Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Conversions
What methods did people use to convert from regular AIM to LD.
Was it just a case of selling off a large part of your holdings and keeping just the initial amount.
I guess thinking about the stocks owned, they can be split into dividend and non dividend paying. It would be the non dividend paying stocks that would be better candidates to swap.
Does anyone have any results from using this method. I have done a few simulations and then combined four stocks together to get a feel of how frequently they trade and what kind of return is produced. One of these combinations (picked at random) produced around 12.5% P.A. which is quite reasonable considering the reduced risk.
Regards
Neil
I knew you could do it!
There you go, I was overcomplicating it. What I was trying to do was work out the return at any given time by looking at the amount spent on the stock (why I showed it as negative) against the actual value of the stock.
Of course this led to wildly varying percenatge returns, especially after sells as you may only be -$100 (of real spent cash) against a stock value of $2000 which would lead to a return of 2000% or some strange figure.
I think I may look at using a fixed value say $2500 which is the max I'll commit to any one stock.
I'll go away for a while and thrash around withmy spreadsheets for a bit longer.
Thanks folks.
Neil
Hi Codypup
The problem I have is actually saying how much I have actually put in.
If you buy 10,000 shares at $1 and they go to $1.50 in 6 months you have made an unrealised gain of 50%.
If I buy 800 shares at $1 and I sell them at $1.50 I have a realised profit of 50%. If I now reinvest $800 at 90c/share then a further $800 at 80c my actual spend would be:
-$800 + $1200 -$1600 = -$1200
The stock I would own would be (800/.9) + (800/0.8)= 1889
The value of which is 1889 x 0.8 = $1511.2
This would mean that you have turned your $1200 into $1511.20
a gain of $311.20 or 25.9%
I guess any time your actual spend goes into the positive you can't do the calculation as your cash flow is positive rather than negative so you haven't actually had funds at risk (at least not your original funds).
If anyone has a good spreadsheet for showing this in an understandable light they may want to share it.
I'm writing all this down as sometimes it helps focus the mind.
Regards
neil
Return Calculation
A question for Grabber or any other LD-AIMers. How do you quantify the returns from LD-AIM.
With most things you have a beginning value and an end value and a time span in between.
From this you can calculate a total return and an annualised return with which you can then use to compare with other methods.
It is a little tougher with LD-AIM. What would you use as your begin amount?
I thought maybe that you could use the max risk value per stock, so if you start with an idea that you are going to make 3 buys of $800 on a falling stock therefore risking about $2500 inc brokerage.
If you have 4 LD-AIM stocks, that would add up to $10,000.
This doesn't work though.
I'm sure the collective brains of this board can come up with a solution to this.
Regards
neil
Thanks Grabber
Great reply and good to hear that it is going so well. I shall look into converting more of my holdings to this concept.
as I mentioned I believe it can enable you to use far more volatile stocks with this method that you would feel very nervous doing is straight up AIM.
It would probably help me with my tax as well as my accountant has me down as a trader rather than investor on my tax office code.
I recently had a buy in Ceramic Fuel Cells Ltd (CFU.AX), a stock I put some money into as a bet on future sustainable or at least far more efficient use of energy. They are an Aussie company, but due to the Australian governments disinterest in the Greenhouse issue they are building their factory in Europe.
Regards
Neil
LD-AIM revisited,
Long gap since I last posted and as I noticed a few posts on this subject I thought I'd aska few more questions.
I have been using A.I. for testing various LD-AIM scenarios where I will initially buy $800 of stock, if it falls, buy another $800 and once more if it falls again therefore having a total risk of $2400 total.
For parameters I have been using $10000 account with 40% cash. I have also been using 20% buy/Sell safe values, my reason for this is that there are many volatile low priced mining stocks here in Australia that you wouldn't want to AIM with a full account but LD-AIM would reduce risk.
If the stock initially rises you just have to sell out your original stake for a small profit, unless you want to hang on until the first buy arrives.
