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Hello AGGJ,
I received your private email with your solution to the problem. However I think we still need to talk about it as I don't believe it is the correct solution. Give me a call when you have a moment.
Hi Conrad,
Yes, the winter olympics will be held here in 2010. Not sure what it will do for commodity prices but right now our province is benefitting greatly from high energy prices.
I think I will try to get hockey tickets for 2010, but otherwise I'll leave the rest of the events to the tourists.
That's the one I remember where you made finger indents "Monica's" nostril.
He doesn't look too happy.
Hi Don,
Got your 2nd message. I get the hint
Hi Tom,
That's the one. I knew I'd seen that bull getting his comeuppance at your hands. I hope "Monica" got the message
Got it!
I opened Opera and did what you did and the images come through. Very strange. IE just won't show them though.
Say, isn't that the same bull that Tom Veale was seen wrestling a while back? I'm sure it is. In fact if I look closely I can still see Tom's finger indents in the bull's nostrils.
Regarding the 2nd picture, yes, I think that would not be a good choice for an opening AI splash screen (because hooves are too big
Hmmm, now I get the following message when I click on the links...
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You don't have permission to access /10dimages/nyc2/cd031_03May04_nyc_wall_st_bull_0169.jpg on this server.
Additionally, a 404 Not Found error was encountered while trying to use an ErrorDocument to handle the request.
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Apache/1.3.34 Server at www.indospectrum.com Port 80
Perhaps that Wall Street security you mentioned goes a bit further than you thought
Hi AIMster,
"if you select a Lichello model you should only have access to features that the "pure" Lichello model allows, thus forcing AI to be strictly Lichello BTB."
I think the problem might be that people are looking at the configuation window, and all of the enhancements it provides, and confusing it with the actual workings of the main AI engine.
If you select a Lichello Model on the configuration screen and click OK, the AI engine will perform calculations strictly BTB -- there will be no enhancements added. And that's what you want.
If it helps, then pretend that after you select a Lichello model on the Configuration window, the config window goes away and never appears again. From that point on you will be using Lichello BTB. There will be no way to view or use the non-Lichello options.
The correct way to think about this is to keep the configuration window separate from the AI engine. If you select a non-BTB enhancement (such as Margin) on the configuration window, then the AI engine changes the way it does its calculations to include the enhancement.
It doesn't make any sense to remove options from the configuration window based on which model is chosen because you wouldn't be able to get those options back at a later date.
Rather it makes sense to disable all enhancements if a Lichello Model is selected. That way you can choose to enahable the enhancements if you want to subsequently use them. In the meantime, any disabled enhancements don't affect the AI engine at all.
BTW, the images you posted didn't show up. I know this happens when you don't type everything exactly as it needs to be (that includes spaces).
Hello Jack,
I don't mean to give you a headache and I have no intention of kicking you off this board.
If you go to AI's configuration window and select the Default Model, you'll see cash reserve starts at 0%, MACRO enabled and VoluFilter enabled.
If you then select the Conservative model, you'll notice that Initial cash changes from 0% to 50% and MACRO and Volufilter are both disabled. This gives the settings Lichello described in the 2nd edition of his book.
If you click OK, you'll be using Lichello's BTB algorithm. The fact you still see options for MACRO and VoluFilter on the configuration window does not mean that AI is using them (because they are disabled).
Similarly, if you select any Lichello model (Conservative, Moderate or Bullish), Margin will be disabled. The fact it still remains as an option on the configuration window does not mean it will be used if you select a Lichello model.
If you choose to turn Margin on, then you are no longer using a Lichello Model -- you are using an enhancement.
This same logic applies if you change, say, the Buy Resistance setting from 10% to 40%. In that case you are using a modified AIM algorithm -- i.e. you're not using AIM BTB.
So I'm unclear as to why you think that "Margin would have to be automatically disabled, so it's not an option."
When you choose a Lichello Model, Margin is disabled and AI uses Lichello BTB to calculate everything. The fact it is still an option that allows you to enable it at some point in the future if you so desire is an enhancement, not a contradiction.
