is retired now but still kicking like a horse!
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Bikeh's wet feet. Heh, MarketSniper,
you might confuse Bikeh in his serious attempt tho buy some stock. If Bikey is a newcomer he might be better off the get his feet wet with Old Dutch Gin. In this market any newcomer will needs some Dutch Courage to start buying!
I am all for buying though these days, except I know nothing about the stock Bikeh wants to buy.
Conrad
Irwin, thanks for some links. Before I start reading all this I like to mention that I think curve fitting can be used to prove all sorts of falsehoods, like the saying goes: "With Statistics we can prove anything we want to prove"(This does not mean that I lump curve fitting under statistics).
In regards to curve fitting in an investment, I forgot what started this discussion. Is there a reason to assume we disagree on something or is it simply that I asked you how curve fitting is used in investing systems?
I think, for example, that curve fitting on any stock price has no meaning, although it might be true that it is used in investing. If so, then is has meaning in so far the user thinks it helps him. That's fine, but this is, in my opinion, not the purpose of curve fitting.
If you fit a curve to stock prices then most of the real data does not lie on the fitted curve. A fitted curve is intended to represent the real data, and as such a fitted curve will closely fit the real data. The assumption is here that measurements do not represent real data, but due to errors represent the real data approximately. The fitted curve is then assumed to represent the real data more closely than the measurements do(but this is not always true either as spikes in the real data can be missed in the measurements if then measurement spacing is too far apart).
With investing, and data on prices, the reality is different. Stock prices are the real data! Any curve fitting will lead away from the real data.
In the limited sense that a fitted price curve may be useful, for example as a moving average, it does not satisfy, in my opinion, the purpose of curve fitting as it does not tend to characterise the process that produces the real data.
So, in so far as a moving average characterises the average from the past, it does not characterise the real data in the past.
I will peruse the links you provided later to learn more about curve fitting.
Conrad
Irwin, what does Benny Hill know about investing that I should know? Maybe Red Skelton has a few gems of advice as well for me?
Fill me in!
Conrad
Tom,
I recently found a reference(via msg# 3453 from RFH) on the Position Cost Averaging(PCA) software. Your link:
Software for AIM accounts:
http://www.aim-users.com/aimware.htm
seems not to be working so wondered if you had done any reviewing on the PCA SW. How does it differ from the Lichello BTB AIM?
Conrad
LostCowboy, the feedback loop idea sounds fine!
Did Tom Veale write it?
That little book you read was not the little book I read(msg# 3454).
I think investing can be reduced to some very basic guidelines:
1) Do I have enough money to invest?
2) Is the stock worth buying now?
3) Buy Low Sell High!
4) Go to #2
Next to this one needs the skills to know what worth buying means, and that is less easily done than following my 4 steps for investing.
Conrad
Tom, about the kids and swiming pools. I took my kid out to swim one day and and two little girls came to play with him: "Did your Granddaddy take you swimming today?" I am sure it was the sun that was blinding these kids.
I also noticed kids are not an investment. You need a fortune to start with to raise them.
Your Nasdaq chart looks like a Head and Shoulder formation to me. Does that mean that the Head will return or does it mean that we are in for a Groin and Feet formation? Are there any pundits out there that want to predict the future?
I read a little book one day(long time ago). I said that smart investors never bought stock that was on the way down. If the writer was right then the idiots are selling to the idiots and the smart buyers are waiting. I think the writer was an idiot well. If you ask me(you didn't) then it is a good time to convert cash in old socks and under matrasses into stock( or call options).
Conrad
Sbtorres88 on OT Gin,
This story could come straight out of the Art Linkletter's show
Kids say the darnest things. Thanks for sharing this with us.
In Holland we have the best gins in the world: Young Gin, Medium Gin and Old Gin. That's why we can make finest types of water you can think off.
Conrad
Hi Robo, you wrote:
In the spirit of your hypothetical question though, "How does H-laden water taste?" Answer.. "lighter".
