is retired now but still kicking like a horse!
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Hi Cowboy, On OT Investment Club Problems.
Thanks for the comments. I think I need to explain this a little more. As a clarification I should say that the investments in the Vortex Engineering Projects were made by Vortex Investment Club based on a 100 000 (Guilders) profit I had accumulated with stock investments(Vortex Method plus Turbovest Method).
The investments in the engineering projects were discussed, promoted in the Vortex newsletter, and agreed to, etc, etc, and for two years they were accepted without any problem, discussed at birthday parties, etc etc and even Year End Statements for fiscal purposes were accepted. This guy also added Fl. 10000 of his own money from his own account without me asking for it. For the latest investment he even signed an agreement that he, as majority participant in the Investment club, approved a Fl. 30,000 extra investment in the project. He was totally informed as to what he was doing, and he even visited the workshop were the equipment was being built and tested.
The problem came much later when his family-friend the Advisor began to tell him he should demand his part of the Vortex Profits back that I made for him with the stock deals. From this point on began a year long battle with the Advisor making all sorts of false statements as to what had been going on. Eventually the investments were being called Loans and things like that. It's a horrible mess when such things are being done to you. It can be compared with calling a woman a prostitute in public, while in fact she is not. The damage is done in spite of various testimonials, I don't care how many, state the truth that she is as pure as the driven snow.
In the court case his lawyer heaped a bunch of new lies I never even heard of lies into the fray. True, the documentation is already in my favour but the issue is no longer a matter of facts but of evaluation of the lies that have been uttered. Dutch Law may in some respect be similar to US law but there may be important differences. A married man may spend unusual amounts of money without asking his wife for permission, but his wife has various rights to declare such expenditures invalid(expenditures out of common assets). If then such a wife states in an letter that she has not approved of her husband lending me money, regardless of the fact that that she is mistaken about the facts of the transaction, this throws a new angle into the case that can not be ignored. A judge must look at all these red herrings that are entered in the hope I would settle in a compromise. Do not forget that this man already got his investment back! He is only fighting to get his hands on the profits that with his approval was invested, That's how devious this case has become.
Now on top of all this his lawyer claims now that this man was mentally sick and that did not know what he was doing at the time. This also brings in a new dimension. If a Judge believes that there is ground for lack of intention to invest the profits then he has the power to grant the claimant his claim. Even documents that carry signatures then loose their power.
As you see, this case is no longer simply a matter of facts but of false allegations that I have misled this guy. Due to the fact that these investment manners have not all been processed in a water-tight set of documents makes me vulnerable for this devious plan to get the money from me and my ex-wife. What makes me so bloody angry it is that I had to sell my house because of business debts and that the little money I had left over is being claimed via devious lies. The sad thing about all this is that this guy himself is not the real culprit but his unscrupulous Advisor that had led him to undertake this action.
Even if I win this case I will loose!
Investment Club members, beware of who you call your friend!
Conrad
Hi Lemonhead,
I bet that we do not substabtially differ on borrowing as you say: Been doing it ever since.
Almost any type of enterprise works by virtue of borrowing either on assets already accumulated or on a great idea for making things better for the future.
Just how anyone applies his credit is a personal matter.
Investing on Margin has hurt a lot of people, I know that, but such sad cases are not primarily due to the principle of borrowing. They are due to a dangerous(devious) manner of borrowing as is practiced in the typical Margin investment schemes in which a broker lends you say 75 dolars to buy 100 dollars worth of stock. Such a credit deal appears attractive to inexperienced investors but is a devious scheme to make people buy stock when they have no money at all. The broker is only after commissions! The promise of the broker is that the stock will rise to heaven and then the borrower will make a bundle. Usually these schemes are promoted in a hyper-active market that is already at the top(mass hysteria to join the fray makes people fall for such devious schemes).
In these schemes the value of the stock can very easily drop rapidly and the Broker will sell the stock before you can say shit!
TurboVest is a mechanism to borrow when the market is already down and AIM cash is exhausted. If you borrow at 50% of the portfolio value the stock market has to drop another 66,7 again to make the equity loan equal to the portfolio value!! In normal markets this way of investing works like a charm...I mean, like a turbo!
With a little sensible money(asset) management TurboVest is virtually failsafe.
Conrad
Hi Rien, That I go along with. Some stocks will never come back at all, I can think of a few!
In that context it is al the more important for AIMing that stock selection is done with much care. The absence of the stop/loss makes AIMing vulnerable to the type of stocks you mention.
Regards,
Conrad
Rien, I have no big uarrel with that, but that counts for small pools of momey as well. If you invest 20000 of a pool of 1000000 in a single stock then this is exposed to a high risk and the 20000 could be lost just the same. The fact that it is a part of a big pool makes no differense in the loss. The only differece is that 20000 in 1000000 looks like a small loss and people will not scream bloody murder about it, if it is lost.
The danger in this type of thinking is that the rest of the 1000000 may also be invested without due care and attention. The key here is a good policicy for all the money, not just the the part that is AIMed on a single stock: If the stock is not worth buying then it should not be bought at any time. That is the most importanr rule!