What I just said above and in my previous posts to you makes perfect sense to me. If it doesn't to you, that's okay. I believe that you know how to get around any problems you perceive with AI (whether by adjusting PC manually or ignoring Margin etc.).
So, I'll leave with this...
You've been AIMing for a long time and I value your opinions (whether I agree with them or not).
So please feel free to post any suggestions you have for AI, ask why AI does such and such or how to do something you might be doing with Newport in AI. Also feel free to share your opinions without fear of being kicked off this board (as for the headache, I'm afraid I can't help there).
Unfortunately at times, like now, it appears we are speaking different languages and I don't think I can explain my points any better than I've done.
So if you think I'm not making sense or am completely illogical, then feel free to ignore what I've said and just use the workarounds we've discussed. That should make the headaches go away
Hi Don,
Thanks for your note. I'll get that fixed in this SP update too. And yes, I'd like your ideas on optimization improvements.
"However, if one were to go strictly by Mr. Lichello's words, there would be no Margin allowed in AI. On pages 197 and 198 of the Third Revised Edition, he states clearly that he is against it. I take it that Margin would have to be removed from AI in accordance with the AIM book."
Margin is not enabled when using the Lichello Models in AI and therefore you cannot get into a situation where there is negative cash.
Margin is an addition to AIM BTB much like MACRO, MattMod, Vealies, Volufilter and such. To reiterate, when using one of the Lichello models, AI follows AIM BTB exactly.
However it also allows users to use AIM enhancements of which Margin is one. Therefore Margin does not need to be removed from AI, no more than MattMod or MACRO does, in order for someone to use it BTB -- simply select a Lichello model when setting up portfolios.
Hi Everyone,
I'm working on the AI 3.0 Service Pack 4 update and need to know if there are any problems with the current AI functionality.
I know about the following...
1) NA is displayed in the Fundamental Analyzer.
2) 10 day Free Trial doesn't always work on some machines.
3) Error 13 appears sometimes when starting the program. If this happens to you, can you send me information on when it happens as well as your OS and whether you're connected to the Internet when it appears.
Is there anything else that needs to be fixed (no new functionality requests please, just current functionality that might have stopped working). Thanks!
Hello Jack,
"It makes no sense to me that AI would perpetuate, allow for, or encourage rounding errors, when there is no need for it."]
This a side effect of implementing the Lichello Algorithm. If you didn't use any software and followed Lichello BTB with a pencil and paper you would have the same problem (which is why I think Lichello didn't worry about small rounding errors). However AI allows you to easily correct these rounding errors if you want to.
The bottom line is, if you don't force an update of PC immediately upon adding cash then you are not following AIM BTB.
Newport chose to allow cash additions without forcing a PC update and there is nothing wrong with that per se. However it is NOT AIM BTB.
I've come across a few comments in the past that basically said, AI should do this or that because Newport does it that way.
Since Newport is the longest running AIM software and it has a large number of loyal users who like it alot, I imagine that its users want other software to work like it does.
However AI's goal is not to create another Newport. It is to implement AIM BTB and then add other features and functionality on top of AIM BTB (such as different models, optimization, asset allocation, fundamental analysis, MattMod, MACRO, etc.).
"It makes no sense to me that a user would be forced to buy shares just because he / she received a Bonus, and is adding it to an AIM account. What if at the time of adding the cash, the stock is trading near it's 52-week high and AIM is actually recommending a sell, does it make sense to buy shares with half of the Bonus?"
Although it might not make sense to you, that's how Lichello defined AIM. Again, if you don't agree with the Lichello algorithm, AI allows you to modify it according to your wishes (as previously discussed).
"For me, it doesn't seem to be a good way of doing things to increment Portfolio Control when adding cash."
That's fine and you can get around this in AI by manually adjusting PC or using the Add Interest/Dividends function. However, again, Lichello developed his algorithm that way. Whether someone thinks it is right or wrong doesn't change the fact that Lichello's AIM algorithm explicitly states this is the way it's done. And AI uses Lichello's algorithm as the definitive model (which is as it should be).