Unless, of course, it is heavy water.
Oxygen laden water would be H2O2 (hydrogen peroxide).
No, I do not agree. Oxygen is absorbed in water. That does not make it H2O2. ^2
Conrad
Tom's Wallet?
Yes, you are right. He's got a Warehouse!
Do you think he takes a swim in the dough every now and then?
Conrad
Maybe I am Too Fuzzy on OT energy savings?
I stand corrected on reducing energy consumption vs increasing the solar energy capacity. See also my e-mail on power and energy.
Regards
Conrad
Tom, in reference to the 2mc method of Matt:
(Maybe I should ask Matt as well!)
I tried to modify one of my Aim spreadsheet and got rid of the circular reference for using the PV. Then I went on(by mistake) to use the PV value also for the Buy/Sell Test instead of the PC. Thus doing the Test: Buy/Sell Advise= F*(PV2-PV1). Oviously, this would only generate action if the Buy/Sell Advice is greater than the Buy/Sell Resistance. I have not worked this completely out yet but the consequences are this('X' is a percentage):
1) Only if F*(PV2-PV1) is greater than X*PV2 then Buy/Sell=Yes.
This would appear to make the activity of this system a function of updating the stock price. Thus for a droping stock value frequent updating would prevent buying! A Perfect method to conserve cash for the bottom!
2) For some settings in preliminary tries I got billions and billons of profit(at the expense of big negative cash positions). I am looking more at this but do you have any immediate thoughts on using the PV instead of the PC for Buy/Sell Advice? I believe it works only if there are big price swings between price updating.
Regards.
Conrad
Tom, I am Mystified(nothing to do with Myst),
With all the money you saved eating Keih's prawns and the next-to-nothing gas price in the USA, your wallet should be bulging!
At least I have a good excuse to be broke(the ex-wife, you know).
Conrad
Toofuzzy OT Power Question,
You said:
For you electrical engineers out there:
I have been getting all my electricity from a 200W photovoltaic system which after all the efficiency losses are figured in probably lets me use about 500W / day (1 100w lightbulb running for 5 hrs/ day).You quickly learn that it is cheaper to spend gobs of money if necessary to reduce the demand rather than the supply but in most cases....
Well, I am nit picking, of course, but here are three points:
1) I suppose you mean it is cheaper to spend a lot of money reduce the demand rather than to increase the supply capacity. Right? I suppose it would be a lot cheaper to get a little larger unit and safe all the money to reduce the demand.
2) Your term 500 W/day is an energy acceleration unit, and this would mean that the energy consumption is increasing each day with 500 W. You mean, no doubt, 500 Watt-Hours/day.
3) With the 200 W system you must mean that the output is 200 Watt. With a solar input of 200 W you might light-up a 25 W light bulb. With the 200 W capacity you should be able to load up a battery for 6 hours a ~50% efficiency of the battery charger(estimate) to get 1200/2 Watt-hours is 600 Wh. So you 500 Wh is a good estimate.
But then it means that while you are charging the batteries during the day that you can not watch TV or do much else electrically, or when you run your 100 W light at night you cannot use a 100 W TV(both for 5 hours), or heat the coffee electrically.
Do you make your coffee on a wood heater? Anyhow, 200 W for a power system is very little indeed. I would probably get a 500 W system with the money you can safe.
Regards,
Conrad
LostCowboy, Banjanxed, Anybody, LC wrote to Banjanxed about selling
or holding depreciated stock in his IRA AIM:
...If the answer is no, sell the stock, and never look back. You have just made the best decision, on the knowledge available to you. Now then what are you to do with the stocks you have left, and what do you do with the money you got from the stocks you decided to sell.
Perfect advise, but the decision for Banjanxed is still to rely on his knowledge for asking the questions he should be asking. This is a dilemma for any investor and if the information is not right, or if one can not answer his own questions properly, then what? He would probably make the wrong decision!
