the help of a cosine. That makes two cycles in 360 points, or 15 cycles, as in Lichello's example, in 2700 data points. (Thank you, Dan Bricklin, for spreadsheets!) So what does AIM do with those 15 cycles? It dies in the 10th cycle with a last buy at $7.73. After that, no more action, and the final score is $16,312.
BTW, the (tentative) add-to-PC-after-a-sale version of AIM dies in the 15th cycle after a buy at $7.83. The hike back to $10 doesn't trigger a sale. The final score here is $21,813.
Of course this doesn't disqualify AIM. But in my opinion it does disqualify the Lichello Cycle, in case that was still necessary.
Regards,
Karel
Easy, no question: PC grows after each buy and so the hold zone will rise after each residual buy.
Regards,
Karel
Thanks Mark, for your interest. The way I reached this variation is more esthetical than logical. I have looked at AIM spreadsheets regularly and noticed that (minimal) buys are spaced closer than sells, all other things being equal. This was also very clearly illustrated in the LD-AIM spreadsheet from Steve/Grabber. The reason for the imbalance is obvious. An addition to PC after a buy brings the next buy closer (and the next sell even farther away). This seems like a strange thing to do, unless you know something about the future price development that justifies this.
Of course an addition after a sell does just the opposite: the next sell moves away (but that does look like less of a problem to me). And the buy comes a bit closer (but still has to cross the barrier of at least two Safes). All in all it seemed more logical to me to add to PC after a sell. Then LostCowboy quoted Lucille Tomlinson's remark that a Constant Dollar Plan would benefit from raising the reference amount 'when the stock value was at its lowest'. Now that is a very logical statement when you view it like this: 'when the stock value is at its lowest, raise the reference value (before buying!): then you will be able to buy more at the lowest level'. The snag of course is that you don't know when the stock value has reached its lowest level.
Of course, a significant part of the logical way I arrived at the idea only occurred to me after the fact. That is why I would be interested in a backtest. I would not only be interested in bare results, but if possible also in the kind of stocks that profit from this approach.
Regards,
Qarel
(Perhaps people could start referring to me by my nick only, as there two Karels on this board. A rare occurrence!)
Hi LC (and Hi aptus)
I am just pondering this, and more for my amusement than from any real wish to change the AIM algorithm. I already did the same test and found how raising PC after a sell instead of after a buy had a severe impact when you consider the Lichello cycle. But for obvious reasons this isn't very informative: the Lichello cycle is almost custom built to make the trading side of AIM shine. (Real trading systems like Vortex or X_Dev do even better.) But for my Nasdaq100 sheet this variation actually was beneficial, so things remain undecided. Perhaps someone with a huge database and a good backtest engine could do some number crunching. (Yes, that's you, aptus. I hope you are interested!)
Regards,
Karel
Hmm, your third ring? What about the law of diminishing returns? Not to mention the fun and profit others could have. But perhaps you really need three!!
Regards,
Karel
Well, that doesn't mean there are no people aiming high!
Hi Karel,
I would love to send you the spreadsheet, but it is just a 4000+ row 2MB+ standard AIM spreadsheet, but where the PC is updated with half the value sold (no changes on buys, and no 'buy-balancing').
Regards,
Karel
Hello Karel! Your research into setpoints underscores for me what I consider the 'dark side' of AIM. It is really a very greedy buyer. In AIM BTB the next sell after a minimal sell comes after a x% rise, where x% represents the ratio MinSell/ShareValue. The next buy after a minimal buy however comes after a y% drop, where y% roughly represents the ratio (Minbuy/2)/ShareValue. In order to make x% equal y%, you could double the Minimum Buy, but this just shifts the imbalance to the amounts.
Now I am going to be heretical. (Bernie, close your eyes!) The problem, if you want to call it that, is that PC is raised after a buy. This brings the next buy closer, which is illogical. For the placement of the buys and sells it would be much more logical to raise PC after a sell. I tried this with my nasdaq daily aim sheet and got a real improvement. YMMV. If you don't like to raise PC after every sell, consider raising PC only after a completed buy-sell sequence, say:
Sell (PC unchanged) - Buy (PC unchanged) - Buy (PC unchanged) - Sell (PC raised) - Sell (PC raised) - Sell (PC unchanged)
There was some information about the constant dollar plan recently, with the comment that it would benefit from raising the Constant Dollar Amount, preferably after a buy. I just don't see it. Comments are welcome.