Conrad
Rien,
In many ways what you say is true, but all investors are burdend with this information and no one can escape this, on the average. The argument I made is not that Turbovest can save you in all chrashes buy that Turbovest is a sensible mechanism for normal markets that are volatile. My example on AHOLd with AIMing shows that a droping market can make you a lot of money without Turbovest(60% per year on AHOLD 1998-2002)! Turbovest would have resulted in a profit of ~ 100% per year!
With Turbovest at work in a normal market one can collects a fortune in good times, and then with sensible money management and sensible investing he can survive the crashes and still invest at or close to the bottom of the market!!!
The fact that I illustrate how Turbovest can survive a market dive of 75% makes everybody sit up and start pointing at the dangers of going to that extreme limit. Every investor can limit his own borrowing to 50% or 25% of his portfolio value after the market has already dived. I hoped to illustrate the power of this method for normal markets.
Turbovest is an extremely sensible investment method. In an analogy, not every person that can drive a car to work should step into a race car and take on the challenges of the Indianapolis Race Track.
Conrad
Hi LemonHead. Betting on he dive is really dangerous.
You are right 100% on this. I think you might have misread my intentions, or more diplomatically expressed: I have not expressed my intentions clearly!
I was referring to the discussion on selling shares that cost 100 at a loss at 50 to buy more shares at 25! If that is a strategy then one has to bet that the market will fall to 25 or else that strategy is doomed to fail. I pointed out that this strategy is a silly one, as there are many ways that could make it fail.
Instead, if one follows the AIM strategy and the market is already down 50% then going on margin is a very, very sensible thing to do. Many discussions on this Board focus on stretching the cash to take advantage of buying a large amount of shares after a deep dive. TurboVest is a way to stretch the assets you have. Borrowing money to do the things you want is a way of life. TurboVest is a natural partner of AIM simply because assets are money one has! If one has no assets then borrowing too much money(as bank will happily allow you to do) is silly as wel!!!!
Some people borrow money to buy an expensive boat and then throw in loads of money afterwards. This happens with big boats as well as with small boats. They get no money back for it! Other people go on expensive holidays and bear the burden of clogged highways, clogged airports and torrential rain storms in foreign countries, or earth quakes and volcanic eruptions that they want to watch with their nose righ at the lavastream. None of these expenses results in getting any money back for it, yet people do it en mass. So, what is so strange about borrowing money to buy low priced shares in a sensible strategy? Warren Buffet is a sensible man. He knows how to invest and to reduce his risk. That's why he does well! He is the living example that the Risk Pyramid is a fallacy! You earn big money by reducing risks. The AIM strategy is focussed on reducing risk. Turbovest is simply a way to increase profits at low risk. TurboVest is not a primary strategy for surviving a crash. It is a primay strategy for normal volatile market behaviour!
As to a rising market after a down period: You asked when it rises after a crash! The market recovers after every crash. You can bet on it! Not everybody will survive every crash but the survivors will make the market rebound. You can bet on it. In the current crash there have already been several rebounds. Turbovest AIMIng thrives on that!
Conrad
Hi LC: AIM Clubs
Thanks for the information. I looked at the bivo.com site but could not find any listings of the problems that I had.(A member all of a sudden losing his memory and taking me to court to get his portion of the profit back that he invested in my engineering projects). Can you point point me to the section where these problems are listed? It is clear that if the decisions we made had been documented in iron-clad contracts, and would have been witnessed by lawyers on two sides then I might not have this problem.
The problem is that the investment decision was written down and signed. But 3 years to 4 years later this guy claimed he was misled and did not know what he signed. Then his wife claimed that she should have singed the paper as well. Then the lawyer on his side twisted everything around and claimed I had made a lot more profit than I claimed. I was made the culprit while in fact I turne4d over backwards to be honest and do things the right way. If you get this sort of problems with people that have been close friends for 12 years then what can you expect from people that you have never even met?
I could get a load of nice documents showing that everything is hunkey-dory but when I shell out $ 5000 to an internet club bank account how confident can I be that it is on the level?
There are loads and loads of schemes that the experts can't even unravel afterwards. It all looks honest and doubly checked and lawyers say: This one is OK! And then it shows that it is a clever fraud. The big dilemma is that an honest scheme that is not 100% formal stands no chance attracting members outside of friends and family. And if it looks OK formaly then the most devious of scemes will look the most promissing.
To have a good fund to reap the benefits from dealing with a large pool of money you need to rise above the limitations of a club. There is a hell of a lot of work to be done to run a fund like that and inevitably you are going to need a manager to run the show. This launches the CLUB into commercialism.
The Vortex AIM CLUB I had, had a portfolio of 250,000 guilders but the money I made on my work was a pittance.
If you run 15 to 20 stocks it becomes impossible to let 15-20 or more members decide what to do in monthly meetings.
Having club is fine but only if it remains small and if the members look at investing as a hobby. If big money is involved you get big troubles!
I am still trying but I am a REALIST(among other things!). To make matters worse, I am an honest realist. When I talk to people about investing in Vortex I tell then they may lose their money. If I sell a glue I tell people that it might not hold. If I would run an Airline I would tell the pasengers that the plane may crash.
I call a spade a spade but people like to hear that it is an efficient earth-moving-implement that makes earth moving a piece of cake.
Conrad
LostCowboy: AIM Investment Club.
