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Hi Tom, Re: AIM and Covered Calls.
Yes, a single contract premium is often not worth it. On some of my other stocks, while they have churned, one month got a decent premium, and other months wouldn't have.
I blew it this month so far with possibly selling a HMY Call for May. Got greedy, holding out for a little more, and then in last couple of days, the stock price backed off ~$0.50, and so the potential premium I would have received almost halved.
So now I have not yet sold one for May. I have a GTC Limit sell placed on the stock, in case it takes a jump while I'm not watching. Wondering if I should instead place a limit GTC sell order for the option itself at a somewhat lower price than I erroneously passed on earlier.
If the stock price doesn't bump back up in the next few days, the option premium, because of decreasing time value, will get more and more into the not worthwhile range regardless of the stock price. (Assuming stock price remaining slightly below $12.50)
AIM for Income with Covered Calls
I just posted a new blog entry at
http://beand-cpt.blogspot.com/
"I sold Covered Calls on Harmony (HMY) for the past three months -- the Feb 2008 12.50c, the Mar 2008 12.50c, the Apr 2008 12.50c. They all expired worthless. That means I got to keep the premium I received for selling those Call Options for those three months, and I still have the 100 shares of HMY that "covered" the selling of the Calls. I'll also likely sell the May 2008 12.50c in the next week or so, provided I can do so for a decent premium..."
Much more at...
http://beand-cpt.blogspot.com/
Happy Holidays All. Neil in Adelaide:
What global warming? Just a liberal plot, eh?
How is the rain/drought situation there? You say was 113F (45C) in Adelaide - is that country-wide? How about Sydney, Perth, Melbourne, Hobart? Maybe time to move to Hobart? ;>)
Hi Adam - re MACD, I didn't want to get into that since this is not a TA forum, but since I started it, yes. Caveats: Best if the crossover is while both lines are in minus territory on the MACD graph, when looking for a bottom. Also if there is no trend (stock going sideways), you will get a lot of minor crossovers in a short time, which are meaningless. In TA, indicators are called indicators because they give only an indication of a possibility. No guarantees.
See this CDE chart - Aug thru Dec 2007. I picked this at random from several I follow. See the MACD crossover the beginning of September and what the stock did after that. Then in Nov-Dec, both MACD and price just bouncing around, doing nothing.
http://stockcharts.com/h-sc/ui?s=CDE&p=D&yr=0&mn=6&dy=0&id=p36704243744
Look at big white candle Dec 20. Looks like that could cause a crossing in MACD (but in plus territory). Then look at the stochastic. If this wasn't holiday time, I would be looking real careful at that tomorrow (Dec 21).
glennpj - Conserving Cash in a Down Market
I have a rule of thumb that uses price change increments. (See http://www.bean-d.com/cpt/price-range-calc-use.htm
especially near the bottom of the first main section.)
Briefly, after a reversal from a Sell, and you've made a Buy, the next Buy should be >=15% lower. The next and subsequent Buys after that should be >=20% lower. So I use price rather than time.
After a few Buys, it may occur to you that you have a "deep diver". In that case, MAYBE you could try some Technical Analysis (horrors!!) to determine a change in trend after those Buys. To see if the drop has stopped. So that you would not buy again until you have some degree of confidence that the stock is on its way back up or at least not likely to continue down. Looking at long-term moving average(s) and support line(s). Then make another, hopefully last, Buy in that series.
I vaguely recall someone else posting, some time ago, about using resistance or waiting for a bounce before doing a Buy.
This does remove some of the "automatic" from AIM. But it isn't really all that automatic anymore with all our tweaks, is it?
BTW, Lichello -- deliberately? inadertently? -- accomplished something similar by waiting a month between transactions. If a month later the price was about where it was at the Buy at the month before, AIM would likely make him Buy again. So he could buy some more at that price to sell later. If the price is about the same a month later, it means that the move down has possibly stalled. If the price was already low, because you have made some consecutive Buys, that would perhaps be an indication that a reversal (to go back up) was pending, rather than going down more after consolidation at that price level.
FWIW FWIW FWIW FWIW FWIW FWIW FWIW FWIW FWIW FWIW FWIW
Hi Tom - Brazil and Portfolio Control Inflation Indexing
Your Brazilian guy comments illustrate the pernicious effects of inflation. And the inflation does not even need to be "runaway".
