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I won't bore anybody here by my AIM directed BTC sell's and buy's... there is just too much of them.
But since the run up is so steep, its always a bit painful to sell too much too early. I have now taken the approach to increase the sellSAFE after every consecutive sell by 1%. After the first buy, I reset it.
I am the only one doing this?
What do you think of this approach?
BTW: In case you did not notice, BTC has crossed the $1000 mark.
I cannot lose any of my initial investment anymore as I also earned that back 5-fold. I am now playing with "house money". Sure money is money, so if I lose this I will be sad... for a day.
But that is highly unlikely. While I do not know if bitcoin will ever be a useful currency, frankly, I don't care. Just trade the ---- thing as long as the customer demand is there. :) (And if you make some good money, just take it of the table)
Sure, my first investment in bitcoins bloomed from €150 to €1150 (using AIM and timing), then I took €1000 out of the account.
The remaining €150 euro has now swollen to €330. But I will wait for higher numbers before I take anything out again.
Btw the growth from 150 to 330 occurred in only 3 weeks, using AIM. Of this €330, €150 is cash.
As I said, my only regret is not having more money in the portfolio, though... no not really. Even though some people expect bitcoins to reach the million mark sometime, I still regard it as speculative only. So I will not commit serious money towards it.
Btw, since I posted yesterday, I have had another 6 or 7 trades.... crazy...
I am now thinking of writing a fully automated BTC-AIMer for this.... :)
Wow what an action in my Bitcoin AIM :)
Starting yesterday I have a sequence of: Sell, Sell, Buy, Sell, Sell, Sell, Buy, Buy, Buy, Buy, Sell, Sell, Buy, Buy, Sell.
It is hard to keep up, but I am not complaining. Except perhaps that the portfolio should have been bigger :)
Wonder when it will stop....
edit: add another sell.
Actually Toofuzzy, I expect that sometime ahead the ETF thing will blow sky-high. Its just too much of a good thing that there must be some hidden drawback that will only become clear in hindsight. I suspect that this will be in the company issuing the ETFs, but cannot be sure of course.
Btw there is nothing wrong with investing in beans rice etc.
JIT is hideous when it becomes JTL. Even if the economy does not falls apart.
Toofuzzy Re: ETFs are not going to zero
I think that is a mistake. An ETF is guaranteed by the company issuing it. It can and will go to zero if that company fails.
Clive you'll get no argument from me against your observations.
Of course you know that these also apply to AIM portfolio's.
Total and absolute protection is not possible.
I'll take one more step: it would not surprise me if the only way to make (or to have made) money sometime in the coming years would be to stay short the markets.
Personally I believe a time will come where the financial-economical system breaks down and all assets are up for grabs. Only nobody wil have the money or the means to grab.
I just don't know when. Things like these always take longer to manifest themselves than originally expected. And if one plays it totally safe (i.e. not in the markets at all) then you face considerable opportunity cost.
Hi TF, Re: ETF to avoid the flaw
Yes you can use ETS to avoid that particular flaw, however with ETFs you run counter party risk.
Risk is inherent to investing and cannot be avoided. If one thinks he/she has found a risk free investment, then he/she simply has not understood the investment.
But as I said, I am not afraid of risk, I will keep my exposure to a minimum. I.e. my main investments are outside the markets.
Hi Clive, Re: Permanent Portfolio flaws.
Well, I am less sure about that. The purpose of a PP is not to increase its value over the rate of inflation. Rather it is a way to maintain purchasing power.
AIM on the other hand is a way to increase your purchasing power.
Directly comparing the two is thus imo not valid. Over the long haul (since about 1980) the PP has performed its function quite well.
The flaw you describe also exists in AIM. It is the way AIM keeps buying as your investment goes to zero. Ultimately wiping out the portfolio. This is inherent to rebalancing, however the rebalancing is implemented.
Personally I am not too worried about this flaw. Investing is not something to be done without thinking. (Though it has to be done without emotion. A difficult thing to do! ;)) So I am optimistic that I would detect such drawdowns before they do too much damage.
Has anybody ever used the Permanent Portfolio?
It is a portfolio that is balanced between long term bonds, cash, stocks and gold. 25% in each asset. Rebalancing is done only when a single allocation is less than 15% or more than 35%.
