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Hi TF, so was I
Regards,
Karel
Thanks Mark, and I really don't mind not having the longest grub ever. I thought 15 was a bit wild already, but then, it was a slow time for me and for the board.
And thank you for your kind words of warning. Even if I won't become one of the superheroes of investing overnight, I'll take my responsibilities very serious indeed.
Qarel@investing.web
nothing
Hello Bernie, first off, my method wasn't meant for tax purposes, but I don't think I fooled anyone with that. It's just a funny calculation, in case you like such things. But then! You throw complexity at our heads and only come up with a program that hides the complexity! That is less than convincing, don't you think? But perhaps I am saying that only because I want to know how the calculation works, even when it is performed for me automatically.
But even Money seems to have a problem, because the three calculation methods leave out Tom's average-cost basis calculation, which seems to be a fourth alternative, also approved by your IRS. (Boy, am I glad that I am not an American
I think it's Lou's turn now, I hope he has found a solution now. And on another tack: what would be the best way to calculate capital gains for tax purposes with AIM? I think Tom V favors FIFO.
Regards,
Karel
Hello Lou, I really wouldn't know. I would be suprised however if Newport, or for that matter any AIM software package, would show average share price. AIM is constructed on a Last-In-First-Out basis, and the conventional way to calculate average share price is on a First-In-First-Out basis. Average share price is just meaningless for AIM. Remember: it is just a metric! It is not an essential quality of your holding.
There is an amusing way to calculate avergage share price in AIM. Take Initial Investment (cash+equity) - Current Cash Reserve. That's is the amount of money that you spent on equity. Divide by the number of shares. Some people don't like this, as all your profits lower the average share price, and may even lead to negative 'average' prices.
Regards,
Karel
Thanks, Bernie, that's the voice of reason from the Fool. I don't quite agree that stocks that have gone up are not better bets than the average stock, but then I have a soft spot for momentum investing.
What makes all the talk about psychological effects of a split rather moot, is that the studies mentioned considered the return after 1 year. By then, I have already forgotten that the stock was ever split. But that may be my age
Regards,
Karel
Tom, bless you for your generosity! When I have a Porsche, I won't mind a monetary contribution. For now, it's just my (paper) momentum port in another nook of the Net.
Thanks a lot,
Karel
Rien, that lower price after a split and higher volatility for cheaper stocks (but no stock will split to a level under $10) play a part may be true or not, but the efficient market crew will not be impressed. It seems to assume that all investors are just a bit dumb, with the exception of you and me, of course. I did try to give an answer within the bounds of that theory, although I myself rather subscribe to the 'more or less efficient market theory'.
Regards,
Karel
Hi Grabber, the problem with that analysis is that it assumes that the split causes the effect. Couldn't it be that the split is more of a symptom? The majority of the stocks getting split will be doing well, and stocks with reverse splits tend to be doing worse than their average peer. Where's the problem? Or do efficient market proponents claim that all stocks are moving in lockstep? Or that in an efficient market no stock price will ever move? That would take a lot of believing. That the effect is not observed in other periods is hardly surprising, as I would expect variation and external circumstances to play a role too.
Regards,
Karel
Hi Jerry, basically, you do nothing when a split occurs. Number of Shares * Price remains equal (apart from price movement). Check it for yourself and do the calculations as if a split has happened already. Halve the shares and double the price. Of course, you will have to recalculate your GTC orders, if any. And reverse splits aren't the best of news, really, but that is another topic.
Regards,
Karel
Jerry, if you sold a dollar for eighty cents? That is not what AIM does. AIM always sells for a profit. What you do when you calculate average cost, will in effect ignore a part of the AIM action. It will make you sell at a bigger profit, and it will make you miss opportunities to sell. Your choice, of course.
Why does AIM never sell at a loss, despite your calculation? AIM is a Buy-and-Hold scheme, with a cash reserve as risk protector and 'play money'. When the price goes down, money moves from the cash to the equity side. When the price rises again, you hurry to replenish the cash. When the price rises further, you'll want a bigger cushion. And when the price drops after that, you add again to your position. Never ever do you consult the average share price (unless you must, for some obscure reason of your own). You only say: the prices are rising again after a drop, can I sell those shares I bought recently in the drop for a profit? Or: the prices drop again after a rise, can I buy back at a discount the shares that I sold off for a nice price on the way up? In fact, AIM will have you buy back relatively more shares than you sold, and sell less shares than you bought, but that is because AIM likes to accumulate shares.
You want to make a profit on your last transaction. If you can do that, don't let the average share price stop you.
Regards,
Karel
About rescuing deep divers, shouldn't we also ask whether they are worth rescuing? I am not yet aiming (AIM needs rather too big positions for my wallet), but in my momentumish investing I need to ask myself the question: do I pull the plug or not. (Answer: not yet
My criterion is clear: do the stocks still grow revenue and earnings, for that is why I picked these stocks in the first place (besides momentum). It looks like a nice start for AIM stocks too, or you must be really sure that this is the lower part of a cycle, or just temporary. Hope doesn't count.
Do other people have other ideas about sinking deep divers?
Regards,
Karel
Beautiful indeed! Is the uptrend included, or is that just a case of the Busty Blonde on the hood?
Karel
About places to test your trading plan, what about http://www.marketocracy.com ? It's free, and when you are good enough, they'll even pay you. I scored the top 100 in the previous quarter.
Regards,
Karel
10 day cycles? I wouldn't know them even when they stand on my toes!
Sorry <big grin>
Karel
Hi niceboat, once you realize that you are in need of a brain, you have made an important first step. Yes, the market is bewildering for a beginner. I am a beginner myself, so I should know. I have started with rather huge losses, percentage wise, then I stepped back, took a breather, and evaluated what I had learned. I decided I needed education, and while I got it (reading about AIM and momentum investing), I got my courage back and started to invest again. The result: I was still losing money, but beating the market. That's something! The last week or so I am doing worse than the market, but hey, that's a week! I am still up compared to SPY and QQQ.
