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I seem to want to make AIM more exciting by increasing
trading or improving profits or whatever- I think I need to start thinking like the tortoise and not the hare.
Hi, Cindy,
Improving results can become a quest unto itself, not unlike the Quest of Sir Arthur for the Holy Grail. The question becomes when does so doing run you right smack into the law of diminishing returns? At what point does expending the effort to tweak that last little bit of performance not justify the results? Lichello kept preaching to simplify, simplify. He chided some audience participants who wanted to add features to AIM or make it do other things to leave his project alone and develop one of their own!
Toofuzzy does have a point of sticking with the standard settings and keeping them there, the maxim "if it ain't broke..." comes to mind. Such is a harmonious interpretation in keeping with Lichello's ideas... BUT, if those are the settings for when the market is in "average" condition, ergo producing "average" AIM results, what should we do when the market is in an abnormal range, either to the Bull as in the 1990's or the more recent visits to the Bear's den? Do the "average settings" still serve us well then, or is there a way to get more "oomph" out of the system? Lichello addressed the Bull side of it with AIM-HI, I don't think he really anticipated an optimal formula for entering and crossing the Bear desert we've been wandering in now for some time.
If one is willing to sacrifice some measure of performance in exchange for less work, certainly using the standard settings will help, especially if one thinks the market will revert to the mean of average performance more often than not. Ultimately it's a personal choice, to find our own comfort zone. But it never hurts to look at alternatives!
Best,
AIMster
Hi, All, I have been working on the LD-AIM spreadsheet, playing around with zigzag on Stockcharts and rereading Lichello. Now have more questions.
Nice to see a student working things out for herself instead of merely accepting anything without adequate understanding!
What would be the problem of making Min.Purchase zero and having Sell Safe at 7% and Buy Safe at 8%- other than increasing number of sales and commission fees?
The downside of the smaller SAFE range is the smaller potential gain. the "traditional" 10+5+10+5 (Buy SAFE, Buy min, Sell SAFE, Sell min) adds up to 30, or a 30% gain on a trip from a bottom purchase to a top sell, using LIFO accounting. Using 15 would give you a potential gain of half as much. That being said, if one can have more cycles at 15% that would "rev" the AIM engine at a faster interval which may justify it.
Minimum amount is also used as a way to keep trading costs to a minimum. Unless one uses a broker like folioFN where there are no commissions within certain parameters, keeping costs down is a useful thing to do. Bear in mind that when Lichello started developing AIM, Charles Schwab was also getting started as the first of the original discount brokers. Prior to that commissions were quite hefty. One person in the book complains about a 10% rate. So the Scottrade's and e-trades of the world have lowered the amount to play the game, but it still costs.
Pictures being worth a lot, let's consider:
The standard 30%
Then at 15%:
The latter gives you a lot more activity last Fall going into December, but the longer-term trends are not that dissimilar at the beginning of the charted period. So playing the 15% flavor may well give you a larger Portfolio Control, but at some greater expense and possibly less profit.
The bottom line then is to find a cycle that gives you what you'd consider to be a reasonable number of trades in a given period, and to make the impact of each trade not only efficiently bring the most profit, but stoke the AIM engine for future activity as well.
Best,
AIMster
Thanks, Conrad,
For the useful insights. If it sounds too good... (grin).
Do you know if he uses the exponential decay method for weighing the price data?. . .I never understood fully what his "genetic" method really meant.
Mark will have to speak directly as to what goes on "under the hood" of his software, but a general article on genetic algorithms:
Dutch: http://nl.wikipedia.org/wiki/Genetisch_algoritme
English: http://en.wikipedia.org/wiki/Genetic_algorithm
Best,
AIMster
Hi, Sno,
The Automatic Investor optimizer is a module within the Automatic Investor program (among a lot of other useful tools).
See: http://www.automaticinvestor.com for full details, current pricing and so on. Mark Hing is the author, he posts on here from time-to-time, "handle" of aptus and also has a dedicated AI board as part of investorshub, see: http://investorshub.advfn.com/boards/board.aspx?board_id=1172
One benefit of his program is the free 10 day free trial to let you look it over.