Investment clubs usually flourish by virtue of two aspects: 1) learning about investing and 2) social interaction( I refer to my Dutch experience). There are also more or less commercial "clubs" but these are run by managers that fetch a significant fee. Usually there are millions involved. Started the Vortex Fund but no one wanted to do anything, so I charged a fee, but one needs a pool of money of about 1 million to make a decent living at it.
If learning and social interaction are absent, then why have a club?. The only conceable advantage I can think of is that you have a larger pool of money so that trades are less expensive. What could be the motive of an investment club that only operates via internet?
I would not like to let other lose my money for me and I win big I like to take the credit as well.
When I read the many articles for such a club I can not imagine that a club on the net will actually be practical.
I am interested however to know if such clubs are actually operating, and if so, what keeps them functioning?
Conrad
OT Subject(On Topic)-: If everyone would be using AIM.....
That's dead-end discussion folks! It does not get anybody anywhere:
If everyone would become as honest as an honest angel the cops would be unemployed, the locksmiths would no longer make any locks and the copper mines would shut down. Nobody would die of gun shots and there would be no needs for guns any more(Angels don't hunt deer either). The NRA-members would all sit at the bar doing nothing but drinking and talking about the Bad Old Times. Beer breweries would do broke, though: Angels only drink sarsaparilla.
People being as they are, we can rest assured that we will be stuck with volatility till Doomsday.
Next OT subject please!
=====================================================================================
OK I have one
Some time ago there was a heated discussion on selling shares at a loss. At the time I thought it was a rather silly thing to do, and I claimed one day that Vortex would not sell at a loss. I have been doing a lot of Vortex testing and finally I understood why the discussion had come up(I am a bit slow on catching on). The reason never crossed my mind as I had Turbovest!
Having thought about this selling of shares at a loss to free up cash to buy lower price shares in a deep dive seem a silly thing to do, but some calculation shows that it might work,if you are confident that the deep dive is at hand. Technically it will work fine:
Regular Buy 100 @ 100 = 10 000 Cash investment
Price drops to 50 and you predict it will dive to 25:
Sell 100 @ 50. Actual Loss = 5000
Price drops to 25. Buy 5000/25= 200 Shares
Wait till the price is 50 again. Value= 10 000. The loss is recovered. No gain; No Loss.
If you sell on the regular AIM-routine you gain nothing.
If you wait till the price is again 100: Value = 20 000. Profit = 10 000
Share Price Rise from the dive at 25 to 100 =300% or a price ratio of 4:1.
This scenario makes no sense as an investment technique, even though it is technically sound:
First, if you can see the dive from 50 to 25 coming the you should have seen the dive from 100 to 50! That's the more serious dive as 5000 was lost in that one! From 50 to 25 the loss is only 2500, and if the dive goes much deeper there is no point selling anymore as you only get pennies for the Penny Stock.
Second, the rise from 25 to 50 will tempt you to sell the lot for an apparent profit of
5000. In order make any profit at all you need to let the price rise to well above the 50 level.
Thirdly, when the price dives to 50 from 100 it could just as well recover right there. This poses then risk of making the 5000 loss definite. So, you bet on the dive and if the price starts rising you think in terms of selling instead of quickly buying to catch the next rise: You wait for the next drop in price and never recover the loss.
Selling shares long after the dive has started, or buying them as the price is rising, is against the AIM thinking. If this tactic is to make any sense at all you might as well use a stop/loss at 85 % or 90% and wait for the stock to hit 25. At this point 8500/25= 340 and when you let that ride for a sell at 50 the profit is 8500, or let the profit run till the price hits 100 again and the profit is then 22500.
Obviously, if the price had already dropped to 50(and the stock is worth having), the sensible think to do is:
1) To wake up
2) Borrow 3500 and buy 70 shares.
Then:
Share capital= 8500 for 170 shares
Price drops to 40: Value=6800
Borrow 4640 for 116 Shares
Share capital=11440 @ 286 Shares
Loan = 6140
Price drops to 30. Share value=8580
Borrow 6000 for 200 shares
Share value= 14580 for 486 Shares
Loan =12140
Price drops to 25. Share Value= 12150(touchy situation, but lady luck
is on your side. With the market at ¼ value it will soon rise!).
Sell your car to create enough margin to cover the loan if things get rough.
Take a second mortgage on your house if things get even rougher.
Price rises to 30: Share Value=14580. Do nothing.
Price rises to 40: Share Value=19440. Do nothing(or sell a few shares).
Price rises to 50: Share Value=24300. Let the profit ride if you dare!
Price rises to 100: Share Value= 48600. Profit is 38600 less trading cost & borrowing interest.
That's TurboVest
Some people will say that this is a dangerous investment method. I say it is not:
A) A market dropping from a 100 to 25 is a rarity. If it had dropped this far then the likelihood of recovering is very large;
B) If you invest like this regularly with borrowing some at all the market dips even up to 50% drops then you do not exhaust the equity credit;
C) When you invest like this regularly then your investment grows exponentially to the second degree and you can afford to put away the cash for a rainy day.
Now suppose ... a lot of people would be using TurboVest: All the money in the world would flow the TurboVest Investors.
Let's not think about it.
