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Yes, that's a good point and complicates matters a bit more.
Avg. Cost. per share is not used by AI in any way and is for information purposes only.
However to keep it accurate you will need to do some fiddling, but not with the Adjust Shares option. Using add and remove shares ensures that the Portfolio Control (PC) is correct. Using Adjust shares or buy/sell, will make the portfolio control incorrect.
Therefore to ensure that avg. cost per share is correct and that PC is correct you can sell shares (rather than remove them) and then buy them (rather than add them). HOWEVER, if you do it this way, you will need to adjust the Portfolio control in EACH portfolio. If you don't do this, subsequent recommendations will be incorrect.
You can change the company name using the "Change Security Information" function on the Tools menu. For further details, please see the AI user's guide (click HELP to view it).
The recommendations are displayed based on the original AIM algorithm, not on whether a filter over-rode the recommendation. So all is as it should be.
Hello Alexander,
Please see my reply to a similar problem here --> http://www.investorshub.com/boards/replies.asp?msg=11661049
The Volumizer is the one algorithm in AI that has never been made public. There are no details published on its inner workings.
Hi Neil,
I'm not sure why this happens on some machines and not others. I can't recreate the problem on any of the machines I have here, but others have experienced it too.
My apologies for the trouble. I'll have to try a few things and get back to you (I believe you sent me an email on this too, if not, send me one at mhing@automaticinvestor.com).
Hi Bruce,
You can do this by looking at the transaction history list (at the bottom of the main screen).
It shows the date of the last buy (in fact it shows a list of all transactions with the most recent at the top).
Congratulations AIMster!
4 Years and 1 day to get to 1000 and now that you're there I'll have to come up with something interesting for you.
Since the SDRs are already being given out on Tom's AIM board I'll go down into the Automatic Investor secret lab and flip through the skunkworks files to find something appropriate.
Send me your mailing address via PM and I'll have the AI couriers at your door in no time.
Yes, that's correct. You only use the Buy/Sell function if you receive an AI-directed recommendation to buy or sell.
You can rebalance using a number of methods. However the easiest way is to use the "Adjust Shares" function.
For example, if you wanted to sell $1000 of ABC and buy $1000 of XYZ, assuming ABC is $10/share and XYZ is $20/share, you'd sell 100 shares of ABC and purchase 50 shares of XYZ via your broker.
Then you'd use adjust shares to reduce the total ABC shares owned by 100 and again to increase the total XYZ shares owned by 50. No other adjustments would be required (although you might want to reduce cash reserve by the amount of the transaction fees).
This assumes ABC and XYZ are held in one portfolio. If not, then it becomes a bit more complicated as you have to use the Remove Shares function in the ABC portfolio and the Add Shares function in the XYZ portfolio.
Well there might be a data model change in the near future. It appears that some AI users in India have a problem with the ticker length (it seems the Indian exchange has recently moved to longer symbols) whereas AI is based on the North American length.
So when this gets changed I'll see what I can do about fractional shares.
Fooled by Randomness is by Nassim Nicholas Taleb.
It's a very good book. Some of his thoughts...
"$10 million earned through Russian roulette does not have the same value as $10 million earned through the diligent and artful practice of dentistry. They are the same, can buy the same goods, except that one's dependence on randomness is greater than the other."
Illustrating with the Iliad...
"Heroes are heroes because they are heroic in behaviour, not because they won or lost."
Speaking about MBAs...
"Why do they confuse probability and expectation, that is, probability and probability times the payoff? Mainly because much of people's schooling comes from examples in symmetric environments."
Other quotes...
"Visibly, the statistic that 90% of all option positions lost money is meaningless, if we do not take into account how much money is made on average during the remaining 10%."
"An event, although rare, that brings large consequences cannot just be ignored."
There are lots of other interesting insights too. Another good book is the (Mis)Behaviour of Markets.
OT: This has nothing to do with investing but is very funny. Ensure your speakers are on.
Thanks AIMster. I really like ETFs, even if they are being a bit overdone.
Message 987 was SPAM, so I deleted it. We're a spam-free zone here
Thanks AIMster.