Best,
AIMster
Clive makes a really good point about it all 'depends' on when one begins their program
Timing may not be everything, but it's not nothing, either. I suppose one could use AI's optimizer on say a 3 month window each time one checks one's program, and adjust the parameters each time. This would at least give you a view as to what's been optimal in the recent past and doing so each time would allow you to tune the settings as you go along. Theoretically it may add some value, though at a consumption of time depending on the number of programs, update frequency and so on. Might be worth setting up a test on and seeing if it
works. A semi-manual way of adding AI to AI!
Further ruminations...
By default the AI optimizer starts from 1 year ago to the present date, lets you plug in a stock or fund symbol, starting amount, then, under the genetic version, optimize for greatest portfolio value, greatest number of shares, greatest portfolio control value. (Choice of one, not all of the above!)
I had the further thought of what if one started the optimizer from the date one initiates a program and always uses that as the same starting date? This would in effect allow you to tune your settings to optimized values as the program continues, rather than using the past to project into the future. Perhaps not the Grail, but it will be interesting to see if this adds value.
Return on Capital at Risk: 247.91%
Average % Capital at Risk: 49.84%
Thanks for the data.
I suspect the above figures exclude dividends/income?
Yes. It just runs the calculations based on prices and gives the comparative results.
AIMster
If I am reading the results correctly it appears that AIM-HI would have beaten both the Original AIM and AIM 67/33, but not Buy-and-Hold. It appears that the AI Optimizer, which had a Hold Zone of around 116%, with really Large Minimum Transactions, would have beaten Buy-and-Hold. Is that correct?
Exactly right.
Clive makes a really good point about it all 'depends' on when one begins their program.
True. Timing may not be everything, but it's not nothing, either. I suppose one could use AI's optimizer on say a 3 month window each time one checks one's program, and adjust the parameters each time. This would at least give you a view as to what's been optimal in the recent past and doing so each time would allow you to tune the settings as you go along. Theoretically it may add some value, though at a consumption of time depending on the number of programs, update frequency and so on. Might be worth setting up a test on and seeing if it works. A semi-manual way of adding AI to AI!
Best,
AIMster
Is their a different/better way to add extra money...??
Hi, Sno,
AIM primarily functions as a closed-loop system, i.e., you set up a given program and off it goes based on the parameters you define. You'll note Lichello only "grudgingly" allows for extra cash to be put in, something on the order of a Christmas bonus or some other irregular cash addition. He didn't really account for periodic saving with AIM, that was more allowed for in his earlier Synchrovest or with Twinvest as found in the 4th edition.
In theory any addition should be split between your original equity/cash ratio and Portfolio Control incremented by the full amount. Hypothetically if you were using AIM-HI and added $100, you'd invest $80 in stock, $20 into cash reserve, then increment PC by 100. If the price is in an uptrend, however, this is working against you as you're increasing rather than decreasing your average cost, reducing profit. Thus doing so regularly does tend to interfere with AIM's "automatic pilot" functionality.
If you don't want to affect things too much, I'd just put the lot into cash reserve. That way if you need more cash for later you'll have it and be good to go. In such as case I wouldn't increment PC. If the price is in a downtrend, you would benefit from a supporting, though perhaps not regular purchase. In that case, DO increment PC as you're changing the equity amount.
Best,
AIMster
I just wonder how AIM-HI would have worked with stocks only (FTSE or S&P500) for that same time period. With last year's huge decline, I can't help but think that it would have run out of cash early on in the decline....though I could be wrong.