(Bernie, you can open your eyes again!)
Regards,
Karel
Conrad, you calculate Safe from Advice. AIM BTB calculates Safe from Share Value. That might account for the difference you find.
Regards,
Karel
Hi Bernie,
good to see you ready to rise to my bait! I thought the mention of the word 'flaw' would draw some reaction from you.
It was indeed my aim to show that AIM wouldn't sell the whole position, and I like AIM for that. And I used the word 'flaw' for Conrad's benefit (and yours, of course!), and not for not selling out completely, but for the residual sell. I don't really consider it much of a flaw, as I have only seen it in this extreme case.
Regards, and very much obliged,
Karel
SELL ALL YOU NUT! I am a boring kind of guy, so I decided to enter this in my AIM spreadsheet. I used 10% Safe (and 5% min sale, but that isn't relevant here). I entered 344 AMGN at 14.62 and entered 50.24 as the next stock price. I finally got 230 stocks sold. Finally, yes, because for the first time in my life I saw a residual sell! After AIM sold 209 stocks in the first go, a stock value of 50.24 in the next row triggered another sale of 21. After that, AIM was satisfied. So:
1) AIM wouldn't have you sell everything, just 2/3
2) Conrad, there's a Lichello Flaw on the sell side too!
Regards,
Karel@lookingforcover.com
Grabber, I feel stupid! I wanted to relax my hotmail spam filter, but I forgot. Could you please send your ss again?
Karel@beatingmyselfoverthehead.argh
Hi Grabber,
Yes, I would like to have a look at your spreadsheet. It's easy to stick one together from your description, but I just like to see your work. You'll find my e-mail in my profile.
... unless you can get some other return (dividends) on those shares, there is no point in buying them. Well, you've already heard from Bernie that he didn't say that. But there is more wrong with the sentence. The stocks left are just panting to be milked the next time AIM triggers a sell. AIM is a perpetual selling machine! I like it!
Regards,
Karel
Hi TF, LD-AIM may very well be a way to start AIMing stocks with 'not enough' money. That may be a plus. Bernie's objection is valid, however. You don't need 5 consecutive sells to run out of stocks: depletion can come in installments.
A try for a characterization: AIM is a kind of investment management with a bit of trading thrown in; with LD-AIM the trading becomes relatively more important and investing less so.
Regards,
Karel
Thanks Conrad,
I am one of those that peek at your board once in a while and I really appreciate the updates. My best wishes for you,
Karel
Hi CJAM,
I did the same test for the NIKKEI 225. When I downloaded the monthly data I got them from 1984 onward, so I used that. BTW, I used the low to decide whether the stop loss triggered, so I'll catch more stopped out periods. I think that's the only way, or you'll have to accept whatever loss >5% happens at the end of a month.
Average return for a 12 month run with a 5% stop loss is 5.98%, without the stop loss 2.35%. I'll guess the N225 wasn't the place to be, the last 17 years. BTW, that +2.35% may look a bit strange when you realize that the N225 now stands lower than at the start of the period. That is because of the average % I use: in practice you can lose money with positive average %, when the variation is great enough.
The real return is a bit more difficult to calculate, as you have to keep track of 1 final and 11 intermediate results. I did something quick and dirty, and arrived for the DJIA at a result of 1% better than the 5.7% average annual return for the index over the last 71 years. (Is it really 5.7% folks? What are we doing here, investing?) So that makes (cross my fingers) about 6.8% annual for your method. For the N225, your stop loss method seems to work out a little bit worse than the index. The index scores -1% annual, your method -1.2%. But don't trust these numbers too much. As I said, they are just an approximation.
Standard deviations are (stop loss versus normal):
DJIA: 16% vs. 19%
N225: 16% vs. 23%
Regards,
Karel
Hello CJAM,
Thank you for this interesting idea. I tested the following:
-DJI from jan 31 through today
-stop loss at .95
-invest every month at the close of the previous month
-every investment runs for a year, unless stopped out
-no interest, no dividends
-no rebalancing
From the 852 periods, 394 got stopped out for -5%, 458 ran for an average 18.96%, and the total average was a gain of 7.88%. The average return for a 12 month run without stops was 8.08%. That a stop loss method comes this close to the 'normal' return is amazing indeed. BTW, with the stop loss at -10%, the average return gets to 8% (240 periods stopped out) and with the stop loss at -25%, the return actually beats the normal return, at 8.24% (42 periods stopped out). Of course, starting in 1931 gives your method rather a head start. Starting two years later brings the avg. annual gain/period at 8.06% (5% stop loss) vs. 8.92%. Still not a bad result at all.