Hi AIMster,
I was working in a few areas including genetic algorithms, Expert Systems and Neural Networks.
The genetic algorithms are in AI now, Expert Systems aren't. I experimented with them and found they didn't improve performance significantly.
Neural Networks have some promise but implementation is complicated and training them is probably not something most end users are interested in. There's still quite a bit of experimentation to do in this area and one day I will hopefully complete it
The other area I'm looking at is Fuzzy Logic.
Hi AIMster,
What you suggest is, as you've pointed out, just a field type change, however because it is a data model change, there are quite a few ramifications to the code that uses this field.
So it's not quite as easy as it sounds and I'm not sure how many people would use it.
That being said, however, if I ever have to rework the data model I will certainly keep this in mind.
Hi AIMster,
That is a good idea and can be implemented as another filter (much like the MACRO filter) that would filter on time.
I'm thinking of reworking the Configuration window so that basic AIM features are displayed on it and advanced features are accessed through an "Advanced" button or tab.
That way, new users don't become overwhelmed while advanced users can still access advanced functions.
Can you put together a list of all your suggestions and email them to me (mhing@automaticinvestor.com)? I want to ensure I don't miss anything you've suggested.
Hi AIMster,
Yup, it's on the list of things to add.
For those of you missing your daily aim-users.com fix, here's a way to get around it...
Go here --> http://web.archive.org/web/*/www.aim-users.com
It will show a list of how Tom's site looked at various times (from 2000 to 2005).
Click on the desired link and BAM! You're seeing aim-users.com again (albeit an old version of it).
Hi AIMster,
I'm aware of of the SmartStock software. It is actually the PCA software that was licensed to an Indian outfit and rebranded as SmartStock.
I've never installed it but did speak to the PCA guys about it a few years ago.
And yes, you were correct the first time, it's ODBC and allows applications to connect to any database that supports the ODBC standard (so you could use an application with Oracle, MySQL, mdb databases and such without having to rewrite the application code). Quite useful if you ever need to support multiple databases or scale upwards over time.
Hi Ken,
As Tom mentioned, Automatic Investor is alive and well. However it is having some trouble with the trial licensing. That's something I'm working to resolve at the moment.
Once the new version is available I will post a notice here so you can download it and have a full 10 days to try it.
Thanks AIMster,
While it's not perfect, it's a reasonable proxy for the actual metal. You've got to like ETFs. It seems they have one for everything.
Hi Jon,
I don't know of any Yahoo! symbols for silver or gold. Perhaps there is an ETF that could be used as a proxy for this (anyone out there know of anything like this?).
Of course if all else fails you can always do manual updates.
Hi Jon D.,
I received your PM. What precious metal symbols did you have in mind?
Basically you can update prices for anything available at Yahoo! Finance. So if the symbol you're interested in is on Yahoo! it can be updated in AI.
I hope that helps somewhat. If you need further details, send me a couple of specific examples and I'll be able to answer in more depth.
Hi Fox,
If you run an historical analysis on your stock, the report shows you these values. An example is below...
Start of Period: 13-Mar-05
End of Period: 13-Mar-06
High for Period: $22.7300 on 20-Jul-05
Low for Period: $14.0600 on 9-Nov-05
Initial Number of Shares: 521
Original Share Price: $19.1900
Original Share Price Date: 14-Mar-05
Original Investment: $10,000.00
Last Share Price: $18.2200
Last Share Price Date: 10-Mar-06
Average Cost Per Share: $19.10
Current Cash Reserve: $116.18
Current Shares Owned: 522
Current Security Value: $9,510.84
Number of Purchases: 1
Number of Sales: 1
======= CONFIGURATION =======
Buy Resistance: 10%
Sell Resistance: 10%
Initial Cash Reserve: 0%
Margin option is Off
Minimum Purchase: $0.00
Minimum % per Purchase: 5%
Minimum Sale: $0.00
Minimum % per Sale: 5%
Control Increment: 50%
Maximum Cash: 100%
Vealie: 50%
Volumizer option is Off
MACRO Filter is Off
Volume Filter is Off
MattMOD option is Off
Portfolio Control: 10,260
Hello Satbir,
I see you've already received a number of excellent answers to your question so I won't repeat what's already been said.