Hi, Ray,
I fired up AI's historical tester and got these results. If one had AIMed SPY since inception in 1993 using AIM-HI parameters, using Lichello's monthly checkup interval:
AUTOMATIC INVESTOR HISTORICAL ANALYSIS FOR SPY
======= PERFORMANCE =======
Current Portfolio Value: $22,355.56 (144 shares owned)
Profit or (Loss): $12,355.56
Simple Return: 124%
Annualized Return: 5%
Buy/Hold Portfolio Value: $27,451.98 (301 shares owned)
Buy/Hold Profit or (Loss): $17,451.98
Buy/Hold Simple Return: 175%
Buy/Hold Annualized Return: 6%
Return on Capital at Risk: 247.91%
Average % Capital at Risk: 49.84%
AUTOMATIC INVESTOR HISTORICAL ANALYSIS FOR SPY
======= PERFORMANCE =======
Current Portfolio Value: $17,604.48 (94 shares owned)
Profit or (Loss): $7,604.48
Simple Return: 76%
Annualized Return: 4%
Buy/Hold Portfolio Value: $27,451.98 (301 shares owned)
Buy/Hold Profit or (Loss): $17,451.98
Buy/Hold Simple Return: 175%
Buy/Hold Annualized Return: 6%
Return on Capital at Risk: 197.90%
Average % Capital at Risk: 38.43%
AUTOMATIC INVESTOR HISTORICAL ANALYSIS FOR SPY
======= PERFORMANCE =======
Current Portfolio Value: $20,252.32 (129 shares owned)
Profit or (Loss): $10,252.32
Simple Return: 103%
Annualized Return: 4%
Buy/Hold Portfolio Value: $27,451.98 (301 shares owned)
Buy/Hold Profit or (Loss): $17,451.98
Buy/Hold Simple Return: 175%
Buy/Hold Annualized Return: 6%
Return on Capital at Risk: 224.31%
Average % Capital at Risk: 45.71%
Symbol: SPY
Original Investment: $10,000.00
Automatic Investor Portfolio Value: $31,251.64
Buy & Hold Portfolio Value: $27,451.98
Buy & Hold Return = 175%
Start Date: 28-Jan-93
End Date: 19-May-09
Frequency: monthly
Buy Resistance = 76%
Sell Resistance = 40%
Min % per Purchase = 31%
Min % per Sale = 37%
Initial Cash = 9%
Control Increment = 40%
A major benefit of AIM is it allows one to tune out all the "investment pornography" that filters in with the spam. Got two emails this morning, case in point:
One warned of "Dow 2,000?"
The other confidently said "Dow 10,000 in 2009!"
With AIM it doesn't matter. We just go with the flow, doing the contrarian backstroke, watching all the lemmings go by...
I heard rumor that some conspiracy theorists are now calling us the "illAIMinati."
Yes. Some video has even been released which gives more detail. See:
It would be nice if stock price volatility capture benefits were doubled in 100% of cases.
Hi, Clive,
Your statement raised a question in my head this morning. Before coffee, no less! <grin> So I can't totally vouch for coherency!
We've discussed in the past that using a 2x long & 2x short fund combo as equity/cash won't work due to the historical bias of the market rising over (a long enough) time. But would one gain enough "free" volatility in holding a 2x long fund as a part of an overall AIM portfolio? Granted one may need a heftier dose of cash reserve to ride such a beast, but I'm thinking that such a beast may serve to augment what AIM does, and with less risk than individual volatile stocks. Any thoughts?
Best,
AIMster
So here's the brass ring.
Congratulations on the 30K grub! I take a week's vacation to visit the mother-in-law for mother's day and the grub's pulled out from under me feet! But then, it went to someone quite deserving, though our Moderator did jumpstart this one!
31,000, real soon now! <grin>.
Best,
AIMster
Housing prices nation wide are set to fall another fifty percent. Combined with another demographic down turn in the market in 2010, this little government propped bear market rally were in right now won't last.
Another aspect that's going to come into play especially from the current to maybe 30 years or so out are all of the older boomers retiring and eventually downsizing from the family house to smaller facilities. That's going to put a lid on prices rising dramatically also.
Best,
AIMster
December or 1974 was when the Value Line Appreciation Potential peaked and so that was why it was chosen as the "Zero Cash" point. The idea was that even the most conservative AIM user should be satisfied with that "once in a lifetime opportunity" circumstance as when their Cash Reserves would be depleted.
And whilst I assume not directly intended to be related, it does coincide with Mr. Lichello's "genesis" of AIM on the heels of that bear market, so having a correlated historical tie-in adds a measure of significance that would be otherwise missing. October 1987 comes to mind or shortly after 9/11/01 as additional low troughs. But going back to 1974 adds more history to the view as well. So I think it a reasonable juncture.
AIMster
I started with low cash 20% so have kept my buy at 10% and sell at 0%. I have been selling for some time now on almost all my holdings. I thought I would collect some more cash then raise my sell safe to 5 or 10%. Am I thinking right?
Hi, Cindy,
Good to see you back! Given that the v-Wave level is up to the +50% level you've likely been getting sells as I have, of holdings bought recently in the deepest part of the recent valley. The run-up of the last week or so has let me take some off the table also and put it back into cash as well. A good feeling!