Conrad
PS: I have been doing a 4,5 year Vortex Test with daily prices on AHOLD(very time consuming!). The test was dome as follows:
Every 6 months was treated as a separate run with the ouput, rebalanced for Cash/Equity Ratio, used as input for the next run.
The Vortex parameters were Adjusted to prevent going into negative cash but they were not optimised(takes too long!!!).
Results:
AHOLD is a relatively non-volatile stock like SPY.
Trading Cost: 10 Euro per trade plus 0,5% of trade value.
Interest on cash= 4%/yr, compounded daily.
No Equity Credit used.
No optimiztion except for the fist 6-month run.
Dates: 1 Jan. 1998 to 30 June 2002.
Vortex Annual Yield= +63 %
Buy & Hold Annual Yield = -3%
With a limited use of equity credit on the dips the yield would have easily been trippled.
Any one interested in a Summary of the nine 6-monsths performances can ask for it at:
ahold@vortex.demon.nl
Conrad
Right you are Irwin!
It's a narrow road, the one that is less travelled.
Cio,
Conrad
Hi Irwin, vout slaves:
Thet were negro slaves.
Dutch slaves work in Holland for low wages and too little medical insurance!
Conrad
Ha Irwin,
I bet you might have figured that I referred to some time-warp like the Andromeda Effect I mentiond earlier for faster than light travel(My Ramjet Principle of Empty Space Propulsion).
No, I referred to the ideas of the Slave Trading Dutch(and others not to forget) that figured that negroes should be eternally gratefull for having been exposed to our Westren Civilization. That eternity proved to be very short indeed.
Conrad
Hi Jennie,
Your comment about the different things people are(or is it something they have?) was the first sensible thing I read today, and it is already 5:30 PM here in Holland. You hit me where it hurts because it hit home(After a day of skiing my hurting body feels good because I realise then that every part of it belongs to me!). Your words made me feel what I know I am(or have). Once in a while I just forget it for a moment. Thanks for waking me up.
I am a realist. An optimistic realist one day, a pessimistic one the next. And then I am an emotional pessimist, or depending on circumstances, an utterly rational calculating computer, or an affectionate romantic, but that part of me is getting a bit rusty. I think I need to practice a bit more.
I am so realistic that I know that we can't grasp onto reality even if it does exist. Every human being tries to get hold of it, yet none of us manage it. Because I am all these things you mentioned, and the few I figured out myself, and a few more, all at the same moment, most people can't deal with me easily. They can't figure out that a rational computer-mind can cry the next day and be a romantic optimist a little later, or a raving lunatic if it suits my purpose. They think I am a funny shaped peg for which they can't fine any hole to put me in. The fact that they want to put me in a hole in the first place is a sad thing as they do not realise that people do not belong in holes any more than a monkey belongs in cage(a hole), I think, but the funny thing is that if there is no hole to be found that I can fit into, they tell me it's my fault and that I need to change! People around me tend to insist that I should fit into an empty hole they picked out for me.
Too bad that so many people already sit in a hole of some sort or other. Or maybe it is just as well that they do?
Conrad
Tom,
You are welcome. It was fun to make the spread sheet! I will still try to reduce the functions to single formula though. My fist efforts led to think that the final formula will be simple.
Anyway, I will send you a copy of the spread sheet. It should not be difficult to adapt it for the AIM BTB. Maybe I will look at that later, but maybe you will beat me to it!
The Chart that is included is a bit grey, with some charting options it can be made to look better. Also, with a smaller data range to represent a realistic stock price dive the results may look more real. I have used a large number of price drops to let the exponential growth rate jump out!
Regards,
Conrad
Hi Bernie, Leeuwenhok ???
That's Lion Cage in Dutch!... No, I mean that's Lion Cage in English!
Ride on the Pun, Its Fun!
Leeuwenhoek you meant maybe? Lion's Corner!
Conrad
Neandertals
I read a story one day to my kid(well, not one day, it took many nights of bedtime reading): The 13th Warrior, of Michael Crichton. It is a fiction about Neanderthals in Scandinavia.
I used to think Neanderthals were Nederlanders(Dutchmen) but after that story I changed my mind.
In The 13th Warrior the Neds survived, while they lasted, by brute force and extreme cruelty. The Dutch, instead, survived by ingenuity, as well as brute force and extreme cruelty(Ref. Dutch Colonial history; Slave Trade, as exposed by non-Dutch sources!). In school I learned that we colonized Indonesia to make them Christians so would be saved(I had no idea from what), and that we gave African Negro's better lives by extracting then from the dark jungles of Africa, and exposing them to Dutch civilization was, I learned, something they would be eternally grateful for.
Years later I went to the University to study physics and so, and began to read other books as wel. I discovered that eternity is a very short time.
I agree with Rien, though: Optimists will survive, but only the cruel ones will!
Nice guys don't survive, nor will they become rich.
They simply fade away.
Nice guy,
Poor guy,
Don Carlson, Lou Dina, Anybody,
Some time ago you had a question on how big a Reserve you needed to be able to buy a certain stock multiple for a dropping stock price.
In terms of stock value multiples the answer is of course trivial:
You need as much Reserve as the value of extra stock you want to buy, and then it is matter of how far you are willing to let the price drop for how many shares you will get. The question as to how many shares one would accumulate when buying with a standard buy scheme for deep divers intrigued me, as it answers the question for an AIM Growth potential.