The purpose of the PP is not to make more money, but to keep what you have (more or less inflation protected).
I was thinking that there may be a good marriage possible with AIM.
The PP is structured such that when one goes up, another asset class is likely to go down.
Here is what I was thinking: why not AIM the three non-cash investments, and use the 25% cash allocation as the cash reserve for all three AIM accounts. After all, the PP is supposed to consist of investments that move opposite to each other, thus one investment will be selling while the other is buying.
PP does not capture volatility, AIM does. Would one get a better long term capital protection and volatility capture to boot?
PS: I do not think that I wil implement such a portfolio, so its just a thought experiment.
Btw: Can you tell I am a tinkerer :)
Re: Across all of the tests I've run, my gut feel is that overall it all washes as an overall average.
In short, it depends on the investment vehicle.
Yes, that makes a lot of sense.
Re: "I will need to look up vWave, I have not heard of that one."
Aha, I see the post at the top just now.....
Hi Toofuzzy
(Do I remember you from TMF also?)
I have lived through two huge drops in Bitcoins. Though the first one is hardly more than a little blip now (it went something like $30 and fell back to about $4 - from memory!). So yes, BTC AIMing did exhaust my cash.
When it went to $250 the first time, I admit to cashing out. The gains were just too big to leave on the table. I am now in again, but with very little capital. For fun only so to say.
"Your IH experience will be much better."
Done!
Thanks Clive.
Hi Clive
"Starting AIM with 50% cash with both buy and sell Vealies set to 50% will steer the overall average cash (stock) to 50% across the investment period."
Instinctively I would expect the total return to be less than standard AIM because I expect a dampening effect on both sell's and buy's. I also know that instinct is a bad advisor when it comes to investing, thus I would need to test this first.
One of the reasons for my instinctual reaction is probably that I have invested in spiking equities and failed to sell enough when I should have done so in retrospect. Still, numbers don't lie so it will need to be checked in a simulation.
I will need to look up vWave, I have not heard of that one.
Thanks for the welcome guy's,
Good to see that y'all are still around!
Congrats on the little one Grabber, he looks to be a lot of fun.
I am going through some pretty big changes myself, buying a house (I have only rented so far), relocating in the process to an entirely different area, and starting my own business on top of that.
So I will likely not be among the most frequent posters, but I do intent to stick around.
I have a few idea's of my own on creating a more symmetrical AIM variant, so I hope to contribute a bit on that front.
Hi Guy's, that was a really "long time no see" :)
Last time was in, maybe, ...., let me see..... probably 2006 or thereabouts?
I have been away from AIM, but am now more committed that ever to start proper AIM-ing and to keep doing it until, well, lets not talk about that ;)
Currently I only AIM Bitcoins. As soon as we have our new home settled in, I will put the remainder of my money into AIM-ing energy stocks and PM stocks. But that moment is still some way off.
While AIMing bitcoins I came to wonder: AIM is not symmetrical, it can exhaust cash, but it will not exhaust the bitcoins. Has anybody ever looked into a more symmetrical AIM? I.e. one that will not run out of cash? I know about the kludges, but not of a nice formula that would conserve cash.
I think it runs out of cash because we specify the buys in currency. If we were to specify the buys in stocks .... (and that is as far as I have thought this over)
That is a commendable decission!
As we all know, MSFT has risen tremendously over the past 20 years and I wonder if it would have been a good candidate for a.i.m, as I am of the view that EBAY could have similar longterm growth qualities.
EBAY has a market cap of $56B, MSFT of $300B.
So while EBAY may do quite well, it will IMHO not have as good a track record going forward as MSFT did over the last 20 years. (Barring hyperinflation)
Best,
Rien.
PS: In a stock like MSFT hindsight-LTBH would probably have delivered far superior returns to AIM.
A thought on this: a lot of people invest to get richer. But is that really the best thing to do?. When things go good, there is hardly any need to better-up our position. We will most likely do good too.
Suppose the market does really well over the next 10 years. Then if we invest in tech stocks we will have done better than the average. Which is nice enough, but if the economy is doing well, chances are that we are doing well too regardless of our investments.