Who out there has a decent amount of LD-AIM stocks at the moment.
I'm interested in knowing if by spreading your money into many more stocks does it make a more efficient and profitable system that just using AIM.
One other parameter I'm thinking of adding is that of locking in profit on an LD_AIM once it moves into a positive cash situation. If you find you have cash of say $2000 as well as stock, ensure that you only spend a maximum of $2,400 on future buys therefore taking your max loss down to only $400. Keep ratcheting this up until you can extract funds to start up more accounts.
Is this how other LD-AIM fans out there are working?
Regards
Neil
Efficiency results
Hello Toofuzzy, have you done any calculations or got any results that show if LD-AIM gives a performance boost.
I would imaging that it should, as you have already mentioned, you don't have money tied up in the core so theoretically you will limit your losses as you may opt to buy no more than three times and so if your minimum buy order is $800 your max loss assuming the stock dies is $4800 ($2400 for initial sells + $2400 for additional buys).
I'll see if I can generate any results using figures from AI but subtracting the core position.
Regards
Neil
What an idea.
I think you have it Mr Core, instead of going into cash, go into soap instead, probably a far better investment than cash and it's usefull as well.
I'm oftem amazed at the price creep of supermarket staples that seen to have price rises far higher than the official rate.
I was buying butter for $1.47/ half Kilo around 2 months ago, now it is over $2/half kilo.
The mind is spinning now, maybe play off butter against soap,
buy 6000 packs of butter and 4000 bars of soap and let AIM do the rest.
What? men in white coats, where!!!!
Cheers
neil
ADHD?
I hope that isn't Attention Deficit Hyperactivity Disorder you have there Tom or have you found a way to harness it to make money in the markets???
Regards
Neil
I think I follow!!
Hello Toofuzzy, umm, not sure if I'm getting a handle on this or not.
Let me see.
Is it a case of saying that instead of going out and buying say $6000 of stock you instead pretend that you have that much and then say if I have to make 3 buys or 3 sells how much stock will I require if I want to make the sells.
Assuming that you intend to make 3 sells of $800 you would go out and buy $2400 of stock but pretend (ie adjust PC) to make out you actually have $6000.
When AIM then tells you to sell $800 you can go ahead and continue a further 2 times until you run out of cash.
I think I may have actually done this already for a friend of mine who had less cash to invest.
She bought $1500 of stock and I told her to pretend that she actually had $5000 and then worked out buy and sell level from there.
It is actually a good idea if you have to start from a small base and want to diversify.
Regards
Neil
Hello Tom
I agree totally with what you say.
They have a stock selection method which is based on fundamentals and as we all know, many managers out there use fundamentals and we also know they all have their own take on them and which ones the consider important.
I'm halfway through their book and considering that they say their approach is simple I would beg to differ, and I would say that most people would be thrown as soon as you start telling them to find the cubed root of growth over three periods or whatever.
It's all suitable vague enough that if the stock you buy plummets they can blame your calculations for being incorrect.
Maybe they Motley crowd just wanted to make their mark, sell their T-shirts, website, wouldn't suprise me if they ended up floating it al la Google!
As I was brought up on Technical analysis the other mob was referred to derisedly as Funny Mentals because as we all know it is great using Fundamentals if you know the data your looking at is true and not a figment of some CFO's imagination such as was the case at Enron, WorldCom etc.
I like AIM because it is systematic, there are no nail biting decisions of "shall I sell" as it has breached a support line only to find that when you do the stock turns around and heads up again.
Thanks again Tom
Regards
neil
LD-AIM?
Hello Grabber and fellow AIMers, can you just point me in the direction of what LD-AIM is, I'm not familiar with the term and I'm always looking to expand my knowledge of all things AIM.
Regards
Neil
Growth V Value
Hi Aimster,
Interesting idea about switching between Value and Growth, I think it would be very difficult to test though.