Since your sells have been the result of bona fide AIM recommendations rather than selling just to meet an arbitrary cash reserve level, certainly increasing the sell-side SAFE value will put a damper on further cash reserve accumulation. If you feel you're at a level where you can ride out any future rides on the "roller coaster," go ahead.
Best,
AIMster
Welcome!
I understand that the V-Wave is useful for determining how much cash to retain when starting out (instead of the by-the-book 50%),
Correct. As Lichello revised his starting cash reserve ratio down from the original 50/50 to 67/33 to his final AIM-HI of 80/20, he was adapting to the bull market as points to start with using AIM. As good as those are, they are still arbitrary entry points. What the V-wave looks to measure is "where is the market right now?" to provide a more time-senstitive indicator.
but is it also a guideline of how much should be held during the course of the investment program? IOW, since it's at 50.9% today, should I sell to get that much cash in my cash account, even tho the AIM model might not yet tell me to sell??
No. The best way to think of AIM is as a closed-loop system with a positive feedback (portfolio control). Once an AIM program is started AIM logic controls how much to have in equity or cash reserve, based on the control parameters (SAFE levels, minimum transaction size) that you "tune" your program to, as well as sampling interval (daily, once-a-week, once-a-month). (Less frequent sampling will make the cash reserve last longer). It will then act on its own, giving instructions to buy or sell accordingly. Your program will be riding a contrarian wave, selling as more people are buying, buying as more people are selling. Over time, depending on the volatility of the holding you're AIMing such trading will utilize the AIM "engine" to the fullest potential. The tradeoff between running AIM on an afterburner level, with say, penny stocks that can go up or down spectacularly is the risk of crashing-and-burning, being thrown out of the game. Hence, Lichello's counsel for "blue chips," though I'd think even HE would be amazed at the level GM's gotten itself down to! Which is why several of us are more willing to forego some of AIM's potential for a greater certainty of sleep at night using closed-end or ETF funds, rather than individual stocks.
Havent seen this specific question addressed yet - forgive my newbie-ness!
Newbie questions are always welcome - we were all there once ourselves and "newbies" can help us rethink some of our own ideas by posing new questions or seeing issues in ways we might not. Again, welcome, and if you have more questions or ideas, please post!
Best,
AIMster
Since that attitude carries a lot of risk associated with one's positions dropping like a rock, I thought that if one could incorporate a stop loss process inside of the AIM process, that risk could be mitigated.
In theory that's part of the function of cash reserve, i.e., to limit one's loss by running out of cash, so that your total potential amount at risk is already known.
That being said, having a preset loss limit so that you keep some cash reserve to use as a seed in another program may keep you in the game longer overall. Which wouldn't be a bad thing. It's making the judgement call that becomes the difficult part. Bu then, that's always the case, no matter what "system" one may use.
Let us know as you get more insights.
Best,
AIMster
Hi, Coach,
The full title is Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets with the author being Nassim Nicholas Taleb. $15+ from amazon.com
Best,
AIMster
The software will have the ability to choose what I call Lichello Mode which mimics AIM. And it'll have an AIM II mode and a 'User Defined' mode which will allow you to test an infinite number of models if you wish. Also I just recently added a finer level of control. I did that because I think both the power user/tinkerer and the beginner will have different goals in mind. Not to mention I will be using the software myself and I'm the world's biggest tinkerer.
I think we all share affinity for tinkering!
BTW I notice the "mac" in front of programmer. Does this mean your software will be limited to Mac's or will there be a Windows version as well?
Curious tinkerers want to know! :)
Best,
AIMster
The worst decline will come from late 2009 or 2010 onward, when the longer-term baby-boom spending cycle finally collapses. (page 13)
So should I just shoot myself now or later? Not seriously, at least not yet, but gee the tone has gotten decidedly darker of late around here!
What will be will be the best one can do is to accumulate cash to weather whatever downturns or upturns may yet lie ahead. I've decided to hold only dividend paying items as much as possible to gain some additional money for investing and to somewhat smooth out the storms ahead.
Hang in there!
AIMster
One of the things I've always wanted to do is create a chart of what the stock market actually looks like so the public can see it.