If however the economy goes into the crappers, the tech investments will be worthless. And in addition we ourself might be unemployed and loose our shirt in the process.
Would'nt it thus be more prudent to put (at least part of) one's investment into "worst case" protection investments?.
The when everythings goes well, we might loose a lot of it, but hey, who cares, we will be doiing great anyhow. And if the economy does go south, we stand a fair chance of keeping our shirts!.
Just a thought, FWIW,
Is gold and oil really more expensive in terms of the EURO over the last year for instance
Ask, and ye shall receive:
http://tinyurl.com/35leo
Yes, crude is up in euros too.
http://tinyurl.com/3d374
Gold is up YOY, but seems more in a sideways trading range overall.
If oil keeps its trend, gold will IMHO break out to the upside in euro's too.
About gold & oil.
If oil limits the economic activity (and thus GDP) then the money supply must go down as well. This could of course cause deflation. If the money supply does not go down, but up (as should be expected also because of the way the fincial system works) then you end up with inflation. Inflation is good for gold.
Adding 1 and 1 together: if indeed we have (or are close to) peak oil, then it would follow that gold would be the investment tip of the decade (possibly longer).
Think this to its conclusion, and you end up with expecting a global bust of the fiat money system.
And that is only the "best case", VBG!!
What about this one:
http://www.lindsaybks.com/lab/rkc/index.html
Hi TF, that is an interesting idea!.
But yes, if we hit really bad times, it is easier to create something which will replace diesel that it is to create gas. Besides, I partly reasoned that lorries will have to keep driving, and they all run on diesel. It is thus more likely that the gov will not increase (or even decrease) the tax on diesel when fuel gets really expensive. (Though they will probably find a another way to get at my money!)
My AHold? LOL.
I sold covered calls on the Ahold stock I had, and it was called away a long time ago. Made a nice profit on it though.
The recent drop in silver has done me in though. I know I should rejoyce in the low prices. But somehow seeing one's portfolio decimated does not bring that much joy
I admit, I used stop losses, so I escaped the worst. At one time though I was completely in cash. Not very AIM like, but I HATE absolute losses. I have since scaled back in, and hope to have some sells soon. At least the stop losses gave me the cash I needed to go bottom shopping. (IF it turns out to have been the bottom, VBG)
Hi Conrad, I know what you mean. Though the rise in the euro zone has not been as brutal as in the US. Mind you, I kind of expected this so last year I changed my Renault espace for a Renault kangoo. HUGE difference. Driving comfort is actually not that different. Though one does feel that the car is much lighter. BTW: I also switched to diesel, which saves another bundle. Overall my driving costs have gone down to about 35% (as compared to the espace).
Thanks LC.
Sorry this reply took so long. Lots to do
I have completed the LD-AIM addition of COCAIM, and have improved the handling of input. There remain a few quirks to be ironed out though before I release an update.
I am not really interested in fuzzy stuff. I am too much an engineer for that
Java is not really difficult. There is a low entrance barrier, but the though stuff comes later, for example when you want to use SWING for GUI design. However since it is easy to start with, all it takes is time and a lot of experimenting.
Sorry Leandro, while I am european too, I invest mostly in the US and Canada. One of the reasons I did so is that it is much easier to get the kind of information you want about US and canadian stocks than from european stocks. And using a low cost international broker is easy today.
Some european companies (the bigger ones) have ADRs that trade in the US. That may help a bit. (ADRs are for all intent and purpose the same as a stock)
The sell point is equal to the number of shares you hold times the price of the shares.
Hence if you have less shares, and the sell point does not change, then you need a higher price to reach it.
The sell point depends on PC, SAFE and min trade size and thus does not change unless you buy or change the AIM parameters.
Hi Karw,
Did you get any benefit from executing 1% sells?
(It was not 1%, but a fixed dollar value, around 4% for PAAS)
I believe I did. However in percentage gain over the whole portfolio it will have been very small. With my settings for PAAS it means that I had one additional sell which I would not otherwise have had. A while ago I wrote that one advantage was that the buy-level rises faster which is good for shallow retreats. Just goes to show I suppose that we now had a major retreat, VBG. Oh well. Maybe I should learn from this that there will ALWAYS be big retreats, even though they may happen only once a year.