The main problem most new investors face is how to handle contradictions expounded by the various experts.
Just as there are many types of people in this world, there are many types of investors who follow many different types of investment strategies.
And many of these strategies contradict each other. It's funny because everyone's ultimate goal is to end up with more money at some point in the future, but the path each type of person takes to reach that goal is vastly different.
So, if you're new to investing you need to determine which path you want to take. Is it a short-term trading strategy, do you want to day trade, are you a buy and hold investor or something in between? (Keep in mind that you can mix and match strategies if you like, for example your retirement savings might be managed with a long-term strategy while a portion of your non-retirement funds might be day-traded.)
As soon as you decide on your strategy, things become clearer.
Of course some things are relevant regardless of the strategy you choose to implement.
First and foremost is risk management. Most new investors focus solely on returns. That's a big mistake. Whether you're day trading or investing for the long-term, you need to focus first on risk and then on returns.
AIM provides one type of risk management and as such you need to feed it stocks that can be used with that risk strategy. Mainly that means selecting undervalued, fundamentally solid stocks that are volatile and then diversifying and allocating appropriately.
If you have limited funds, then sector ETFs are great because they generally have low expenses and provide instant diversification.
Note that I said sector ETFs rather than just ETFs that mimic a broad index.
The reason is to attempt to capture volatility. If you simply invest in a broad index, much of the volatility of its components will be cancelled out. By splitting into sectors, you should get diversification plus increased volatility.
If you have more funds (e.g. $30,000 +) and some experience behind you, then individual stocks are the way to go (that's my opinion only, you have to decide for yourself if you're comfortable with individual stocks).
By selecting undervalued fundamentally sound stocks you limit your risk when the price drops. Good stocks can drop as we've all seen, but because of their earnings over a relatively long time frame, they tend to hit a bottom and then rebound.
Fundamentally shaky stocks (and stocks that are overvalued, whether fundamentally sound or not), tend to drop and not recover or are either delisted or go bankrupt (these are not good candidates for AIM, although they might be excellent candidates for other strategies).
So if you've done your homework and selected the appropriate AIM stocks, you should not have to worry about purchasing when the price drops, because you know that over time it should come back up (if that's the case, then you might as well pick up some bargains along the way).
Compare this with a short-term strategy. If you're in for a day or a week or 2 weeks, then if the price starts to come down, you will most likely want to cut your losses and sell. That's because your time horizon is so short that you can't be sure the stock will rebound in the next day or week or 2 weeks.
If you're following this type of strategy, then you would definitely not want to average down by purchasing more. You'd simply take your loss and find the next short-term darling.
To summarize, if you've decided to use AIM for all or part of your investments, then the following steps should help....
1) Have a longer term time frame (4+ years) in mind.
2) Select only undervalued, quality stocks that are fundamentally sound. Or select sector ETFs.
3) Diversify according to a proven strategy (generally you should look to hold stocks/ETFs with low correlations).
4) Allocate according to a proven strategy (there are many ways to allocate).
5) Manage your equity positions with AIM (although there are a number of AIM variations, stick with a By the Book strategy to start with until you build up some experience).
6) Periodically check to ensure your selected stocks haven't changed for the worse fundamentally or become ridiculously overvalued. If so, find a new stock to replace it (if you're using sector ETFs, you don't have to worry about step 6).
And that's about it in a nutshell.
The other thing you might want to check out is Tom's Idiot Wave. It gives you an indication of how much equity (as a percentage of your initial investment amount) you might want to allocate to equities.
Hi TF,
To answer your questions...
1a) Adding dividends or interest changes the return (as it should).
1b) If you add cash using the "Add Cash" (i.e. not add dividends/interest) function, the initial investment is increased by the cash you just added and you're asked to purchase equity immediately (the actual amount of equity you're asked to purchase depends on the Model currently in force).
Adding cash in and of itself does not change the recommendations relative to PC. Only when the actual Equity changes are recommendations affected.
1c) I don't think a pop-up is required. Users who want to add dividends or interest will use the Add dividends/interest function and those that want to add external cash will use the Add Cash function (that will indicate their intention to AI).