Something on the order of the ETF "heatmap" that you can find here: http://screening.nasdaq.com/heatmaps/heatmap_ETF.asp
only in your case for stocks as a whole? Or something else in mind?
Curious!
AIMster
Ryan,
Your point on the dissolution of companies is well made. The same argument on survivors' benefit as it relates to larger performance metrics of mutual funds has also been stated.
It's a pack of wolves out there!
Best,
AIMster
I've been tempted to go for this sort of all-in style at more recent relative low price levels. What's held me back however is that I can make a reasoned argument for much lower stock prices. By going all-in on one particular style you then induce the risk that if that style doesn't work then likely that will occur at the worse possible time. AIM is a form of style diversification that reduces that risk.
The drop-off today in the market just might make those lower prices happen... :)
AIMster
If you really want monkey business, send in the clowns!
Interesting article, Clive, thanks!
Doesn't the premise, though, favor the "common wisdom" of "cut your losses short and let the winners run" as oppossed to AIM's more fully contrarian model?
I suppose another strategy might be more on the constant value idea of holding 100 items and using new funds and dividends to bring up the laggards so all the holdings are at a near constant 1% of the total portfolio, if the few that do take off take off that will let them prosper whilst continuing to fund the others, which may well prosper later.
Just a thought.
Best,
AIMster
I understand that you must reduce your cost basis by the return of capital amount until it is reduced to zero and report the remainder as a capital gain. My tax question is how do you report it on schedule "D"? What would you use for the decription and what acquired/sold dates would you use? I haven;t found anything in the tax info. on this.
Thanks.....
OOOooooh! And I thought I was a procrastinator mailing in our taxes last Saturday! The 14th of April and you're asking now??
Try here: http://www.fairmark.com/mutual/nontax.htm
I've found with search engines it's how one frames the question.
Best,
AIMster
Well anyway, go to USPTO, and do a search for equity plus and you should see it.
From the links off the trademark page once you hit the expired page click on the obvious "Start here"
That will give you several paragraphs. Under the "Searching Trademarks" section you'll find "You may conduct a search online for free via our TESS (Trademark Electronic Search System" TESS is a link, click on it.
Click on the New User search form (Basic)
Enter "Equity Plus" without the quotes and click the Submit Query button. The search will currently return 35 hits. The one of Mr. Lichello's is #35 at the bottom of the list. I checked a few others first!
Best,
AIMster
I have a great fondness for dividends, both in receiving them and as a relative measure :)
I've valued dividend paying stocks and funds also as I view the dividend as a form of time compensation for the relatively long periods that the stocks may sit in the hold zone. As I mentioned to Tom a few postings back I don't let them reinvest directly, but rather take them in cash. As they collectively accumulate they can then help out with more buys.
Best,
AIMster
OT: Privacy
As though having a camera on very street post wasn't enough...
As good a time as any to watch (or re-watch) the late Patrick McGoohan's prescient 1960's show The Prisoner. The F/X will be dated, but the messages still come through loud and clear. 1984 would be a good read also. We've all been warned. But in the name of "security" we give away freedom. Enjoy the pottage of our inheritance.
Be seeing you.
AIMster
I am Aiming half of my investments and running the other half on a 60% stock 30% bonds and 10% Reits format and rebalancing quarterly.
The best of both worlds. I like it.
There were attempts to improve the AIM algorithm by reducing cash reserves. This did result in better returns in certain circumstances. Being "mathematically challenged" I don't know what is best to do. I'm sure there are better returns to be made, but I wouldn't throw over AIM's safety and capital protection lightly.
I agree. On the other and take retailer Wal Mart. B&H them from April 1980 with a $10,000 investment and you're sitting on $3,000,000 plus now. Use AIM and you'd have $65,000 plus. Yes, only 24% of your money would have been at risk. This test done, by the way using Lichello's original 50/50 formula, likely what would have been available to you in 1980. Of course one would have had to have a lot of faith in what was then a more "upstart" company. Going with the then long established IBM would net you $70,000+ using AIM, $153,000+ at the end of the day using B&H.