Still for the moment I'll stick to the small min sell size as in addition to the small gain, it fits me better.
I suppose this is interest driven
I don't think so. The price of silver went down sharply. Which for a silver miner is not exactly a good thing, VBG.
The selling was overdone though, even in relation to the silver price as can be seen when you divide the price of PAAS by the price of silver:
http://tinyurl.com/32ka6
I thus believe that this is a good entry point.
Ouch!, or should I say WOW!.
Just back from a short holiday. And it seems that some of those people who insisted on buying my miners are now most anxious to sell'm back.
Oh well, they can have it both way's, VBG.
Hi Karw, yes I had two "accellerated sells" in PAAS yesterday. Though if I would have stuck with the larger size, I would have had a sell also. BTW, PAAS is up currently, seems the breakout was genuine.
Though one could say in hindsight that I should have stayed with the old settings, I am still pleased with the new settings. There is no way one can forcast how high it would have gone. Ironically, what I like best about the new settings is that the buy level goes up faster. With the silver miners in a very pronounced bull market it is hard to keep the coffers stuffed with shares as the retreats are often very shallow.
I expect that PAAS will have some upside ahead of itself, as can be inferred from this chart: http://tinyurl.com/2kq2c
It shows the stockprice divided by the price of silver. With silver breaking to new highs almost weekly, there will come a time when the price of PAAS will explode upward. The CCI(20) in the chart hints that that time is now.
In edit: I expect that silver will eventually settle in the $15-$20 range. Though it will probably overshoot that range at first.
Thanks Tom. A well reasoned post. And with this start you can see it coming that I actually disagree slightly, VBG.
But only on the static min sell size. I have begun (yesterday) to implement "half sized trades" in the sell direction. I.e. the first sell is a full size sell (10% of PC) but after that I dropped the sell size to $300. It resulted in two trades yesterday for PAAS, and increased on each trade the buy level to more "realistic" values. So for now I am happy with this approach. I will keep the board informed about this experiment.
BTW: A nice volume breakout for PAAS yesterday!.
But when I downloaded and clicked on your program COCAIM.jar the Windows "Open with........" choice window poped up
Check out the user manual on my website, it shows how you can make a double-clickable shortcut for java applications.
AH, its the journey not the destination that makes the trip worthwhile. Or as (we) mountaineers say: "I'll like to climb that mountain because it is there".
(I never believe mountaineers that say they climb mountains because of the view from the summit!)
Click on the link "Free Download" in the upper right corner of this link:
http://java.com/en/index.jsp
I think their website s*cks, they should make it more obvious. But then again, most operating systems have java pre-installed. You can just try to run my software, and if it fails, then download the latest java VM from the above website.
It would seem to me that a sequential buy that was bigger would sap cash not preserve it
Depends on what your benchmark is. Against standard AIM it would indeed preserve cash. Your method would preserve even more cash, but also buy less per buy. I.e. if the downdraft turns out not to be THAT deep, then you end up with less inventory to sell.
I think however that both methods improve standard AIM, so I guess it depends on just how one expects a stock to behave in order to choose between the methods.
Sorry to say Steve, but it won't work. We already had these kind of places in a small town I used to live, and it did not help. Heck, you can even find lot's of dog-sh#t in designated playgrounds for (small) childeren. Even though there would be places less than 100 yards away where it would have bothered nobody.
Sorry to say, but for me the only good dog is a *bleep* dog.
Hi AH, I suggested the exact opposite of your idea. I.e. a min size for the first sell after a buy, and a second (smaller) min size for further sequential sells. As soon as a buy would interrupt the sells, one would fall back to the initial sell size.
My thinking is that I cannot estimate exactly how high a stock will go, and thus rather have a lot off smaller sells than 1 or two 2 big sells.
On the other side (i.e. buy side) I would have a smaller buy size for the first buy, and further sequential buy would be bigger in order to preserve cash in a prolonged down draft.
In short you could say that I want to be an agressive seller, but a reserved buyer, VBG.
Robert, I use my own SW for AIMing, it is not as sophisticated as other packages out there, but it is free.
You can download it from www.marinusvanderlugt.nl