This process is, more or less, also what people in the herd are doing! They ask themselves questions and listen to the pundits and experts, and then make decisions on what they know: they follow the herd and sell to AIMers at low prices. I like to add some thoughts on this:
After an AIMer picks a losing stock(after asking questions and ‘studying’ it, or studying the market), and bails out at a fraction the initial value, then what?
He has a fraction of the original money left(AIMers do not, as a rule, bail out at small loses!)and he starts searching for new stock to invest in. Maybe in a similar way as people that marry for the second time he picks a stock in the same way as before, and maybe more likely than not, he asks himself the same questions and get the same answers, and bails out again, in the same way. Now he has a fraction of a fraction of his original money left.
This vicious circle occurs also with some people that use TA. They bail out at their own stop loss(or at some other indicator) and pick a different stock that looks good because it has been rising for some time(advice from experts). This stock shows a wiggle and they bail out again(searching for the one that never dips).
What sits in a corner, is red and gets smaller all the time?
An investment tool used without understanding it is often used in the wrong way! My advise is that the original choice for an AIM-ed stock should be such that you are confident to let it dive deep and to invest in it at a ridiculously low price as people are dumping it. After it has dived there is no point to dump it at a fraction of its original value. The chances that it will recover are better than the chances that it will keep diving.
My point here is that letting it ride and taking a calculated risk would often pay off much better than switching to another stock/fund that is recommended by the experts.
Everything Lostcowboy has said remains sound advise.
I want to add that investors should also feel 100% right about the choices they make for themselves and they should be able to reason out why their choice is a rational none.
Conrad
Myst: Off Topic Chemistry:
You asked:
Could more hydrogen atoms be used to improve the quality of water?
[b} Very interesting question indeed!
Water with nothing in it tasest like hell. Oxygen can be absorbed in water to make it tast better, and so do some elements and minerals. Hydrogen can be absorbed in almost any compund, so, I take a long shot at it that H2O can also absorb H-molcules or H-atoms. Now, for you guys that know more on this, pleasse tell me and Myst that H2 does, or does not, improve the quality of water. How does H-laden water taste?
PS: I do not mean H2O2...!!!!
Conrad
Irwin, I think I am drifting Off Topic, but just the same...
I do not recall that I thought you were quoting anyone in msg#62.
Anyway, as we are on the offtopic of misunderstanding the message in the message I was wondering why your wife is wishing you to go away and why you are not leaving.
My wife was wishing me to go away years ago but later she left because I didn't go away. If I had loved her to death, as you are going to do to your wife, I would have ended up with a corpse. Or maybe you meant something else? Do women like being loved to death?
Conrad
Irwin, Thanks for the replies/suggestions.
You wrote:
Conrad here is a link you might find useful.
http://www.mathworks.com/access/helpdesk/help/techdoc/math_anal/math_anal.shtml
There is a good section on curve fitting which is something to avoid when testing investing methods.
Whow! With the other Math sites this will keep me bussy for years just to select the right stuff! But I think all the things on Mathworks you have to pay for. For the moment I have enough free stuff to last a lifetime.
But why must one avoid curve fitting when testing investment methods? Could you explain when curve fitting cwould be used and why it is to be avoided?
Regards
Conrad
Irwin, your "tongue in cheek" message # 66 was the reason for my comment.
What I meant is that in written communication I miss the messages "between the lines" such as facial expressions, intonations, etc. from which I could get clues as to what was meant by the writer, if he had been speaking face to face to me. Especially I find it often difficult to determine if one is joking or not, or if one is translating cliche's.
I recall an interesting example: I forgot who had said it(ET, LostCowboy or LemonHead) but it went something like this:
The wife had gone to Reno to gamble a bit, and she called back to ask hubby if she could stay a few more days. The answer was that she could stay away for 6 months or more.