As has been mentioned elsewhere, I think the problem you would run into would be that in a general market selloff both Value and Growth would be hit.
I would think that Mr Lichello's original intention was to switch between high risk (stock) and very low risk (cash)
A variation on your theme may be to substitute Property trusts for Value as the market seems to cycle between property and stocks. The property boom (and Property trusts)took off as the stockmarket (industrials) got hammered.
Again the theory is nice but since the market has recovered from the 2003 low, the Property Trust Index (In Australia) has gone from 1410 (in Nov 03) to 1870 (Jan 05) a 33% increase.
THis is probably still part of the global property bubble, a correction is underway now in the Aussie index but still has a way to go before it meets a longer term linear regression line which should bring the level back to below 1600.
Regards
neil
Hi Toofuzzy,
Thanks for your replies. As you say when ever a method of investing that proves to be successful is taken up, the window of opportunity then closes.
I would say the Dogs system was/is systematic in its approach, as is AIM, and to a certain extent they both have a similar ideology of buying low and selling high. Both also can suffer from the same problem of buying into a stock that never recovers, although this would be less likely to happen to a DOW stock.
Funny thing is, they make mention of the book "How to Make a $1,000,000 in the Stock Market Automatically", in their book rather derisedly, I thought, which was unfair.
Maybe all the successful AIMers out there should point out their miguided statement to them.
Regards
Neil
Index funds Vs Motley
Hi Toofuzzy, I've just been reading through the Motley Fools book that someone kindly lent to me and it makes interesting reading. They also say that you shouldn't settle for the mediocre returns from the Index funds and that Vanguard (I do have some) have done a great marketing job in convincing people that it is futile to attempt to beat the markets consistantly, mainly based on the Efficient Markets theory.
I personally don't subscribe to this theory and I'm sure Warren Buffett wouldn't either or else he would have all his funds in index trackers.
According to those Motley Fools and their DOW Dividend method of 2,2,3,4 where you choose the 5 highest dividend payers out of the DOW30 split your funds into 5 equal amounts then place an equal amount into each stock except for the highest payer which you omit and instead double up on the second highest payer. According to their 'tests" this produces returns of about 20% per annum with adjustments only needed on each anniversary.
Are there any of you out there that has used this a core structure for investements and then used higher risk methods as satellites around the outside to hopefully feed the less risky core?
Regards
Neil
Hello Matt
Thanks for that reply, you wouldn't be by any chance the Matt behind the MattMod or is that just a coincinence?
I have noticed that it always makes you buy slightly later and at better prices and thus preserving cash that when it is switched off.
I have done some Excel spreasheets where I have used different levels of initial cash reserve such as 40% 30% 25% and 20% and then comparing the performance to the MattMod equivalent and mostly they give a better return either in absolute percentage or in the fact that you end up with a greater number of shares and hence greater leverage to a recovery.
It would be great if Mark or Don could post or send me their results, many hands make light work.
Regards
neil
MatMod question for AI users,
I was just wondering if anyone out there has done any tests on the A.I software to see how or if the MatMod option improves the returns from AIM and under what circumstances.
I have done a few myself and it does seem to improve the returns but I have only done a small sample.
A link that you will find an interesting read on and that might scare the horses a bit can be found at.
http://the-privateer.com/gold6.html
Regards
neil
Full Moon
Just got out of the cinema after our regular tuesday movie night (Cheap night) and looked to the sky to see the full moon.
Does this signify a big fall in the market? sometimes.
I remember doing some analysis to find out if there were any full moon effects but all in all found nothing except random probablity.
I like to tell people that it will cause the market to go crazy just to see their reaction.
Regards
neil
AI Software works anywhere
Hello Tom and Ksmurf, Automatic Investor uses Yahoo to gather stock price data when you tell it to automatically update your portfolio's. It works fine.