So to conclude this thread of conversation, I have the following comments...
1) I don't disagree with you feeling that you should be able to add cash without adjusting PC (AI allows you to do this in two ways). However I don't agree that this is AIM BTB.
2) AI is not meant to implement Newport functionality exactly. It's meant to implement AIM BTB exactly and add additional features.
3) I am always willing to fix anything that does not implement the AIM BTB algorithm. However I need logical support via a page number in one of Lichello's books clearly showing how AI's implementation of AIM differs from the BTB definition.
What you are proposing is not AIM BTB. Tom's Vealie is not AIM BTB. Matt's MattMod is not AIM BTB. Don's MACRO is not AIM BTB. However all of these things serve to enhance AIM in certain situations and thus are implemented in AI.
4) AI is set up so that if a new user with no knowledge of AIM wants to select a Lichello model, he or she would be able to implement AIM BTB exactly. That's why the Lichello models don't include MattMod, MACRO, automatic Vealies and that's also why they enforce automatic PC increases when adding cash.
Whew! This turned out to be a rather long post and I think we've beat this particular topic to death. If there are other things you don't like in AI, feel free to post them here or send me an email (mhing@automaticinvestor.com).
Thanks Jeff,
I figured there had to be an option that would allow PC to be increased by 100% of equity value.
Hello again Jack (or any other Newport user who can answer),
After having written my previous reply to you, I just thought of something.
Since I don't have Newport installed on my computer, I can't check this but I'm curious about how Newport handles cash additions.
You mention that Newport does not automatically increase PC when new cash is added, but only when you purchase shares.
So my question is this...
I assume that when you purchase shares (assuming a 50/50 cash/equity distribution), Newport adds 1/2 of the equity purchase to PC.
So if I add $10,000 cash. PC is not initially adjusted.
Then if I subsequently purchase $5,000 worth of equity using the standard Newport functionality, does Newport adjust PC by 2500 (i.e. half of the new purchase)? Or does it adjust PC by 5,000 (i.e. 100% of the new purchase).
If the former, then it looks like PC will be less than it should be (because according to Lichello, when adding cash and purchasing equity with that cash you must increase PC by the full amount of the equity value).
If the latter, then normal AIM recommendations will cause PC to be more than it should be (because according to Lichello, when performing an AIM directed purchase, PC should be incremented by 50% of the new equity value).
Or is there a special function in Newport that allows you to purchase equity and (for that function only) increases PC by 100% of the equity value?
Hello Jack,
I'm always interested in determining ways to better improve AI, so if you think what I said doesn't add up or make sense, I'd be happy to know why.
I'm not sure if we're talking about our interpretations of Lichello's BTB algorithm or a desired modification to the BTB algorithm on your part.
To me, Lichello's book made it very clear that when you add cash you immediately purchase equity and increment PC by the amount of equity purchased.
If I've missed a place where he changed that requirement, please let me know. I have both the 3rd and 4th editions of his book (plus the original manual and cassette tapes that came with his infomercial course) and can't find anything in either book or course that goes against this part of the algorithm (prior to the 3rd edition of his book he had the requirement to add 110% of the equity value to PC. In the 3rd edition he changed that to simply add 100% of equity value to PC).
On the other hand, if you are acknowledging that the BTB algorithm is in fact as mentioned above but you would prefer to use a modified algorithm that doesn't require an immediate purchase, then you can use the Add Interest/Dividends function in AI to accomplish this.
It allows you to add cash, does not adjust PC but does not change the original investment. The other method is to add cash and then reset PC as you've already done.
I believe that AI is currently set up (if you use one of the Lichello models) to exactly implement AIM BTB. If you believe this not to be the case, please feel free to let me know (and point me to the page number in Lichello's book that supports this). If AI is not implementing a part of the Lichello AIM BTB algorithm I'd be happy to change it.