I read into it that hubby was glad to get some peace of mind, at last, but the truth was that the wife had been winning the dough at such an attractive rate that hubby wanted her to stay and win a lot more....Something like that!
Conrad
Thanks for your encouraging words and for the link to Overture.
This link gives websites that Google missed and visa versa:
http://www.overture.com
I agree that a tremendous amount of auto-learning can be achieved but one needs to do this at the expense of other things.Choices must be made.
Regards
Conrad
Pragmatico on Exel and Circular Reference:
Your explanation is as clear as flawless diamond. It is exactly the answer that I intuitively asked for some months ago: There must be some delay between the calculation I am doing now and the calculations with the numbers I need.
This requirement was obvious but I could not relate it to the way Excel operates as you have explained it. Thanks a bunch.
What I do now is to caculate the Portfolio Value from old cash data + new stock data and that solves the problem exacly as you indicated!
Conrad
Irwin,
I read your point: On this Board I can't see the faces(or tongues) behind the writing.
Also your statement about the fact that (aparently)good stocks can turn into shit stock is a valid one. But here we face a real dilemma: If you have a good stock that dives then you might dump it when it is on the bottom. When it recovers rapidly on account of it inherrent quality then you have lost the real opportunity to profit from its quality. This dilemma is faced by any investor in greater or lesser measure.
This is where one's investor profile enters to determine what he is going to do, either playing safe(desire not to lose anything and having limited good information on the stock) or to invest extra money on one's confidence that tye stock is sound and will recover(on quality of information and investment skill).
Money Management goes both ways, I agree. But I can add to that:
Good Money Management coupled to effective investment techniques gives much higher profits than Bad Money Management coupled to ineffective investment techniques. The trick is to be able to call a spade a spade, if it is a spade and not a schovel.
Conrad
Mark, Others, on the objectives of optimisation:
I remark point-wise to your response:
1) Agreed that 30 days could be too short for model building, but it depends, I think, strongly on the objectives(extend and accuracy) that are set. I think each method would require its own minimum period for making a meaningful model;
2) I think the frequency of re-balancing is more a question of personal preference, and possibly a matter of simple expediency, rather than a question of functionality. It would seem obvious that a re-balance resulting in a small shift of the cash/stock ratio is not worth the trouble of executing. I would certainly agree that some practical frequency should be chosen rather than each price update. In fact, I see this re-balancing as a separate subroutine A-La-The-Idiot-Wave-Mechanism that one can invoke as one pleases.
3) The cash addition mechanism to AIM has never been a problem to me as I saw this as a natural thing to do if the investment performed well. So, if a) re-balancing is advised I would simply add cash to the Reserve and update the PC with X-percent of the extra cash(X could be a variable that was optimised, if I was using the PC), and b) I was using the PV as Control Set Point then the extra cash would automatically be accounted for in the PV.
My preferred way of adding extra cash is my TurboVest Strategy as I would already be inclined to be fully invested most of the time.
(TurboVest = Controlled Margin Investing in times of Falling Stock Prices). I know that this stratgy needs to be applied with skill, but any investment method requires understanding of one's actions(in order to avoid surprises)... for example, my baseline ironclad criterion is that stocks must be worth buying a the time I buy them! Stocks that are worth buying could be going down or going up when I buy them. In this line of thinking it makes sense to buy a good stock, even if it has bee rising in value for a long time.
For as far as adding extra cash to buy new stock it is therefore necessary to ascertain quality rather than asking if the price is going up or down. The next point is, of course, that adding cash should be done on the basis of a plan: "How much am I willing to lose?" If one is willing to lose all he has then he will risk all he has one way or another. That is not an investment question. Although there are ineffective ways to risk all and effective ways to lose all! Think of the Kelly Risk Calculations for betting on gambling odds. If one risks all foolishly then the probability of winning is low. If one risks all wisely then the probability of winning is high.