Adjusting Portfolio Control (PoCo) -- Damned if you do; damned if you don't. He verified that it is difficult under such circumstances to make money investing, in such an environment.
By adjusting PoCo -- inflation adjusting or Vealie -- you will end up with less cash, which is a good thing as cash is a wasting asset. But, when you need to buy something, you will not have as much cash, maybe not enough, to buy it.
And, if you don't index PoCo for inflation, you will do a lot of churning in your account and at best only stay even in purchasing power. More likely to lose purchasing power.
ATTENTION EVERYONE: YOUR GOVERNMENTS AND THE BANKSTERS ARE SCREWING YOU!
There is NO NEED for national currencies. The only reason for them is to allow politicians and banksters to better control you and get even wealthier at your expense. There is no other reason other than control NOT to have gold, a basket of precious metals, a basket of commodities in general, including oil, pizza, or whatever, to serve as (competing) real value transnational currencies.
ATTENTION EVERYONE: YOUR GOVERNMENTS AND THE BANKSTERS ARE SCREWING YOU!
Hi TF - Pizza and Inflation/Devaluation.
I don't recall the last time they raised the price. Could be a year, year and a half ago, or longer. Wasn't really paying attention. The only reason I remember this instance is that I gave the counter guy $3, from which I had heretofore gotten some change. He said he needed more. So I said something like it's a good thing we've got inflation under control. He jumped to that. Turns out he's a college economics student and we had a short conversation. This guy must have had some good teachers, because he understood the relation between inflation and price increases.
The formula I can't recall (and don't want to take time to look it up -- a quick search didn't turn it up) has to do with converting an inflation rate or price increase into a devaluation rate. For example, a 100% price increase (a doubling) means the currency has been devalued 50%. But it's not a simple inverse relationship, as I recall, even though that example might give that appearance.
BTW, Barron's newspaper used to have (and still may, but I haven't read it in a long time) their own cost of living index. It was comprised of items such as taxi fares, Broadway show tickets, suits, shoeshines, restaurant meals, etc.
Pizza and inflation. My favorite NY style pizza slice place raised their price last month. It was $2.76 with sales tax for a slice with sausage and olives. Now it is $3.19. That is a 15.6% increase in cost in $US. My U.S. pizza dollars were effectively devalued by about 15%. (That is a rough devaluation estimate; I can't quickly find the conversion formula.)
Hi Adam - Accumulating weak stocks:
"For individual stocks I'm concerned that increasing PC will result in accumulating more weak stocks, because those weak ones that hang around for years are the ones that will be most affected by raising PC over time."
Quote from my page at
http://www.bean-d.com/cpt/inflation-cpi-adjust.htm
"Now, if you have a stock that does not increase -- on average -- over a period of a couple of years at a rate equal to or greater than the "truth-in-government" adjusted Consumer Price Index (CPI), you have to face the unpleasant fact that your stock is going into the dumpster in REALITY. Its price is NOT maintaining REAL VALUE. It is not maintaining purchasing power."
That is a weak stock. Even if you don't adjust PoCo, if a stock is declining, you will be accumulating -- more buys than sells.
In such a case, you have to decide whether to continue buying it or dumping it altogether. You will be forced to make that decision more often if you index PoCo, because inflationary reality will thump you on the nose.
Hi harw: re "Cash is dangerous because the dollar can be devalued...." Precisely. And what is inflation, but a continuous devaluation?
Hi Neil - AIMing e-gold Gold/Platinum.
No, not. What used to facilitate that was the metal-to-metal swap feature of OmniPay, e-gold's main exchanger. e-gold and OmniPay unfortunately did not get all of their operations offshore. That is, they didn't get out of reach of Amerika's Heimland drug and terrorism chimera wars. (Actually their war on you and me.) They had only a partial understanding of the extent to tyranny this country has come to.
see webpage
http://www.bean-d.com/cpt/order-e-gold-aim-calc.htm
That has links to e-gold and OmniPay info pages.
We Americans used to feel oh so superior to those eastern European and African countries and the problems their hapless citizen/subjects had/have with their "blocked" currencies. Oh yes, this great land of the home of the brave and land of the free. ("No one is so enslaved as one who falsely believes himself to be free.")
e-gold is now essentially a blocked currency. It is still tradable to some extent through other exchangers, but at a TREMENDOUS bid-ask spread.