Hi Conrad,
Nice to hear from you again. It's been quite a while.
"The question about the automatic update on the PC when extra cash is injected caught my attention. I find the automatic update not logical."
I'm not sure why you find it illogical as it seems logical to me. Not adjusting PC also seems logical. So it's not a case of black and white, just how you decide to implement the adding of cash.
However it is very logical to force a PC update if you are following the Lichello's AIM BTB alogrithm and it is illogical to not do this (again, if you're following BTB AIM).
That's because Lichello plainly states that when you add new cash, you MUST purchase equity and adjust PC.
At the end of the day, this point is somewhat moot as AI allows you to reset PC or use the Add Interest/Dividends function so PC is not adjusted. Therefore if you disagree with Lichello, AI allows you to go your own way.
On the other hand, for new AIMers (who might not know the ins and outs of adjusting PC), AI ensures they follow the BTB algorithm.
Hello Jack,
My initial comment was to your statement, "the way I view it is that, if I Deposit Cash to an account, I shouldn't be forced to buy shares right away (and increase Portfolio Control). All I am doing is adding cash to the account, which should only increase my Cash Reserve."
That view, however, is not correct if you go by Lichello's AIM BTB algorithm. In the 3rd edition of his book Lichello writes, "AIMvestors know that when they add new money to their AIM programs -- a Christmas bonus, an inheritance, etc. -- they are supposed to put half the funds into STOCK, the other half into CASH RESERVE. They are then supposed to increase their PORTFOLIO CONTROL by the amount of money just invested in STOCK."
Therefore it is not BTB AIM to add cash and not buy shares right away or increase PC. I'm not saying it's wrong to do this, just that it's not AIM.
The basis of AI is to implement AIM and then add functionality to allow experienced users, like yourself, to override the BTB algorithm if desired.
Regarding your thoughts about starting a new AI portfolio...
You are correct in stating that AI bases its initial PC value on the actual equity value. Hopefully that purchase is close to the actual recommended investment amount. For me, I usually calculate how much equity I purchase and then add the appropriate amount of cash to fill the cash reserve appropriately, so my new portfolios always have exact PC values.
With respect to adding cash, you are also correct in that the PC adjustment might be slightly off if the user rounds off values. However there are two considerations involved in this case...
1) Lichello didn't have a problem with small rounding errors (and it is the case that usually these rounding errors are small).
2) Not forcing an AI user to purchase equity when depositing cash, means that there is a HUGE error in PC 100% of the time because according to Lichello's BTB AIM algorithm it is just plain wrong to add cash and not purchase shares and subsequently adjust PC.
Therefore AI takes the track of forcing the purchase and adjustment of PC so that neophyte users will not mess up their portfolios. Experienced users, on the other hand, who want to deviate from BTB, should have the knowledge to update PC according to their wishes without breaking their portfolios.
Hi Tom,
Nothing amiss over here. Perhaps Netstock issued an update for another reason. The Yahoo! data seems okay.
Hi AIMster,
No, you're not way off. Your invest in both and split the difference strategy is a good way to go.
However, in theory, more weight should be given to the stock's rating. This is because much of the rating is calculated on what has happened at the last earnings release (i.e. a snapshot when the statements were prepared), whereas the target price is calculated mainly based on estimates of future earnings (which, as we know, can contain a large degree of uncertainty).
So it makes more sense to go with what has already taken place rather than what is predicted to take place.
That being said, however, if a stock has a score of 6, it usually means it's a quality value stock (at least from the software's perspective).
I hope this helps. Let me know if you have any other questions.
Hi Tom,
Thanks for the link. Looks like he has a few useful utilities on his site.
Hi Jeff,
You're welcome. I just processed your VSS registration. Let me know if you have any trouble accessing the software.
The AI update is turning into a real bear. It seemed simple enough when I updated the AI code, but for some reason, when testing, the move from MSN and Yahoo! to Yahoo! alone (not to mention the Yahoo! data format change) is not working correctly.