So I went work for finding a closed solution formula and I invented a new term to sit among side the term Cash Burning Rate(Either coined by you or by Lou Dina, I forgot!).
Paper Burning Rate
Defining the Buy Function B1 + B2 + B3...+ Bn +Co+C1+C2...Cn=Reserve
and the Share Quantity Accumulation Function No+N1+N2+N3...Nn= Ntotal quickly required more paper than I could find.
Certainly the functions would ultimately reduce to some neat simplified form(I hoped) but I got lost before I got to that simple end point , and temporarily gave up!
Instead I produced an Excel spreadsheet solving this problem in a jiffy. This idea was prompted by the Excel program from Lou Dina that Tom Veale put on the Board:
The Spreadsheet contains:
A Buy Factor such that: Buy=(Yo-Y1)*F
A Percentage for the Repetitive price drop: Y1=R*Yo
A Cost Factor for the Trading Cost per Trade: Cost=C*Buy
A Counter defining how many times you will let the price drop by the fixed percentage. Obviously, one can easily adapt the functions to create a different price drop structure by for example using a fixed amount of price drop instead of a percentage. Be my guest!
The rest of the spread is obvious.
Interesting Features:
1) The runs shows the Reserve Depletion to zero and to Negative values;
2) The negative Reserve simply represents the Safe Margin Investing as I explained in my TurboVest Paper(Another Secret exposed on the www);
3) The TurboVest bare bones Loan Limit is shown, plus some gimmics.
The Loan Limit for the TurboVest is shown here approximately at the point that the Loan equals the stock value. In practice you would not want to go as far as this and you would want to limit the Turbo Credit to say 60% or 70% of the stock Value in the portfolio. This way you get a safe margin on margin investing!
The interesting extra is a graph showing the exponential explosion of share quantities when you dare to invest in Deep Divers(Only for the Daring).
Although AIMers know already that they achieve a growth potential by repetitively buying on the dips and getting extra shares, the spreadsheet makes this very clear and for extremes drops this feature is demonstrated particularly strong.
Also, it demonstrates the power of TurboVest: It is very difficult to go into dangerous territory as the price drops to make it dangerous are really huge.
Another powerful feature is that you can see how Vortex achieves it tremendous portfolio growth potential: Simply vary the Buy Factor=Ffrom say F=0,8(which corresponds to a Lichello SAFE of 5%) to say F=1,5 or even 4.
With these variations it is immediately clear that with a Lichello AIM with F=0,8 will wait a lot longer to buy on Deep Diving prices and(preserve cash longer)than a Vortex AIM with F=2. In contrast to this, if the share price does not dive deep the Lichello AIM does not buy enough shares to efficiently profit from the dips. The Vortex does deplete the cash in such cases. And if the diving goes deep with TurboVest you simply keep buying,if the stock is worth buying! Also, that the VORTEX approach can adapt to different stock price profiles is a huge advantage over the Lichello AIM.
I will send this spreadsheet by e-mail if you request it by e-mail. I am not making any money yet on the Vortex program, so I might as well make you keep thinking about how well it works!
eng@vortex.demon.nl
For people that can read Dutch this may be of interest:
http://marksmeets.nl/article.php3?story_id=178
http://marksmeets.nl/index.php3?section_id=5
Conrad
Hoi LH,
They stopped spending money on me!
I thought it was generic.
My mistake!
Conrad
Hi TV,
Maybe Jill ain't the bad one after all. If all the woman of the world would start spending again maybe the market will just flip.
The dough is got to roll!
Conrad
Rien,
They have no sense of humor.
Maybe they are just fools.
Conrad
A Terrible Dilemma! How does one escape from it?
All through history some people see the "insanity" of a warmongering attitude while others are flag-waving supporters of it. In between is a mass of people who is not informed enough to be able to decide one way or the other but shout as hard as any.
Depending on the time of day, or depending on which book or article I have just read, or which news report I have just seen, I find my self on the bandwagon of either one of these three shouting troupes, not knowing were our parade will end up.
Years ago, I believe it was about 1979 or so, I watched a TV Report, I forget who broadcasted it, called The Children of War , and If I remember it correctly, the setting was Afghanistan.
As I write this, for the umpteenth time I can not stop myself from crying about the soul-wrenching pain that I feel when I remember the suffering children: By way of communication technologies, almost 25 years ago, I could virtually hold the hand of a dying child, and saw the bloody bits and pieces that remained of children's bodies that were torn apart by explosives or were crushed by tank tracks. The question as to who wreaked this havoc didn't even come to mind.
Should we tolerate such evil if we see it coming? Are we qualified to assign ourselves the role of Nemesis in this horrible dilemma? Is the suffering that we will inflict on children, in aid of retribution, any less evil?
The Children of War.
Goverment Leaders should be forced to watch it!
All of them in the same room.
In tears
HI Anyone,
As far as I have thought it out I am going to define the optimisation requirements for de VORTEX program. See also:
http://www.investorshub.com/boards/read_msg.asp?message_id=445056
Some time ago I mentioned that I did not see any purpose for curve fitting when it came to optimising the Yield Function of an AIM. I have to some extend come to think that curve modification on stock prices may be beneficial.