My point is not to discredit AIM, in a shorter time range the result may be quite different, or with another stock that's more amenable to AIM's methodology. My point is that at whatever point we start, the unknowable future makes any investment, any system a guess, at best. As I pointed out in a comment in the NY Times today off of Dr. Krugman's article (he being a Nobel prize winning economist):
"...If the proverbial dominoes are falling faster now than in the 1930's depression, it is likely due to a perverse side effect of globalism and all the interconnectedness that was supposed to improve things. Obvious in this latest stock market swoon was how correlated everything has become. It used to be if the market was going down here, it would be going up there, one could protect one's portfolio by international diversification, Now it's all gone down together, no matter where, so we've all been cheated.
And the band plays on to the elites of the political and financial circles, probably because the level of pain isn't enough yet, unemployment is still only about 1/3rd of the peak in the Depression. Small solace to the recently unemployed.
It's going to take political will and courage to bring to heel the current banking establishment with the lax regulations and free spending ways. One can expect them to howl and pay lobbyists beaucoup bucks to maintain the status quo. But if we are to learn from history and not merely repeat it we still have time, though not much, to make the systemic changes we need."
Emphasis added.
We roll the dice, pay our dues and hope we come up winners. AIM gives us a fighting chance, but maybe B&H still is a contenda, if only in a very long timeframe. And with much patience. Hmmm - I wonder if someone could come up with something that would compare B&H to say Synchrovest since we already can measure AIM to B&H. Just a thought.
Best,
AIMster
Any attempt I have seen to improve the Lichello algorithm involved curve fitting to some extent in other words, the new version worked better in some circumstances but not as well in others.
In running historical tests I've found sometimes B&H is the big winner, sometimes AIM leaves it in the dust, sometimes they're both about even. Depends on what the security is, when it was bought, how much cash reserve to start with and so on. The problem, of course, is that you can't know in advance what will be the optimum strategy nor configuration. Hence the counsel of people like Larry Swedroe and others to simply B&H index funds with the view that in the long run at least matching the performance of the market will still put you ahead of many actively managed funds. Which is a valid and simple way to go. The nagging question always, though is "can we do better?"
Hence the neverending quest for the Holy Grail.
Maureen Dowd in her NY Times column today touted her experience as a would-be strike-it-rich prospector for gold in California.
Under the title of "Striking it Poor," her column can be found here:
http://www.nytimes.com/2009/04/08/opinion/08dowd.html
Remembering, of course, Mr. Lichello's experience with gold and his chapter in the book, I was not one to leave this unanswered! No, sir!
My response:
If the Inca description of gold was "the sweat of the sun," that certainly explains the "gold fever" that can still be quite infectious. Certainly gold is often promoted as a steady hedge to hold in times of economic turmoil, so why would people be buying now at a relatively high price, if it goes down, they're sitting on a loss. Of course that's the paradigm many follow with the stock market, buy high, sell low.
In the rather offbeat titled book "How to make $1 million in the stock market automatically," the late Robert Lichello counsels a system to encourage to buy low and sell high; he also devotes a chapter to the relative merits of gold in a post-apocalyptic economy. In his case, immediate postwar Japan. Looking to get some spending money he decides to hock a gold ring in a pawnshop, only to be disappointed with the amount he's given for it. The shopkeeper explains how there's plenty of gold for sale, but not many buyers, thus the low value. You can't eat it, make change easily with it, even barter would be difficult. If you were seen as holding a lot of it, security would become an issue, especially in difficult times.
Since gold ownership can be taken away by the government, as it was in the US between the 1930's and the 1970's, Lichello suggests a far more useful hedge in such an economic scenario: Ivory soap. People are still going to need it, soap has a long shelf life, and the small bars make barter more feasible.
Sounds simple, doesn't it, and storing a couple of cases of soap is a lot less work. Though maybe not as much fun. But you'll be clean, that much is certain.
You're correct. The cost of the course was $300 (plus S&H).
Considering that the book can be had for $6.99 from amazon.com, the tapes which largely cover the same material makes such value worthy of one for a true collector of such. Take it on "Antiques Road Show" in a few years and who knows what you'll get for it!
Rather than letting the dividends reinvest directly, I've chosen to take them in "cash" and then deploy them where I see best opportunity. This helps to keep the accounts moving along, even if only with small buys.
A strategy I've long used myself. This way dividends from several holdings can combine together to make one more realistic buy instead of smaller and more multiple buys were each holding allowed to feed itself from the dividend stream.