The VSS move went smoothly, so I expected the AI one to go smoothly too (as they share a great deal of the code base).
So the short answer is, I'm still working on it. Sorry for the delay.
Hi Tom,
1) Interest adds to profit as it is money generated by the portfolio (i.e. not external).
2) Dividends can be treated like interest although theoretically when a company distributes dividends its share price falls by the dividend amount (although in practice this change in share price is usually so small it is often overshadowed by normal daily price volatility).
3) Adding external cash affects the total investment (i.e. initial investment plus new cash), so it doesn't increase total return per se, but does affect the returns in the sense that all subsequent returns are now calculated based on the new total investment.
However I see your point. In that case, within AI, PC would need to be adjusted manually if the AIMer thinks adding cash should not result in purchasing new equity.
Thanks for bringing it up.
Hello Jack,
I remember having a similar discussion with a few AIMers (I think one was Bernie Goldberg) many years ago. My logic is as follows...
1) If I start a new AIM portfolio with a 50/50 cash/equity split and invest $8000, then according to the AIM algorithm I have to purchase $4,000 of equity and keep $4,000 in the Cash Reserve. PC would be 4,000.
2) If I did (1) yesterday and then realize that I actually meant to start the portfolio with $10,000 rather than $8,000, then what should I do? Should I (i) add $2,000 to the Cash Reserve and leave PC at 4,000 or (ii) add $2,000, purchase $1,000 of equity and adjust PC to 5,000?
My view is that I should do (ii) as that will put my portfolio into exactly the same state as if I had initially invested $10,000 rather than my incorrect $8,000.
In that case, the passage of time (whether 1 day or 2 years) should not matter (as AIM does not take time into account, just changes in equity value). So if 2 years later I decide to add cash to the portfolio, I should follow the same rules as I did when adding cash 1 day later.
That's why AI adjusts the portfolio control for external cash deposits.
On the other hand, Dividends can also be viewed in a number of ways. When handed dividends there are 3 possible ways to think about it...
1. Place the dividend in the cash reserve and treat the change in share price as a market change.
2. Use the dividends to purchase additional shares so the stock value remains the same.
3. Place dividends in cash and treat the decrease in market value as a non-AI transaction (so decrease PC).
AI implements option (1) so no change to PC is made.
Interest can be handled by adding it to cash with no adjustment to PC.
So you can see that I believe AI implements the correct way to handle external cash infusions. However I know many AIMers don't see it that way. In that case AI gives the option to directly change PC (as you did) or use the Dividends and Interest option so PC is not affected.
Hello AIMster,
Yes, the Yahoo! format change also broke VSS. There is a Service Pack update available to fix it...
Do the following to update your copy of the software...
1) Download and reinstall the SP1 software from here --> http://www.valuestockselector.com/delivery008/vss20setup.exe (Ensure you install it into the SAME folder you originally used).
2) Reboot your computer.
3) Restart the software (you don't need to re-register). You should see the title screen display Version 2.0 Service Pack 1.
If you have any questions or run into any trouble, please don't hesitate to let me know.
Hello Jack,
When depositing cash, part of the cash should be used to purchase equity (depending on your initial cash setting). Thus PC should be increased.
However when adding interest or dividends, PC should not be increased.
Essentially, if you want to add cash but not adjust PC, use the "Add Interest or Dividends" function on the "Cash Reserve" menu.
If you want to increase PC, use the "Deposit Cash" function.
I hope that helps. Let me know if you have any other questions.
Hi AIMster,
The previous change they made was made to support more data, so it was a good change.
This last change was simply reformatting the existing data, so it didn't add anything. However I don't suppose we can complain as the data is free
Hi Jerry,
There are a few ways to calculate a stock's fair value. One of the most used is the Discounted Cash Flow (DCF) method.
You can find it explained here --> http://www.moneychimp.com/articles/valuation/valuation_theory.htm
And you can find a calculator here --> http://www.moneychimp.com/articles/valuation/dcf.htm
Benjamin Graham devised a short hand formula to calculate fair value and published it in his book, The Intelligent Investor. There have been a few minor variations over the years.