Here in Australia, for Australian stocks I have to add an .AX suffix to the code to tell it that it is an australian stock. I assume the UK suffix would be similar, maybe .UK or .UX, look it up on Yahoo. BHP would be BHP.AX as an example.
Regards
Neil
Sale's Season
The warehouse is cranking up at the moment in anticipation of some selling during the reporting season that is now underway.
It should prove to be a strong season once more here in Australia but this I fear is as good as it gets.
Just shipped out some Smorgon Steel stock (SSX.AX) for a LIFO gain of 47% and have placed another sell order in Technology One (TNE.AX) that I hope will get taken tomorrow morning.
Looking forward to a new float of Australis Mining in the next few days, hoping for plenty of initial volatility in the 20c Shares.
Cheers
Neil
Biotech Stocks,
Very interesting article Tom, even more interesting is that some of the returns that AIM would have produced would have been far more pleasing.
I've only tried it on a few of the ones mentioned in the article.
Nearly fell over when trying INKP using 15% SAFE and 10% min order. Used the MatMod in Automatic Investor to produce this.
Starting with a $10,000 portfolio and 40% cash level
AUTOMATIC INVESTOR HISTORICAL ANALYSIS FOR INKP
======= PERFORMANCE =======
Current Portfolio Value: $242,978.11 (16099 shares owned)
Profit or (Loss): $232,978.11
Simple Return: 2330%
Annualized Return: 39%
Buy/Hold Portfolio Value: $28,524.68 (6134 shares owned)
Buy/Hold Profit or (Loss): $18,524.68
Buy/Hold Simple Return: 185%
Buy/Hold Annualized Return: 11%
Return on Capital at Risk: 5475.06%
Average % Capital at Risk: 42.55%
Regards
Neil
Dallas Temp
Hi Grabber,
I would imagine that the Dallas heat would be far more unbearable than that in Adelaide as here the comforting factor is that being right by the ocean the sea breezes spring up in the afternoon.
The hot temperatures come when the wind swings around and blows from the north across the deserts.
It's usually a cyclical pattern with the hottest days followed by the cool change.
I have know times when we have had 2 weeks of 35C+ then when the news of the cool change comes through people rush to the beach to welcome it in.
The temperature can drop about 15 to 20 degrees in about half an hour on occasions.
Our cool change is here tomorrow!!!!
Regards
neil
Did someone say it was snowing?
You poor people up there, I saw the pictures on the news of snowploughs and people digging masses of snow out of the way.
Here in Adelaide, by contrast is has been a warmish 38C or in your terms just over 100F.
I think we are due a few thunderstorms in the next day so that should freshen things up a bit.
February is usually the warmest month when temperatures can reach around 44C (111F) and have been known to get up to 46C last year.
Gets a bit uncomfortable as I don't have air conditioning just a small upright fan, but hey I like the warmth.
Regards
neil
Possum Teeth,
Well, I'm not sure that I would like to put my finger in their mouth to check.
I'm sure if you rub them up the wrong way they will soon make their feelings known.
Cheers
Neil
Thanks for the 'roo story
Hello Tom, good to see some of my fellow country creatures exploring new exotic parts of the world.
The Kangaroos can grow quite large, the Western Reds are taller than a man and I would feel very wary about approaching one as they have pretty sharp claws.
The Wallabies are far smaller at about 3 feet tall and I think they would make wonderful pets.
Unfortunately the main time city people get to see 'roos is when they spring out in front of your car at night and you end up cleaning them up (or vice versa).
I spent New Year in the Barossa Valley (wine area) just up from Adelaide staying in cabins in the country, very relaxing.
During the evening Possums would climb down from the trees and take fruit and food from us. They are around the size of a cat with a long bushy tail and very cute face.
Regards
neil
ROTH IRA
Thanks for that explaination of the ROTH IRA Grabber. As far as I am aware there is no equivalent over here in Australia at the moment (we are always a little slow off the blocks when it comes to financial innovations).