2a) Just adding cash and then later purchasing stocks is not AIM BTB (see previous posts on the subject). Of course if that's what you want to do, AI will allow you to do it by simply adding cash and then resetting PC via the Tools menu. Again, however, that's a modification to AIM.
2b) The actual mechanism AI uses when you add cash is to increase PC by 1/2 the amount dependent on the current Model in use, then when you purchase the shares, PC is then increased by the 2nd half (as normal).
For example, if we're using a 50/50 model, then if you add $10,000 in cash, PC is increased by 2500 (i.e. 1/2 of 50% of the deposit). Then when you purchase $5,000 worth of equity, PC is increased by a further 2500 (just as it would be in an AI directed purchase).
The end result is that PC is increased by 5000 (which is exactly according to BTB AIM).
2c) Again, I don't think a pop-up is necessary becasue if a new user follows the steps AI presents when adding cash he will be following AIM BTB exactly.
If an experienced user decides to deviate from AIM BTB, then he can add cash, not purchase any shares and reset PC via the Tools menu.
I feel this works well because there are no pop-ups or anything else that might confuse a new user, while an experienced user will know why he's changing PC and how to do it properly.
I think a similar thing could be said for younger people too.
From what I've seen, most AIM users are 35+. There was a fellow who posted a few years ago that was in his early 20s, but he was an exception.
My guess is that if we did a poll of all the AIM users out there, the vast majority would be middle-aged and older men.
Yet it is the younger set that could benefit the most from AIM (so by the time they turn into middle aged men they would already have enough money to retire).
They should start teaching this stuff in schools (starting in Grade 4).
Hello Satbir,
I'll leave it for either Tom or AIMster to explain what they do with their cash reserve in more detail (as I don't use this method).
To answer your other questions...
1) Yes, AI incorporates Split SAFE.
2) Yes, AI supports Vealies (both manual and automatic).
If you have any other questions, feel free to post them here or email me at mhing@automaticinvestor.com
Nope, I think you're safe...
Note how this guy is off balance, trying to use his puny weight to overturn the massively heavy bull. I'm afraid this is going to end badly (and not for the bull).
Hi Tom,
I guess we'll have to put an asterix by it since all this grubbing is not really investment related. However it is fun...
With number 19,000 under my belt I thought I'd see how many SDRs I now have and how many others might have. I'm not sure about the Motley Fool board you started a few years back, but between SI and iHub the stats are as follows...
In first place with an astounding 5 grubs is (and this is a surprise because I thought for sure that first place would have gone to Grabber)... CODYPUP. The pup managed to grub 2000, 3000, 7000, 9000 and 14000 on iHub (nothing on SI as perhaps that was a bit before his time). That's a 26% success rate on iHub!
In second place with 4 grubs is... the GRABBER. Steve is a very well-balanced grubber as evidenced by his 2 grubs on iHub and 2 on SI. In addition, Steve is a quality grubber as he managed to snag the 10,000th posts on BOTH iHub and SI (very nice move there Grabber -- you may not be in first place based on quantity, but when it comes to quality, no one can touch ya).
My score came in at 3 with TooFuzzy and Linda Kaplan (don't know who she is, but she posted early over at SI) close behind with 2.
The list was rounded out with singles by...
RR Spore
Rien
Quarel
2MC
Capitalist
Irwin
AIMster
Bosco
Labestul
Dolomight
LemonHead
Bernie Goldberg
RGammon
Jack Jagernauth
Robert Hansen
Tom Veale (huh?)
Larry Grzemlowski
Jack Park
Greg Welch
Socal Steve
and Bruce Bowman.
Whew! Here's to the next 37,000.
Steve, AIMster,
Thanks! I learned the art of grubbing from the masters
Thanks! Will email snail mail address right now.
I was watching last night with 20 posts before 19,000 and thought there was no way when I woke up today (on the West Coast) it would still be there -- so I didn't even check this morning.
Imagine my surprise when I checked at lunchtime and 19,000 was still sitting there.
And yes, the old ones have been well used so I'm looking forward to a shiny new one.
...is available!
Haven't had an SDR in a while. Hopefully the code hasn't changed!