Could you show the difference in volatility between your method and plain B&H, and what this does to the 'return gap'? With percentages this close, your method might even beat B&H.
Thank you for your efforts so far,
Karel
Thanks Tom! I may be greedy and I may be a sneak, but I am writing this wearing a big grin and something even Warren Buffet in all his glory cannot sport: the Secret Decoder Ring (well, actually it has morphed into another wearable). I have already had my first valuable insight just looking at it! Go figure!
Regards,
Karel
Conrad,
I don't know whether the scientific and theological viewpoints will end up at the same point. It would be nice if they could reach a kind of compatibility, and a recognition of their separate competencies. For the interpretation of the material world, science shouldn't be bothered too much by theology, for the interpretation of the spiritual world the roles should be reversed. The moral sphere might be an interesting meeting point, where both should have a voice.
I see you use revelation in a way I did not intend, so I will explain. Revelation as I meant is the self-revelation of God, not the discovery of facts about our world and our subsequent interpretation. Of course, things are a bit thornier than that, as all revelation in the sense I mean also incorporates interpretation, but the starting point is not so much material as spiritual.
It seems strange to harness an interpretation of the world as cruel and destructive against the goodness or even existence of Big C, but you mention this with special reference to creationists. They will not be impressed, as for them this world is tainted by the Fall, and all that is bad is caused by that tragic incident. More enlightened Christians know that life has developed through evolution, so this knowledge doesn't amount to much of a revelation for them either. (And, as a sidenote, it seems strange to qualify what happens in the world as cruelty the way Attenborough seems to do. While I would allow that human beings can be cruel, I would hesitate to call non-intelligent beings cruel, at least not unqualified.)
I would also like to point out that the majority vote is that prayers should never considered to be answered by war, rape, child molestation and whatever cruelty people perpetrate on each other. (War might be an exception for people suffering under oppression, but even then not unqualified.) Prayers that remain unanswered materially might be considered answered in a spiritual sense; that was my meaning. As a consequence, Big C doesn't need to be as convoluted as you suppose. Big C is generally considered to be against cruelty of any kind.
You are right that the discussion would benefit from more thoughts on the combination of ontology and cosmology, and that theology isn't necessary in that discussion. Theology is only necessary to clarify the language and other structures of faith. But you will find mostly theologians interested in questions like these (and then only a few), because most other people just don't care one way or the other. As a matter of fact, a modern and very complicated attempt at doing this is Process Philosophy (and Process Theology), first developed by A.N. Whitehead in his Process and Reality (1929). I haven't read it!
Regards,
Karel
Hello Conrad,
the subject matter is rather difficult, and I am bit rusty here, as it doesn't come up often. It is almost completely ignored in some Protestant circles: they see Big C as revealing itself, and no reference to other knowledge outside the revelation is even relevant. In my Catholic background there is room for something called Fundamental Theology, which is considered a kind of preamble to Theology, and tries to go as far as possible under the steam of reason alone. This project is considered to be very limited in scope: one cannot prove Big C's existence by any means. My point of view is that FT doesn't try to show that it is necessary to talk about Big C (that would amount to proof) but that it is not unreasonable to do so. While this may create room for a discussion about Big C, this space is fundamentally empty, for we agree with the Protestants that the only knowledge about Big C is revealed. This is one way to explain the silence that is hammering on the eardrums of your mind.
Indeed, it is fundamentally impossible to make an objective distinction between Big C and small c's. Such a distinction ultimately requires the 'leap of faith'. However, unobjectively, we can go a bit farther and say that no one small c in this universe should be confused with Big C. Even calling Big C the essence of the universe is unwarranted, from my point of view, but that might depend on your definition of essence. Big C can only be discerned from its workings, and then only tentatively.