Now, developing an effective optimisation technique is quite something different than thinking of the objectives in the first place, as you have already discovered. Having said this, I want to emphasise that manual parameter optimization for a specific stock price profile is easy...Many of us have alreay done it by tweaking all the parameters we had, and this results in an optimised Yield very quickly. It should therefore be a cinch to automate this optimization process.
My problems, as far as optimisation techniques go(the other ones I do not mention), are that I have no specific experience/knowhow of these techniques other than basic exposure to them from my engineering education(and interest in these matters). So, I feel unable to implement my ideas as my skills for doing so are minimal(and I have a strong aversion to statistical theories). So, for the moment, I am 2 eons away form doing any formulating of optimisation techniques myself, and I will die before 1 eon has gone by. I will have to be satisfied with chewing the fat on this and leave the formulating and testing to you and others. In this process it will be decided which objectives have a chance of succeeding and which do not.
Regards,
Conrad
Mark/Others,
The address storing problem solved itself.
I conclude, by deduction, that the failure of storing the website in the browser was due to the fact that the number of messages was less than 50!
As soon as the message quantity was larger than 50 the problem was gone.
Conrad
Irwin, You asked:
Which comes first stock selection or money managment?
In my 'book' selection comes first always. You can manage your money any time. You do not need stocks to do that! A good stock invesment is not possible(in the long run) with a bad stock...excluding savy short time investing in stockes that have entered in the convulsion stage before dying.
Having a good stock allows you to optimise the money management while the stock is already earming money for you.
Conrad
Thanks, Cowboy: Tom/Others/Excel Experts????
I am not sure if I actually used the PV on the previous Excel line in my testing but I reasoned that there would be a decoupling if I did it, as you suggested. If I am intending to use the current PV then I do not want to be satisfied to use something else.
My point was , as you confirm, that I should use the current PV and that gives the circular reference. The iteration function worked for some values but the problem was that when I was tweaking the parameters(I am a Tweaking Freak=TF Method) the calculation went unstable.
The method I am looking for is probably readily available...after all, in the 2mc spreadsheet it also works(I am assuming that Tom did not use the previous line!!!). So, I will check out the 2mc spread sheet and peek at the method used. Other than that maybe Tom Veale will tell me later.
Still, I think there must be an Excel-method to decouple the variables: Suppose there is an Excel function(or we make one) that transforms a function cell into a numerical cell. This would decouple the numerical value from the function and there would not be a circular reference to content with.
So, this question may not belong on this board, but I ask it anyway:
Is there an Excel Function=Number Transformation?.
If not, how can we create one?
Conrad
Banjanxed: To Bail or not to Bail!
This is the tough decision that will depend strongly on your ability to outsmart the Pundits. There will be forces to tell you to bail out and to stay in and tough it out.
I can only say this: If you only hope for recovery then it is like playing roulette and then you hope to hit the selected number on one throw. This is not investing but gambling. Ask youself this: Is the stock worth buying if you saw it for the first time today? If yes then is it logical to stay with it(Past loss/gain has no bearing on current quality). If the stock is not worth buying then you beter bail out. Aiming is only done effectively with good stocks...good stocks will rebounce. Bad stocks will likely vanish.
After you have decided to stay in only then is the question of strategy relevant. If the stock is good it is a teriffic time to but more of it a this low rate, even if you have to borrow the money!
1)Use the TurboVest Strategy!
2)If you bail out no strategy will help you recover the loss.
Conrad
Mark,
When I first got in contact with Tom Veale he directed me to this link you mentioned:
Jack Park (http://www.thinkalong.com ) did some interesting stuff many years ago that you might find interesting.
I found it very interesting as it described the Optimisation Objectives for my Vortex AIM and was illustrated conceptually in my first (unpublished) Write-up of Investing with Understanding(Free title translation of Beleggen met Begrip).
I proposed a auto-adjusting algorithm as is used in self-learning process control systems. The idea was exactly as was tried on the Think Along website. I never got beyond the basic definition of the purpose and how it could be done in a step by step manner along the lines with N-dimensional mathematical equation parameter optimisation.