You can find an example here --> http://www.grahaminvestor.com/articles/finding-undervalued-stocks-intrinsic-value
The bottom line is that nobody can accuarately forecast a stock's fair value over the long term. However both of these methods give you a pretty good guesstimate.
I hope this helps.
Hi Jeff,
It's just about ready. Unfortunately Yahoo! Finance changed their quote format on Monday (Yahoo! is where AI retrieves its data) and that now needs to be fixed in this Service Pack too.
I'm currently testing the fixes and hope to have the SP available later tonight or tomorrow.
I'll post a note here as soon as it's ready.
Hi AIMster,
"Your situation brings up an idea I'd like to see in AI, multiple portfolios instead of having to manually manage several files"
Amazingly enough the AI database was designed to handle this starting in version 2.0 (it has a user attribute that allows you to associate portfolios with a specific user).
However I never did implement the code necessary to use this feature. I'll have to look at this again if there are enough people who think the feature would be useful.
In other news, I've just about finished a new Service Pack update for AI (it fixes a problem with the Fundamental Analyzer and the licensing module).
It should be available on Wed. (It really should have been done last week, so my apologies). I'll post a note when the new SP is ready.
Hello Jack,
I just typed out a fix to your problem then realized that AIMster had already answered it. Thanks AIMster.
Hi Bosco,
There are + and - indicators on the line charts but not on the stacked charts. I am planning on enhancing the charts to add a few features (such as hold zone and a moving average) and might just add a vealie indicator too.
I see Tom answered your question on copying charts (I use a similar procedure -- CTRL-ALT-Print Scrn and then copy to the built-in Windows Paint program where I crop and save to disk).
Let me know if you have any other suggestions for AI.
Hi AIMster,
Thanks for the shameless plug . And I'm happy to hear your test portfolio is doing well.
I actually invested real funds in 4 stocks selected by VSS in the latter part of last year (MVL, PLNR, CREE and added to my position in MSFT). I sold out PLNR and CREE late last year when their ratings fell below 6 for a nice 15% profit.
As of today, both MSFT and MVL are up more than 13% (combined) in less than 6 months.
An interesting twist on MVL was that it took a sharp dive when it announced 2006 earnings were expected to grow less than in 2005. Although I wasn't AIMing it, I decided to buy more and double my position. A short time later the stock moved back up significantly and I was able to sell enough shares to get back my money while keeping 11% more shares (or free shares as they've been called by some).
Having said that, however, the software is really meant for long-term investors, but anytime I can make 15%+ profits in a few months I'll be happy to take it.
Let me know how you make out with VSS if you decide to invest real dollars.
Hi Dick,
I believe you've already purchased a copy of Automatic Investor, which should allow you to do everything that you can do in Newport.
FYI, here's the Newport webpage --> http://my.execpc.com/~newport/index.htm
Hi Richard,
I checked Yahoo! Finance and couldn't find a match on their site for any of those funds. It appears that Yahoo! doesn't support these particular funds.
If that's truly the case then you can update these funds manually after getting the data from MSN.
Hello Jack,
Yes, Happy New Year! So far so good
Regarding IB, I don't recall having to do anything with the Market data until after my account was approved (although it's been awhile so I don't remember the entire process). After approval, I was able to subscribe to a market data feed (although I didn't have to if I didn't want it).
In any event, the application process for me went smoothly and the only problem I had was that they didn't send me the 3 paper forms I had to sign and mail back to them (when I called support they told me how I could download the PDF versions, which is what I did).
After that it was just waiting for approval and the funds to be transferred from my bank account.
Try calling IB's support line if you have still have a problem. I found them to be helpful.
Thanks Tom!
I hope you had a good Christmas with your family. Looking forward to 2006.
Merry Christmas Everyone! I hope 2006 turns out to be a GREAT year for you all.
Hi Matt,
Will do. Should be going early next year.