I did have a sale from my modest equity warehouse today, sold 16 Alinta Ltd Convertable Preference Shares (ALNPA.AX) for $133.80 they were purchased in Feb 2004.
Also added a new stock to the inventory list Pacifica Group (PBB.AX), its out of favour with the market and has a 6.9% Fully Franked (Tax Free) dividend. It may take a while to turn around but then again we are long term investors.
Regard
neil
Hello Grabber,
Regarding the Tsunami question.
All other headlines have been relegated to second position on all news channels and most printed media news.
I remember first hearing about it shortly after it occurred and the sketchy reports were of 4000 killed which I though was a huge amount.
As we all know it only got worse from there and now it is well over 25 times that number.
At the moment I think the number of Australians killed is still officailly still quite low at around 20 or 30, unofficially it may go up to a couple of hundred.
I was in Bali a couple of years ago and can understand why these places have such high death tolls, there are many people in quite primitive villages with very small roads, evacuation would be quite difficult.
I remember a similar thing on a smaller scale happened several years ago on along the cost of P.N.G., undersea quake followed by wave that wiped out scores of low lying fishing communities.
I think it is a very active region of the earths crust.
It shows how despite all our cleverness and technology how fragile we all cling to this planet, maybe we should learn to take more care of it.
Lets hope the rest of the world unites and fights the real enemy of mankind and not each other over silly petty idealogical differences.
Have a good new year all
Neil
Hello Toofuzzy
What is ROTH IRA that you mentioned in your reply. I am writing from Australia so it may be something that is not available over here.
Regards
Neil
Margin & AIM
Hello Fellow AIMers, this question has probably been asked many times before but I have not found anything in recent postings so I'll ask now.
What does the collective wisdom tell us about the use of AIM with margin funds (ie borrowed money).
I would assume that as in most leveraging cases that it magnifies both gains and losses.
As AIM is a risk control system is the use of margin then going against the safeguards of AIM?
I have noticed that in Automatic Investor there is a facility for enabling the use of margin funds.
Has anyone used AIM with margin in a successful way and what recommendations would they make in regards of margin usage.
Regards
neil
Hello Razorbackfan.
Thanks for that inspiring story on your deep diving stock, it just shows how keeping the faith and not panicing at times when most others are, how you ended up producing a good return from the stock.
It just shows how much sentiment rather than fundamentals plays the larger part in the price movement of stocks.
I have posted earlier of my deep diver (obviously needing reassurance from fellow AIMers) Millers (MRL.AX) it is currently at multiyear lows, initial purchase at $1.83, second at $1.48, third $1.35, and last $1.10, currently at $0.95.
It may be one I have to hold for a while.
Regards
Neil
Millers Problems
The main problems besetting Millers Retail is that one third of their operations are under pressure, that is the discount variety area where they are in a price war with Warehouse Group (WHS.AX). This is anticipated to come to an end within the next few months as The Warehouse group is losing money to compete whereas Millers is still turning a small profit.
Their other segments are still producing decent profits (If you can believe the company reports) it is just out of favour at the moment.
Regards
Neil
Yield
On that previous post I forgot to mention that the yield on the stock is now standing at 10% fully franked (That is, tax paid).
While that sounds great the "Times covered" is now 0.38 which means if all things remain the same the dividend must be cut to at least 3.8%. to ensure that the company is not giving away more than it is earning.
Regards
Neil
Fear Of Falling
Hello fellow AIMers, been a while since I've last posted here but I have a question that I'm sure has crossed every AIMers mind in the course of their endeavours.
I have just purchsed the 3rd and final amount of stock in MRL.AX (Thats the Yahoo code format) or Millers Retail.
Now, coming from the momentum investment style which in current market conditions would probably outperform AIM it is hard to purchase a falling stock.
If I feel this way I'm sure other AIMers have also. I guess the only way of overcoming this fear is backtesting of the method and also the probability of how may companies go into bankrupcy that one could expect to be unfortunate to pick.