My understanding is that Jack Park is no longer working on this optimisation. Also, in AI you have something similar, if I understand it correctly.
Questions/Remarks:
1)Is your optimisation routine functional on line so that it optimises the parameters on the active stock as you go or do you use it only as Model Building with historic data?
2) My objective was(is?) to do the optimisation each time a new stock price is entered. I am not sure if that is a reasonable objective but I see it as follows:
2.1) You start with a stock price history, say 30 days, and use that to do the initial Model Building.
2.2) Then each time a new stock price is added for the active stock(as frequently as you want to do that) then the Program first runs it optimisation subroutine and then comes out with a Buy/sell Order.
2.3) Of course, this operation should leave the previous buys and sells unaltered. Each optimisation run is actually building a new model, using the price data as it develops and then sets up the Model as if you start a new investment.
The new parameters would specify a new cash/stock ratio to start with. This amounts to Re-balancing based on the optimisation run. The next action then is to start a buy or sell or to make a extra cash or stock contribution. Essentially then the optimisation will result is New START-UP Advise.
To what extend is this objective already realised by you or anyone?
Clearly, this type of optimisation may exclude what some people consider pattern recognition, but the nature of the optimisation subroutine could be varied. I can imagine a pattern recognition routine that defines the form of the stock price profile and then define the Buy/Sell Advice on that pattern.
Of course, this concept probably includes bit and pieces from conversations held the last 6 months or so. It is a crystalization of the idea I had years ago, and may be modified with the things that were presented in the AIM Discussions
Am I dreaming or am I on the right track from a practical consideration?
Conrad
Myst,
Something is not happening that should be happening. On this AAI Board the web address for the last Message Summary starting at Message #45 is:
http://www.investorshub.com/boards/board.asp?board_id=1172&NextStart=45
The problem is that this specific address is not retained in my brouser after I sign off. On the other two boards(AIM and X_DEV) these addresses remain stored so that I can get back at the last message from the previous sign-on, each time I sign on. As it is now I have to search for the AAI Site.
How do I get the brouwser to retain the AAI address?
Conrad
Aptus/Matt/Don/Tom/Anybody?:
The 2mc Percentage Buy/Sell Resistance(SAFE) of the Portflio Value(PV) is a single input on the 2mc spreadsheet that was made up by Tom Veale and given to me by Don Carlson.
I played with the SAFES on the Lichello AIM Reference and found an optimum yield with different SAFES for buy and Sell(For example 6 and 9 or something like that, for the sake of argument...I did not safe the correct numbers) while the optimum for the 2mc model was 4,8..percent.
Would it not be so that if you take different percentages of the PV for the 2mc Buy/Sell SAFES that the optimised yield could be higher? My feeling tells me that two separate parameters will be better as the buy and sell functions are necessarily not symmetric. I have not been able to test this yet in my Vortex Excel program as I still can't get around the circular refece that I get for the PV function. It will work if I use the PV value of the previous Excel line but then I use the wrong PV....I think.
What are your thoughts on using two 2mc SAFES?
Conrad
ET & Bernie,
I certainly will use some Due Diligence next time I invest in a new venture.
Thanks.
Conrad
Hoi, Don,
I had made a long reply but lost it as my notebook got stuck(we need an intermediate safe in this iHub!). Anyway, there are so many replies already, I will keep it short.
My point was that an index will behave as if it were a single stock(just like mutual funds). I feel that it makes no sense to ignore optimising single stocks in favour of optimising the index.
On the point of optimising a portfolio I realise that there are various standard means of balancing the portfolio, but I look for a new way that is specifically suitable for AIM-Portfolios.
The one I have called the TurboVest Method can be applied to the portfolio...That is: Margin Buying for Safe Divers while maintaining the portfolio(or the sum of portfolios) in a healthy positive cash position so that third parties can never liquidate your holdings: How do you optimise such a Portfolio?