There are other e-gold type companies (e.g., GoldMoney, Pecunix, and others) that have their operations off-shore. But because of the bullying by the fascist U.S. government, it is not a simple matter to deal even with them. And, as far as I know, they deal only in gold. Not silver, platinum, or palladium. So no swapping possible.
You'll note my signature below no longer links to my AIM program for e-metals.
POSSIBLY my AIM program for e-metals could be used to swap the recently created gold and silver ETFs in the U.S., but I haven't looked into that, yet. I suspect it would take a lot more money because you would have to trade in whole shares of the ETFs vs. fractional ounces of e-metal.
Another complication is that for the last several years, the precious metals have moved pretty much in lockstep (percentagewise) so I wasn't getting many trades anyway.
Maybe a fiat currency is ok if the the country doesn't run a deficit economy?
Whatever country you are in, if a loaf of bread costs more this year than last, and next year more than in this, you are living in an inflationary economy, regardless of what your government says about budgets and deficits. Protect yourself.
AIM Portfolio Control Indexing for Inflation.
I added some text material and links to the AIM Portfolio Control indexing web page at
http://www.bean-d.com/cpt/inflation-cpi-adjust.htm
The new stuff is interspersed with the old, so you will have to scan through the whole thing to see what's new. Especially see the links at the end of the main text.
BTW, sometimes swearing, or a facsimile, is necessary. To get a mule to do something you first have to get its attention. That, in the joke, is to whack it on the head with a board. Too many people just don't get the reality of the destructiveness of inflation or, if they do, they just ignore it and hope it will go away. Fat effing chance.
Portfolio Control Indexing for Inflation.
Hi all -- I have put up a web page at
http://www.bean-d.com/cpt/inflation-cpi-adjust.htm
If there are any calculation errors, let me know.
I didn't, after all, go through all the related posts and concerns. My posts here and my new web page cover the points that, to me, are those pertinent. While I would love to debate this and tangentially related, I just don't have the time. Sorry. But I hope what I did write is helpful.
Regards, DB
Inflation and PoCo Adjustments -- Looks like I stirred up some controversy with what I thought was simple, self-evident. But that is always my problem. ;>) I will try to consolidate my posts and your comments and at least one EXAMPLE by next week, possibly this weekend, on a dedicated page on my site. Until then:
Buy from the scared, sell to the greedy (Tom Veale)
Bulls can make money, bears can make money, but hogs get slaughtered and sheep get fleeced (Commodities market saying)
Is7550clive - (Off-toPic) $8 gas and (On-Topic) PoCo Adjustments.
$8 Gasoline
Well, TPTB are working to get it to $8.00 in Amerika also. Where you are, I gather the price is mostly tax. Here the extra $ will go to the oil companies. Same difference. The strategy of TPTB is to reduce per capita consumption. Since most humans breed like cats, rats, dogs, with no thought of consequence, increasing numbers are causing a resource problem. And since breeding is increasing faster than governments can kill off people, reducing per capita consumption is their solution. Actually, I can't fault their strategy.
AIM Portfolio Control (PoCo) and Inflation
Most of AIM's additional rewards arise from its selling, much less so from its buying.
Got to buy something in order to later sell it.
By increasing PC over time in a non conventional manner you are pushing the likelihood of sales away.
Exactly my point. You WANT to push the likelihood of sales away. Unless you adjust PoCo for inflation, your sales are not going to be as profitable, if profitable at all, IN REAL PURCHASING POWER TERMS. You will not reap those "additional rewards", in reality.
See re Keynes:
http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/ess_inflation.html
Excerpts:
"Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
"A sentiment of trust in the legal money of the state is so deeply implanted in the citizens of all countries that they cannot but believe that some day this money must recover a part at least of its former value.... They do not apprehend that the real wealth, which this money might have stood for has been dissipated once and for all..."
So, you buy something for $1.00 and sell it later for $1.10, you have a 10 cent "profit" according to your/our governments. You are then supposed to pay a tax on that "profit". But if the $1.10 at time of sale buys you no more than the $1.00 at time of purchase, your/our government has essentially CONFISCATED SOME OF YOUR CAPITAL by taxing that so-called gain.
Is7550/Cowboy - PoCo Adjustments for Inflation and "Rising" Stock Values.