How many out there have picked a stock then used up their full free cash and then had a satisfactory outcome at the end of it?
Is there a point at which people have actually used as a cutoff to abandon holding of a falling stock?
Regards
neil
SPY clear
Hello Tom,
Thanks for that comprehensive explaination, that has helped me understand what a lot of the people on the forun were referring to.
I don't believe we have an exact equivalent, or maybe we do in STW which is the Streettracks 200 fund. Its a listed fund on the Australian All Ordinaries Index and consists of the top 200 companies. It probably has a bit more flexibility than the Vanguard funds as you can buy/sell minimum of $500 and you can do it real time at a fixed price unlike Vanguard where you are not sure exactly what the units will cost as there can be a delay of a couple of days when you purchase.
As with the sector trackers all we have here available are the CFD's (Contracts for Difference) which replicate the sectors but do not hold 'real'stock. They are more like a betting instrument as you do not have to actually buy the value of the sector its a mark to market settlement at the end of each day, a bit like futures but without an expiry date.
Regards
neil
SPY Or SPI
Hi Tom,
Can you just give tell me if what you are refering as the SPY is what seems to be known over here as the SPI (Share Price Index) which is a futures contract on the Share index.
Is that one and the same thing (except of course you are refering to the S&500).
regards
neil
Gold Funding,
Hi Hr Core.
The links to the Aussie gold cambios appear to be dead or have been taken off line.
I have sent an email enquiry to Omnipay to see what they suggest. I would be putting more that $1000 into the account so that wouldn't be a problem.
There is a listed company over here called Gold Bullion Securities Ltd (ASX Code GOLD). They are a mirror of the gold price. Each share represents 1/10 troy ounce of gold, currently trading at A$57.55. All shares are 100% backed by bullion.
Theoretically I could use that, paying the spread + $32.95 brokerage. All you would need then of course would be a similar proxy for the other metal.
They definitely don't make it easy to split away from conventional currencies do they.
Regards
Neil
Thanks Mr Core,
Hi there, Thanks for your efforts. I have been doing some digging and found a company here (after following some of the dead links on the e-gold website) called Pridal that appears to offer a e-gold funding service. But as usual I don't think they have the facility up and running yet.
Pridal appear to have offices worldwide. I am unfamiliar with their main areas of operation though, are you familiar with them.
I guess wiring money to Omnipay can be done by Australian banks they just sting you when you ask for anything like that.
I assume onece you have an account funded that any M2M trading is a tad easier?
Regards
Neil
How to Fund?
Hello David, here is a dumb question from a novice in this area.
Having opened a e-gold a/c and then going to Omnipay to look into placing some metals in there I find that there is no easy way of paying for the transaction.
What have you found to be the most convenient way of paying.
I just assumed they would have a credit card facility or some kind of electronic bank transfer.
regards
neil
About Time,
Had first sale in about three months, talk about lack of customers! Sold 300 Southcorp (SRP) for a 30% gain. I had the order placed the previous day and it must have touched the price and sold as the price was a couple of cents down by close.
Have a few other stocks that get close then back off again. One such is SGLGA, a convertable note that at face value paid 12% interest. As it is a gas provider it has also benefited from the rises in the energy stocks.
Nice to get a bit of income while at the same time getting a pummeling from a short strangle on another energy stock, just need the volatility to back off!
regards
neil
Oil Prices in Australia
It is not only the U.S. where oil prices are high. Currently the prices here in Australia are in a range from $1/litre to $1.15/litre. I don't know what that translates to in U.S. measures (your gallon is different to imperial) but I would say that your prices are some of the cheapest in the world.
When I was back in the U.K. earlier in the year, the prices there were double what they are in Australia.
I'm hoping that the silver line in these high energy prices will be a kick start in the development of new technologies that are less reliant on fossil fuels. I've got some Stock of CFU which is a listed company here that manufactures Ceramic fuel cells.
regards
Neil