Conrad
Mark: Volatility Index vs Stock
You remarked:
The index will never have a lower volatility than all of the stocks (i.e. some stocks will have a lower volatility than the index and some will have a higher volatility), assuming all stocks in the index don't have identical volatilities.
This goes as far as it would be true some times. What I said is therefore not true all the time. OK, but I thought in terms of extremes and in that case I thought of a batch of high volatility stocks that would all, more or less, cancel each other out. In real life this would not happen, and using different frequencies there would be peaks in the Index Price.
For he rest I go along with what you mentioned. Concerning cash allocations, I am beginning to think that the cash allocation in a portfolio can create problems along with advantages. In the case of the Vortex AIM the cash, as various pools(various bank accounts) was proportioned to the individual stocks on the basis of cash injections as well as on the basis of the relative fraction of the stock in the Portfolio(for interest calculations). This created dilemma's when one stock's cash portion went into the red(margin buying) while the total cash position was positive(one stock borrowing from the cash pool). Also, when one stock went into margin the interest on the cash went negative(logical and desirable) but the total cash was positive(margin costs are then illogical).
In short, with a complex management approach for the various features of multiple accounts and portfolios I run into management conflicts: Which aspect is more important than the other? The way I can resolve this dilemma is to take a step back and treat the pool of money in the various portfolios as a bank that is not connected to my interest in the investment gains. Whether this is realistic or not is for the moment less important...It is more or less a game of developing an investment management tool that is devoid of internal conflicts.
I will keep in touch on optimization ideas.
Conrad
Tom, what algorithm did you use?
Interesting!
Your conclusion would require Keith to provide a certain amount of good food for your journey of 2210 miles home. The idea,as I read you right, is that saving on food on your way home will make you break even on the higher gas price.
Depending on the price of the amount of food you would need to eat on your way home, it might turn out that Keith would have to provide you with more food than you could possibly eat, on top of the food you aready ate while visting him! This will need some algebra to sort it out!
It is almost as complex as investing!
Conrad
Toofuzzy: My Winning Losers,
Much of what you say is(was)true, but I think that you simplify the issue by referring to winning as a result of the fact that everything went up, and hat wining that winning that way is easy. I have always hated to follow advice, so realised my profits by doing wat appeared foolish:
During the Mexican Crisis(well, one of them!) the warnings about dropping stocks came out. Latin American stocks dropped left and right, so even though that was a fact I thought it time to start investing with my AIM-method. My faith here was that Mexico and Brazil, etc. were not going to disappear. The stock recoverd to original levels and we made a bundle. I call this: I did it My Way. In spite of other stock prices were dropping in a cyclic manner we made money on them as well, after selling out at a lower than entry price.
Conrad
Hi Fellow ET,
I appreciate your comments! I too feel like an ET more often than not, but I call myself a sane duck in a strange pond!
You wrote something on losing investments:
a. Foolish Emotional Trading b. Lack of DD
What the heck is DD?....
I am a duck from Holland! Is it a Dutch Duck???
In regards to losing investments, I had a few as well but I don't call them mistakes(I rather call then long shots that didn't pan out).
One can even justify a foolish move now and then, as long as it is not done with the pretence that it is logical, or way of life. If investing is a hobby then it doesn't have to be rational all the time. We can afford to goof off now and then.
Conrad
Toofuzzy on Investing:
It's interesting to note that if we get any number of people together we get as many views as there people. If you ask me, there are plenty of people that use margin buying openly, and many more that do but will not admit it, and others want to do it but are too scared to get their feet wet(sometimes a good thing!).