Most of the "Rising Stock Values" you see are due to monetary (money/credit) inflation.
Take the cost of gasoline for example: Once upon a time it was $0.30 per gallon. Now it above $3.00 a gallon. A gallon is the same now as then. What is different is the price in dollars. Since more dollars have been created out of thin air by the government/Federal Reserve cabal, it takes you more of them to buy the same thing each year.
The expenses of domestic largess and foreign misadventures have been paid by you through fiat money/credit creation by the government. Your rulers are screwing you, plain and simple.
Now, what does that have to do with AIM Portfolio Control (PoCo)?
Essentially, PoCo determines how much you will buy or sell at given prices. The object is to "buy low and sell high". I would say that does not mean just looking at what the dollar number is, but looking at something hopefully more related to actual puchasing power. After all, isn't the reason you are trying to increase the "numbers" in your account so that you can buy more stuff? (For family if not self?) If you have bigger numbers, but can't buy more stuff, that means the value of what you are using to buy stuff with has declined due to inflation.
Say you buy some stock at $1.00 per share. You have set your SAFE and minimum transaction levels. I am going to give you an UNREALISTIC example: Your PoCo then tells you to sell some at $1.10. (Not likely, since a problem with AIM is lack of transactions due to large buy-sell "no transaction" hold zones.) But indulge me. Say it takes six months to get that sale.
So, in six months that $1.10 you think is giving you an incremental profit will likely buy you only what the $1.00 would have six months earlier. You think you are a little ahead since the numbers are greater. But you really are not because money/credit inflation has caused the prices of your cat food diet staple to increase.
The effect of inflation on your AIM buys and sells is to cause you to buy and sell at prices that are too low. Or to sell too much at a given price and not buy enough at a given price.
Insofar as stock prices in general increase over time, much if not most of that increase is due to inflation. That means there will be a sell bias over time, leading to a misleading increase in the cash part of your account.
Tom's "Vealies" address that in an ad hoc indirect way. I suggest that you instead adjust your PoCo directly, on a one for one basis with inflation. Inflation is difficult to determine, since the government lies to you about it. The best you can do is take the CPI and add a "truth in government" factor to that. Say the CPI is stated to being increasing at 5% a year (dream on). At least double that to 10%. (I say that is low, but use it just for example.) Apply that to your PoCo.
A monthly adjustment would then be roughly 10/12 = .8333..
Say you have a PoCo of $5000. That means next month your PoCo would be $5042. The month after, $5084. Next, $5126...
I know I am not accounting for simple vs compound annualized calculations, but you get, I hope, the idea.
Or, if you do it just once a year, adding the example 10% would make your PoCo $5500.
Monthly, yearly, however often, I suggest adjusting and using the adjusted PoCo in your calculations.
Conrad, re shorting:
Not applicable to AIMing.
AIMing means you are ALWAYS "long" to some degree or another.
Now, MAYBE, BUYING puts (put options) would result in generating some additional cash just when you need it to do an AIM buy. But that would take careful analysis to determine if that would actually work (be profitable) in the specific instance, as opposed to just being a good idea in theory.
Regards,
DB
Jack O Just Getting Started:
Welcome aboard.
Many of us have switched from looking once a month/week/whatever to predetermining our next buy and sell prices and quantities, then putting in GTC limit orders with our brokers.
That probably would have captured that previous day transaction you mentioned.
One caution: Make sure that the transactions that you make actually result in profits. ;>)
If you take every minimal move that AIM says is OK, that WILL result in losses. Note that the Lichello examples had large moves. Your transactions should be somewhere inbetween the price what the AIM minimum says and some huge move.
Look around Tom's site and my site and blog.
My program lists quantities to buy or sell at various prices, and what the dollar difference from the last transaction is.
Regards,
DB
AIM 'By the Book' Classic Example Spreadsheets.
Spreadsheets for the examples in the Lichello book.
New page URL and some minor changes.
Can view as pdf files from
http://www.bean-d.com/cpt/aim-btb-spreadsheets.htm
Hello Adam and others re GTC: Looks like a lot of you are putting in a lot of effort trying to do PREDICTIONS. (Which, as you may recall, AIM and related were designed to make unnecessary.)
Yes, sometimes the stock will break on through a GTC limit price and go higher. Often, as I have noted, it will hit and reverse.