If a stock price falls out of the current pattern it may not actually mean that a breakout is eminent. So, my optimisation technique will use modified stock data. That is, if a stock price represents is a false breakout, it is mot immediately known of this is so. On this occurrence the investor must simply act on flying by the seat of his pants. At this point to Buy or Sell is a not matter of the trading system adjustment but a matter that is to be interpreted otherwise. However, if after a few days or (weeks) it is clear that it was a false breakout I will delete these stock prices from the optimisation procedure and replace it with stock prices that are more or less conform the stock prices of the prevailing pattern so that the next optimisation is not influenced by the false signals. I call this Fudging the data or Cooking the Vortex Books, if you will. I may also call this Creative Stock Price Manipulation by virtue of inside information.
OK, seriously, this cooked stock price data will provide optimised Vortex AIM parameters. The fact that the signals were false may be sufficient to warrant that the stock price behaviour will continue in a similar fashion. That is the best I can do for now (other predictive sources not being ruled out yet).
If on the other hand the breakout signals prove to be representative of a definite change then I would make a new optimisation run including the new data as representative for the near future. If necessary one can optimise as often as is considered necessary.
Considering this objective, can anyone suggest any additional requirements before I actually embark on the detailed description of the optimisation subroutine?
Conrad
Karel, Tom, Anyone, On my Fokker Investment in 1996.
You may find this interesting. On my real Fokker investment in 1996 I used the Vortex Method but I did the buying and selling simply buy eyeballing the stock prices and deciding when to buy and to sell off the cuff, I thought I could fly with the seat of my pants jus as well as with looking at the instruments.
I am not sure if I posted all the Fokker dope but here is a recap:
1 Buy & Hold Yield: -47% annual;
2 Off the cuff Vortex Actual Yield: -4,4%;
3 First Vortex Optimisation: + 11% (a few weeks ago)
4 Second Vortex Optimisation( 3rd August): + 27%
This goes to show that manual optimisation is a very tricky thing to do. You never know of you hit the highest peak in the optimisation field. This, and the previous simulations I did, also shows that with optimisation a tremendous benefit over the Buy & Hold can be achieved with any stock. Not the least it shows that flying on optimally adjusted instruments beats the hell out of flying on the seat of my pants: Getting the emotion or gut feeling judgement out of investing is absolutely necessary to get super yields out any type of stock.
I believe that with the latest test results I can start forgetting about long term back-testing and stick to frequent optimisations, using short stock histories. This would lead to the realization of my optimisation notions I developed in 1994, but then I had no idea about actually getting them to work. Thanks to many discussions and facing challenging issues on this Board. I think I understand where I am going.
What I see now as being within reach for me is maybe not new to some of you but what I have come to is this: In the fashion also of some of the ideas on the Think Along website, I am ready to implement Automatic Optimisation for Vortex with 6 Vortex parameters, using frequent optimisation runs, say every month or so, with which I will end up chasing the theoretical optimum performance of the trading system. Each addition of an heretofore unknown stock price will change the old optimised parameter set to a new optimised set.
This optimisation, as I envision it, always being able to find the absolute optimum point in the 6-variable Yield Function.
If my test runs are any guide then the Vortex Method can beat any AIM BTB for any stock except for a perfect Straight-liner.
Is there any point in this on which I could be wrong or ill informed? I am ready to start looking for an automatic procedure to do the optimisation. I rather not start installing the engine if the boat is still leaking.
Comments are appreciated.
Conrad
Tom,
Who is the lucky one? Bob or Jack?
Conrad
Rien,
Very long chains indeed!
Conrad
Right on, Bernie! On Intelligence-My Case.
This gets seriously off topic and long-winded. Read this at your own peril or quit while you have a chance.
I is an excellent good point you made! It's a mechanism with imbedded software(instructions for operational procedures! Growing towards the light is something a plant does well! It's the software that does the trick! I said: garlic intelligence is the same as celery intelligence. The fact that this is called, as you say it is, phototropism does not change - in my line of thinking - that it is intelligent behaviour. If you change the location of the light the plant will respond(information processing + action) for its own benefit. None of us would dare calling this stupid nor unintelligent behaviour. I bet we could even fool the plant by giving it clues that are ultimately destructive for it. Think of what the Rat Catcher of Hamelen did: the response of the children was an intelligent response but they were misled!
Destroy or interrupt the coding (software) in an organism(system) or implant a virus, then it behaves irrationally and/or unintelligently. Growing a baby with flippers instead of arms and hands is not intelligent behaviour, unless by evolutionary circumstances it would be better for us to adapt to an aquatic environment.
There is strong evidence that ultimately any emotion, or body response like thinking, pondering, asking, proposing, information processing etc., is nothing more than an electrochemical and/or electromechanical response(or possibly other physical processes as well) of biological systems, just like growing towards light is for plants. The answer to the question as to plants are endowed with higher intelligent qualities or not remains illusive.