The nice thing on this board is that many readers are not afraid to explain why they lost money. I will tell a little story as well to reflect on how you, Toofuzzy, were investing then and now:
1)When I started investing I made no mistakes. I started AIMing with US Dollars. I figured that the Mighty Buck may drop in value but it will not vanish in my lifetime. I made money on a Dollar that cycled;
2) I repeated 1)above;
3) I invested in various stocks as a next venture(diversification) but each stock was chosen for maximum volatility. I bought stock in the company that laid me off in an reorganzation(made 137 percent annual yield when I sold out three years later);
4) I Borrowed money and bought more cycling stocks;
5) I started an Investment Club to get a bigger portfolio. Borrowed more money to buy more cycling stocks...my TurboVest Method!
6) I got into a few options(buying and writing) just to get the hang of it.
It worked out fine. Did the same with Warrants and US Dollar Features.
With the only Warrants I ever bought we made a killing.
7) Up to this point I made no mistakes. AIMing got me into a Profit Position of 100 000 Dutch Guilders(after all expenses were paid for) in 1998;
8) My first mistake: I got the Investment Club members to invest a part of the profit in my own company for technology development and did not asked them to sign a contract to approve this deal. I trusted them to be honest. To make the nightmare that followed two years later a short story I tell you that a so called friend now claims that money back on the basis of a pack of lies. He got already his original investment paid back and now claims his share of the profits as well. The case has gone to court and we are already past the first round without results. I had to sell my house to pay of company debts.
I still love investing with Aim and the TurboVest Method(but have no money left). I too learned some lessons:
A) As far as investing is concerned: Any time is a good time. The only mistake that you can make is not to be in the market;
B) If the Good Lord comes down to earth and offers me a deal I will ask Him to write down His intentions, that He is of sound mind, and that what He is offering me is not a mistake. Then He must sign it in the presence of 3 impecable witnesses.
Now I wonder when I will make my second mistake.
PS:
Margin Investing can have devastating effects: When stocks tumble you might lose all of it in one sweep by the bank. TurboVest Investing is a different kettle of fish: The borrowing only starts after the stock has already tumbled a bit.
Conrad
Hi Don,
This message was triggerd by your message on the AIM-USERS Board:
http://www.investorshub.com/boards/read_msg.asp?message_id=389372
If you combine several stocks into one portfolio then you essentially create an index, right? This index will behave quite different than anyone of the stocks and has also lower volatility than any one of the stocks. What do you gain?
I presume, of course, that with stock selection you pick stock that you feel comfortable with for AIMing anyway. I would AIM & optimise each stock separately. This is what I do in the Vortex-AIM. I make up various portfolio's and each stock is treated separately. Thus also the optimisation would be done separately(manually or automatically).
On top of that one might look at the portfolio and use some sort of stock analysis method to optimise the relative weights that each stock should be assigned. I can imagine that for this various types of optimisation objectives could be defined. I think Mark Hing's idea of combining AIM with the MPT is an example of this.
In this case tweaking the portfolio parameters would then be quite apart form tweaking the AIM parameters.
That's what I see as an objective. The question now is:
What types of different Portfolio Optimisation objectives can we define to optimise the portfolio, other than the MPT as a start?
I would appreciate some handles on portfolio optimization ideas. For example I can think of weight optimization on risk evaluation so that the high-risk stocks are reduced with respect to a percentage of the total.
Any standard answers?
Conrad
Tweaker Board Language?
Hi Mark! Good Idea to discuss tweeking.
What is the age limit for getting on this board?
I am worried the language may be too rough for me!
Conrad
Hi Matt,thanks for the extra 2mc remarks,
You wrote in regards to your use of the Portfolio Value vs Portfolio Control:
So, I have another AIM-like investment plan that takes this into consideration as well as treating Cash and stock equally.
I am looking forward to hearing more about it when you are ready with it.
Regards,
Conrad
Hi Tom,
I bet you would cry your heart out if you had to drive your 2120 miles in Holland. You gas price of $1.20/gal amounts to 36 Euro cent/Liter. In Holland we pay roughly 120 Euro cent.
Count you Blessings as you cover those miles!
Conrad