Take the case of answered prayers. When someone prays for recovery from illness, and recovers, the prayer is considered answered. From an objective viewpoint it is completely likely that the illness went away naturally, or because of medical treatment. This is also clear to the person who prayed, but still the prayer is considered answered. Why this is so will become even clearer in the case that no recovery occurs. The person who prayed might still insist, and often will do so, that the prayer was answered, only in a different way. (Please remember that the archetypical Christian prayer contains the words: Thy will be done.) This conclusion: that the prayer was answered, can only be seen as tentative, and as requiring faith. It can also be seen as unnecessary, because of other explanations, or no need of an explanation at all. We have, however, moved outside the range of the purely practical and objective. We get no information on what happened in the strict sense, but when we open ourselves for a confession along the lines of 'my prayer was answered', we might get closer to the person who makes it, closer to ourselves, and closer to Big C.
Regards,
Karel
Conrad: To say that Big C might be more interested in new possibilities makes him utterly human.
I will not deny that humans share this characteristic up to a point, when they devote themselves to being creative. But the very point of creativity is that humans create reality, and become real. It is this reality that karw talked of, as far as I understood him, and I wanted to question whether this reality is equally important, or necessary, for Big C. If it isn't, that rather detracts from Big C's humanity, ontologically speaking.
I fully agree that Big C is an unfounded and unasked for hypothesis, on the same level as possible viruses in some unknown location. That is why Big C almost never is being used as a hypothesis (the exception being fundamentalist creation 'scientists'). But if you want to reduce language to the construction and refutation of hypotheses, that is your problem. As soon as you leave the scientific and objective use of language, the silence around Big C becomes a bit less ear-deafening. After all, lots of people have talked and talk about their experiences with Big C. But not objectively, no.
Regards,
Karel
Peter: Please correct me if I am wrong
No I won't, as your absolutely correct, and I was wrong. Sorry for the confusion.
Don't mind Bernie about AIM variations, he is seeing them in every corner now, that stalwart defender of True AIM. Bless him.
Regards,
Karel
Unfortunately, Rien's calculation isn't quite correct:
Price drops to $2,
10.000 (PC) - (1000 shares * $2) = $8,000
$8.000 - 10% safe = Buy order over $7,200 = 3,600 shares
The 10% safe are supposed to be relative to PC, so:
$8.000 - 10% safe (PC 10.000) = Buy order over $7,000 = 3,500 shares
The new PC then becomes 13,500, not a big difference, but a real one. The rest of the calculation:
Share price goes up to $2.20 =>
13.500 - (4500 * 2.2) = $3,600
$3,600 - 10% safe (of 13.500) = Buy order over $2,250.
Now the difference between this $2250 and Rien's $3.000+ is rather great, so take care!
About the flaw: when the share price drops, AIM advises you to buy a certain amount. When the share price remains at that level, AIM might advise another buy, even when the price has risen a bit. It's still good advice: Buy, the price is low enough to justify it. However, you shouldn't go out the next day and buy. Space out your buys, as money is a limited resource in AIM. (Equity never is, so the same doesn't apply equally to sells.)
Regards,
Karel
karw: When you look, or when Big C looks, reality is created, .... Just as a side note: I wouldn't be too quick to equate the way we earthlings look at reality and the way Big C looks at it. (Unless you mean Big Conrad, of course...) Big C might be better suited than we to live in a 'reality' that is more of a potentiality than an actuality. Of course, that is also a theological objection to Einstein's: "God doesn't roll dice." Big C might be less interested in outcomes than we are, and more interested in the new possibilities that arise.
But that's rather far afield from the Vortex discussion.
How are things going, Conrad?
Regards,
Karel
Nice job, QP!
Karel
Another attempt at recreating the screen from that article: http://tinyurl.com/2xqn . I just used EPS growth > 0 and totalled the RS values. You would change the target value to get about 50 stocks. If you would like to add a beta check (like Myst), you'll need a lower value for this total. So much lower in fact, that it changes the whole nature of the screen. With a total of 200 (= on average in the top third on Relative Strength), I only get 2 stocks!
This (abbreviated) URL only works when you have installed the deluxe screener already. If not, and you would like to: follow lostcowboy's advice in #msg-595276 .
Regards,
Karel
Hi Mark, thanks for answering my question before I asked! About having to specify your risk level, I mean.
Regards,
Karel
Hello Tom, you'll find (or have found) an email in our inbox by now. Thanks for sharing these rings! I am quite sure they are an invaluable asset.
I was looking at the numbers of the posts for some days now, because I really wanted to grub one of them. As Rien pointed out: now I don't have to worry over it another time. When I saw the count at 5985, I just couldn't resist. It's nice to yield to temptation once in a while!
Regards,
Karel