One of the counter arguments to this line of thinking is that imbedded intelligence that (some) people are endowed with, is implanted by God. I do not argue with this - in this current debate - as I can accept it as a premise. But if this is so then intelligence is still nothing but a response to imbedded software. If one would insist on qualifying this intelligence as a type of intelligence then I would go as far as to call it intelligence that is the manifestation of divinely imbedded software. This is the same thing that people do to computers: we make hardware intelligent. The same software in different systems may well exhibit different behaviour. It depends on the peripherals!
A simple case in point: I defined a A5 document on MS Word 2000 and I wanted to print it two pages at a time on one A4 sheet. With one printer this could be done with the margins mirrored as well as unmirrored, and with another printer it could only be done with the margins mirrored. The one type of computer-printer software/hardware package could do what I wanted and the other could not. So, according to the line of thinking that I follow these two system-combinations did not have different types of intelligence but one of them had extra software features. Most AI people would concurr that both systems had AI instead of that they had differet types of intelligence!
In the end, what a white mouse and a black rat can do, in a labyrinth, to get to the payoff is not a consequence of white mouse intelligence vs black rat intelligence but has only to do with quality of the software but also with the difference between the peripherals. In any one test-case either the mouse or the rat could be the most intelligent one. A smart worm will aslo get out of the labyrinth before a stupid white rat will.
Would that worm have worm intelligence? Or would we have an intelligent worm?
Conrad
Rbo, my view on intelligence.
I am not directly familiar with the details of what you call Computational Intelligence. The question reminds me of: "Are you still beating your wife?"
I do not accept that the term Computational Intelligence has any meaning at all. I do accept however the term Intelligent Computation. This way we can allow the thinking that intelligent machines, or intelligent dogs have something identical in common: intelligence.
I think that any combination of intelligent systems or intelligent problem solving methods and intelligent data processing routines that uses complementary sub-systems and various problem solving techniques will eventually raise the level of intelligence of a system in which this intelligence is active . I believe that intelligence is fundamentally something quite different than what most people mean when they talk about artificial intelligence.
Have you ever noticed that bean stalks(or other plants that are sprouted in a box with one hole all grow towards that hole if there is light outside the box and not if it remains dark outside the box? I find that quite intelligent! Should we call that bean stalk intelligence? And do you think that cellery intelligence and garlic intelligence are all different type of things?
Maybe another way of illustrating my point is that a set of software programs of an intelligent system, such as a battery of computers, represents the seat of the intelligence. Yet this software is written by people. What a dilemma! What type of intelligence should we want to call that? Artificial People Intelligence? Is it not simply an effective conclusion that such a system is intelligent and that this intelligence is the same thing as the intelligence by which an ape gets the termites out of a hole, with a stick?
I say it is.
Conrad
Robo. Gold from the Ocean.
I read somewhere that the Germans during WW II seriously tried to get gold from the sea water.
Good luck with the NT!
Conrad
Thanks Rien.
I got it.
Conrad
Aye Robo,
I think in these discussions it's not so much a matter of being correct or not as it is the need to express another view. To make people think. The matter is too complex for any of us to fully comprehend. Rather, I think, my views, as exposed in the little stories I tell, and which are by en large based on real events, present a deeper look into what makes me tick and how I view the world. If I say people create the mess we are in I also indict myself of the things that we do wrong, while also not being sure all the time how to judge the concept [b[wrong.
This reminds me of another beef I have on the subject of Artificial Intelligence(AI). The name AI is meaningless as intelligence is a concept that defines the ability to solve problems. People solve problems, dogs and walking stick and termites do it as well. When computers solve problem and learn from it nothing different is happening then if a monkey gets the termites out of their burrows with a stick. But we are stuck with the fact that AI is believed to be different for people and computers. I say it is not and this creates resistance.
A good example of this is the fear that people have of AI: "Suppose the computers and the robots take over from us? Is that not a scary thought? Will mankind not face a terrible fate?"
It makes people think when I say: "Well, is it possible, maybe, that machines can make matters any worse than we have made them?"
Conrad
Rien,
Your welcome.
__________________________
I don't quite know what you mean by rec in your remark:
I wish we could rec posts here, you would have mine
?????
I like to know if it is important, but sometimes it's better not to ask.
It might be like asking how much a present costs!
Cio,
Conrad
Robo, You mentioned GOLD!!!
Why do you think they all hate gold so much?
I love Gold!
The Vortex Method gets the Gold others leave behind!
http://www.vortexcw.nl/wsn2485.html
Conrad
Hello Karel,
From what I got from Don I think some thumb-rules were mentiond but I do not remember one that ended up with the extra number of shares after the reserve was exhausted. If that is done then no point me inventing yet another wheel...although, I have seen some pretty darn interesting wheel inventions!
I will find a solution for the question that intriques me, but I have to fit it into between another 101 things.
Regards,
Conrad
Hi Robo, now that I my pen is well-oiled you put fuel on the fire!
The human institutions of church and state are not rational. Fear, control, force, coercion, threats, deceit, theft, hypocrisy, corruption, ignorance, incompetence, etc. Mix economics with church and state agendas and you just get an incomprehensible mess.
Ehhhh, I think, maybe, just a small chance, possibly, that you might mean, don't get wrong, that this incomprehensible mess is caused my people?
Economics are rational?