Start an alternative position that is initially 100% loaded into stock, but every time the previous AIM indicates a buy, trade an actual sale of the same amount of stock, and ignore taking any action when the AIM indicates a sell, then over time your stock exposure declines, but overall the ROCAR (return on capital at risk (or return on equity exposure)) is very good.
Wouldn't you end up creating a lot of tax loss though? For a really simple example,
Initial buy 1,000 shares @ $10 total $10,000.
Price declines to $8. AIM recommends buying 100 shares.
Instead of buying $ 800 worth you sell it. Won't that give you a -$200 loss? Wouldn't this continue over the buy sessions into the decline?
Curious,
AIMster
Hi, Tom,
I believe once upon a time you said in your development of investing thinking that you'd switched from "MyWay" to AIM. I've been playing with MW lately mainly as I like to tinker with old programs and see what they do and the ideas of a hold zone, buying on the declines doesn't make it seem all that dissimilar from AIM. So far the purchase recommendation is increasing with each successive buy signal, just as Portfolio Control would have you do, and so on.
Granted it was written in the last century so the interface isn't as "clean" as more current programs might be, but still, with an executable of 249k and a few overlays in the 39-61k range, one can't complain of it being a space hog! Of course, any trend graphics you'd need to make yourself, but with a spreadsheet and the data from the program, that's not too difficult.
I was wondering if you had any notes as to the pros/cons of it or if you can reach waaaay back into the neural net and see if any memories come up to the top.
Thanks!!!
Best,
AIMster
I shareware'd that program and spent many hours assisting and improving upon the features. I even ended up building circuits that enabled power sockets to be turned on and off remotely. The financial rewards for all my efforts however were very small and after a few years I gave up on commercialisation.
Hi, Clive & Conrad,
The idea of "build a better mousetrap" and the customers will come is as old as long as there have been mousetraps and potential customers. (cats work well). For every 10,000 or so ideas if one makes it to the big time that's probably a lot. Then again with all the stuff one sees advertised on television you know someone had to think of it. Thus we have the "are you an inventor" commercials of firms that purport to take your great idea and translate it into something marketable. How much you get after they take their "cut" I don't know, but obviously such a market exists.
Occasionally Jay Leno has a segment on new inventions on "The Tonight Show." One recent one was for a plastic bag that you can put on the back of a dog to act as a disposable diaper!
Video link here: http://www.nbc.com/The_Tonight_Show_with_Jay_Leno/
I have registered a fair amount of shareware software and gotten good value for it. That being said, I do look for freeware first. In a real pinch I throw something together in Microsoft Professional BASIC 7, pre visual BASIC days, with built-in ISAM file support! In a pinch I could compile the program for character based OS/2! Strictly non-GUI the programs are small and efficient, though bells and whistles are non existent. Given the 1990 date on MyWay, this stuff's about of a similar generation.
Best,
AIMster
I also have a full working copy of MyWay somewhere. Again that is no longer supported nor have I found any current contact details of the author(s). Seems a shame letting such golden oldies lie unused.
I had the demo for MyWay which timed out after 14 days. Now search for MyWay and you'll be getting a lot of Frank Sinatra! That's the sad part when these developers put all the time into it, thinking they'll get boucoup bucks and to so protect their work, put a registration requirement in there. Which is fine as long as they're going to be around and are still interested in supporting said software. But when they decide to move on, release an uncrippled version, for posterity's sake and us fans of oldies-but-goodies. Yes it will be unsupported and as-is, use at your own risk, but we do that with current software anyway!
Either that or some developers should use AIM to satisfy their commitment to capitalism and release software as open source! <VBG>. Whatever happened to that guy with the weird handle (EvilSeed) who was going to develop the mother of all AIM software for us anyway? Would you want to be his beta tester, though? Hmmmm.
Best,
AIMster
Toofuzzy advised Ganaraska:
I think you understand the beauty of AIM completely. It is safest with funds as aposed to individual stocks (funds are less likely to got to zero)
Though one admittedly does gain that measure of safety at the loss of potential return as a fund is likely to be less volatile than an individual stock.(AIM acting primarily as a volatility capture mechanism). The old risk/reward relationship, though AIM does help even the odds overall.
Just wanted to add this point for the benefit of "newbies" who are reading through the messages!
Best,
AIMster