I am still nowhere compared to the likes of Myst. Perhaps it will come, perhaps not. But as long as I am ready to learn, things will only get better.
Now, ask yourself what you have learned, and then what you need to learn. No, you don't want to know what the market is doing tomorrow You want to know what you will do when the market goes up/down/whatever during the next day/week/month/whatever, and how you arrive at those decisions. Look (or ask) for real simple rules first. Things like fibonacci periods, 10-week cycles and covered interest will take more time. Don't start there.
Regards,
Karel
Hi AOB, let me misinterpret you willfully: by buying into a position. Aside from that, it is impossible. AIM needs equity to work with. It can't do anything with just cash.
So you are afraid. Nothing new there. Come to grips with it and get in, or stay out of the market. Your decision. Don't look for hot stocks or sectors, try for something solid first to get your toes wet. Don't follow the IW advice (currently 18% cash reserve for stocks, 12% for funds). Be a real coward and reserve 50% cash.
If you like this advice, ask the board for some solid stocks that still are likely to show some AIM action. We'll come up with something.
(PS: How big are you thinking, $$$-wise?)
Regards,
Karel
Well, agree on everything? But it is nice to agree on something!
BTW, making lists about what God cannot do is not very difficult. The question is whether this really challenges God's omnipotence. First of all (and last of all, because I am not going to discuss it here extensively) omnipotence is a very difficult word, as it is (supposed to be) an attribute of God, and all those words are very complicated indeed. There is widespread consensus that the fact that God cannot do logically impossible things hardly challenges his omnipotence. Another well-recognized problem lies in linguïstical absurdities like: "Can God make a stone he can't lift." Fun to construct, but not really saying a lot about a God. Of course God could make a stone as heavy as you like, but will always be able to lift it, so to speak. To count this against God's omnipotence, as is sometimes done, seems rather strange.
Regards,
Karel
Hi karw,
on the Bible Code, first an excellent debunking article:
http://www.csicop.org/si/9711/bible-code.html
And my fear that it is still alive is illustrated on:
http://www.research-systems.com/codes/codefind.html
Regards,
Karel
Tom, as soon as IHub finds a way to measure quality, we'll be right back in the top. And when the market picks up, of course. Couldn't you add number-of-posts-per-week-on-the-'A.I.M. Users Bulletin Board' to the Idiot Wave?
Kind regards, and don't worry,
Karel
Hi Conrad! We were talkign about messages in transcendental numbers, weren't we? I found it interesting to read you were not terribly impressed by the idea (neither am I), so I tried another tack than yours: the reductio ad absurdum. When a transcendental number can be said to hold an infinity of messages, even contradictory ones, the "message in the number" just evaporates. Numbers remain fun, of course, for those susceptible to their charms.
This whole discussion reminds me of that horrible idea of some years ago: the Bible Code. That was even worse. Perhaps I should say is, for people will continue to have an unholy attraction to certainty, while beauty and real messages always involve serendipity.
Regards,
Karel
Conrad, didn't Big C put all messages, even the contradictory ones, in each and every transcendent number? Suitably encoded, of course. Scientists, poets, philosophers, paparazzi etc. can only copy what is already written there.
Regards,
Karel
Rien, as far as it is possible I have an enormous respect for Nassim Taleb. I say "as far as possible", because when I look at the formulas he uses, I can't figure out whether I am looking at them right side up or upside down. Are you really sure that what works for hedge fund investor Nassim Taleb also works for niceboat, who as yet seems rather confused? (No slight intended, niceboat, we all started confused!)
And another thing: your description of the strategy was so cursory that I can't make much of it. Interesting though. Do you have experience with this yourself? Could you explain why it works, what you want to buy, and when you sell? A pointer to a book or site is also welcome. I like the idea of lots of small losses and few big gains. I know enough about Taleb to know that it is his preferred style, but currently I am doing exactly the opposite: lots of small gains and some heavy losses, not yet written off.
Regards,
Karel
Niceboat, if these questions are making your nuts, it is a fair indication that they are the wrong questions. Questions should be aimed at getting more knowledge, not at getting security. At the back of your questions seems to be the idea, or rather fear: "But I want to avoid losing money, I can't bear to lose money on one single trade." That way madness lies.
Read Myst's post http://www.investorshub.com/boards/read_msg.asp?message_id=543668 once again. It is a complicated piece, especially for you, but when there are things you don't understand, ask. One of the points is: You'll win some, you'll lose some, but try to tip the balance in such a way that your balance is positive. (BTW, the article is especially aimed at (very) active traders. Some details in the article are less relevant or even untrue for other investment styles.)
If losing money on trades horrifies you like it seems to do, don't choose X_DEV for your trading style. In fact, as no style of investing can guarantee that you win on every trade, perhaps you shouldn't be investing at all. Try CDs instead.
Part of my advice to paper trade X_DEV for a significant period is exactly aimed at your "but now you sell XYZ for less than you bought it!" questions. That is what X_DEV is designed to do. X_DEV prefers to free money on a spike upward, even at a loss, to be able to trade again. Decisions like that (freeing money at a loss) are necessary in any investing style.
BTW, nosy question: could you give a rough indication how many $$$ your are playing with for investing?
Regards,
Karel
A damper? You make me smile! Who is this Prechter guy, and where can I buy a crystal ball like his? Sure, this might well be a little or not so little correction in an ongoing bear, but predictions six months out, let alone several years out, just are hilarious.
Thanks for the link!
Smiling all the way as I type,
Karel