I'll dig back a bit, not mentioning any years: A friend of mine was trying to explain to me the law of demand an supply in economics. Being a greenhorn in those days I carefully asked who discovered that law. He didn't know, but he assured me that the price of a product was related to the demand. Still carefully I asked that if the supply of product were halved the price would go up by say a factor of 4. That would be an inverse square law. He didn't know.
Now I was becoming a bit daring. I suspected he had no idea what he was talking about, but he was my friend, so I took him down gently: Maybe you mean that if I have a million bushels of grain priced at a buck-twenty per bushel, and somebody starts a rumour that I have none at all, then the price of my grain would suddenly jump by a fixed amount? "Yes, that's it. You've got it! That's the law of supply and demand!"
OK. So if I start that rumour myself, then the price of my grain will jump by the same amount or by some other amount? Are there two laws or just one? "I dunno. It's is getting complicated. Your stupid questions make me think." Well, that's a good start for today, let's go for a beer before they run out and the price will become infinite.
After a few beer I explained to my friend that the price of my grain, if had any, would stay a buck-twenty regardless of what people would think how much I had, or how little anyone else had, or if all the other grain in the world got stolen by Aliens. In that case I might even drop the price to nothing and give it a way to the hungry. So, after two more beer my friend finally understood that economics are not rational and that the law of supply and demand did not exist. He understood that some people are greedy and will take advantage of shortages, and that I claimed that I would give my grain to the hungry, if I had any.
Economic are what people do. That's why we have such an incomprehensible mess.
Conrad
Karel, I agree.
I am quite pleased with the way it works.
Now all I have to do is to fix the future, but then, if it ain't broke, why fix it?
Conrad
Hello Rien,
Jeah! I was in Canada in 1980-1983. Real estate prices came down from high heaven in 1980/81, I believe it was. Many people had been so greedy that they bought second and third housed at mortgage rates of 22-25%. They did not see it coming, but the writing was on the wall.
In the crash that followed many people lost the third house, the second house, and the first house, which had already been paid off, but then was worth only half as much as their debts.
Some of these people are now in an Old Age Home and are still paying payments. I think. That crash was not caused by deflation but by inflation pushed to the hilt by greed.
Many prices other than real estate went up afterwards and people that did not loss their jobs just kept buying what they needed. There was no across the board deflation. Just a crash of real estate prices and job loses all over the place.
In BC 30% of the Professional Engineers were out of work at one time. Only the ones that lost their house were hurting. Many of them took long holidays, started remodelling their house. They had neglected it in the 10-year booming period that preceded the crash. Their saving accounts were bulging!
"Ahhh, finally some rest and time for things other than working overtime." I heard them say. It was simply a necessary market correction to the preceding madness.
If structural deflation occurs across the board it benefits fits everyone, except exporters, as the money is too dear for foreigners
.
Now, in all cases many other things are happening at the same time and one can almost prove any point of view by pointing to specific cases. As I have done just now. If I take off my coloured glasses I need another pair, and lo and behold I simply get a pair of another colour.
In Zimbabwe I was told by the white guys: "Man, these blacks stink like hell. It's not normal."
One day I visited a Zimbabwean family, had a marvellous meal, drank good red wine. Then their two kids, as black as coal and no less shiny, crawled onto my lap to say good night. I had a 3-year old kid myself. Kids just loved me. Like all dogs wag their tail at me. Boy, those black kids smelled a lot! I was shocked! I do not remember exactly but I bet 10 to 1 that it was either the smell of lavender or of roses. My kids never smelled as nice as that. We couldn't afford the type of soap these people used, nor the wine they drank. Black people smell nice!
I am going to quit as an ecomomist. I get nothing but flack for being contrarian.
Conrad
# 4438---->Rw=Constant at $16000 is wrong
Obviously for the Vortex run with the Cash/Equity ratio at 50/50 this should be:
RW=Constant at $ 10000
Conrad
PS: RW=Portfolio Control
Grabber said,
Some of us won't get any
I didn't get any.
Conrad
Ahhh! Grabber. Thanks.
That's it! It was Pareto Picorni!.....
Or was it Picorni Pareto?
Conrad
Robo, for $ 5,95 I sharpen your pencil, deflation, deflation, or lateral sliding notwithstanding, but you have to provide you own sharpener.
My advidce was TIC, sureley that was obvious? Maybe not. But see mess # 4439. Prices drop all the time and I love it! Prices rise all the time and I hate it. A tiny cup of coffee in Holland costs $ 2 and still we buy it! Computer prices are redicuously low and we complain about the high price.
Anyway, economies on a large scale are aparently not understood by anybody very well. Thats because economics are not rational. From John Adams, to John Keynes(maybe the Johns have it?) the theories fall bij the wayside as soon(15 years later) as it is clear they do not work. People are funny beings: In business schoold we learn that we have to work smart, not hard. Reduce the input and increase output! As soon as we put that in practice we are called lazy bums. We are supposed to work hard!(Calvinist Principles). But if a factory does not make enough profit we shut it down rather than let it produce more products in a more efficient way.
There are hundreds of industrial example to find in which the needs for the people in general are trampled into the dust to save money for the rich. Shut the bakery down! It costs to much to bake the bread. The profit margin is too low: Let the people go hungry, then they will pay for a slice what we now get for a loaf!
Well, I better quit before I will charge more than a pittance!
Conrad