If you have a "mental" limit and try to squeeze out a bit more, it could back off and you will have to wait weeks or months for the price to hit again, where you could have banked a profit if you had taken the price.
OTH, if you, horrors, "leave money on the table" by taking the price, and the stock continues, you will perhaps have another AIM sell at the next higher level (15%, 20% or higher).
Remember the commodities futures player saying: "Bulls can make money, bears can make money, but hogs get slaughtered."
For all the time some of you spend on trying to psych out stuff like this, you may as well put the effort into technical analysis, where if you are successful at PREDICTING, you could make a lot more than with AIM. ;>)
Conrad - stop orders. All that stuff was just definitions. Stop orders are more typically used by "conventional" traders. Limit orders are more typically used by AIMers. They have opposite effect.
They buy with a stop when price goes up.
We buy with a limit when price goes down.
They sell with a stop when price goes down.
We sell with a limit when price goes up.
Stops are generally used by TA aficionados.
Yes, sell stop limit orders are NOT recommended for bailing out of a long position. If you want out, period, you use a sell stop. If you add limit to it, then you may not get out (still stuck with the stock) as, for example, the stock could open below both your stop and limit prices.
OTH, to establish a SHORT position, you may very well want to use a sell stop limit, so that you sell (short) at a price that gives you a possiblity of capitalizing on a further decline. If you don't have a limit, the price is "too low" when you get in with the short, you have sold at too low a price. With a short, you want to buy back at even a lower price.
This is the exact opposite of a buy stop limit, where you want in long, but if the price gets too high (past your limit) you no longer want in.
And, a buy stop limit is similarly NOT recommended to bail out of a short position. You may not get your price, and so have to cover later at an even higher price.
It took me some time to get that stuff straight in my head. Use the little diagram in the previous post as a visual aid.
Regards,
The David (Hey, Trump can be 'The Donald', so ...)
Hi again, Conrad. Stop and Limit orders update and additional at
http://beand-cpt.blogspot.com/
Hi Conrad - stop orders. Most people are familiar with the SELL STOP order (that is also know as the "stop loss"). When the price DECLINES and hits your stop price, the order then becomes a MARKET ORDER to sell. (That is why you often get a worse sell price than you may have expected.)
You can also place a SELL STOP LIMIT order. That is where if the price hits the stop, the order becomes a limit order. You set that limit price below the stop price. So there is that range where the order will be executed -- if it is executed. If the price drops too far too fast, you will still have your stock. So if you were looking for a "stop loss" with a SELL STOP LIMIT, you could be S.O.L.
Conversely with the BUY STOP order. When the price RISES and hits your stop price, the order becomes a MARKET ORDER to buy.
Now, to prevent paying too much on a buy (say you want in, but not at a ridiculously high price), you can put in a BUY STOP LIMIT order. You set the LIMIT part of the order at the maximum price you are willing to pay. So, if the price hits the STOP price, your order becomes a LIMIT order, where you may get a buy fill below your limit price. If the price rises too far too fast, you may not get filled.
The STOP LIMIT BUY is frequently placed the night before as a day order when you want in, but if the opening price is too high, fuggedaboudit.
------ Limit
.1
------ Buy Stop
.15
------ Ask
------ Bid
.15
------ Sell Stop ("stop loss")
.1
------ Limit
Also note that the BUY STOP is a "stop loss" order if you are short and want/need to cover.
Hi Adam - GTC on BUY side. If you hold off; that means you are trying to outguess the market.
As I have mentioned before (sort of at least), frequently a GTC is just touched or exceeded by a few points, triggering your order.
If you didn't have the order in, you would have to sit at the monitor, and when/if the price hit your target, you would then STILL have to decide - market order (or a close limit), or wait and see if it declines more. And if it doesn't decline more, but turns around, you have missed the BUY.
And, how far would you wait for the price to decline PAST your actual target price before you decide to act?
Yeah, I know, some have mentioned letting it drop, then when it "shows signs" of turning around, then buy. At the hopefully, much less price. But, remember, it could turn around at your target price, which would be missed, just as well as at some lower price. That is trying to play technical analysis (TA) which to me is WAG (wild ass guessing). (And believe me, I've tried that game.)
My TA is now limited to shaving a few cents every now and then, as mentioned in post 22419. If I come up with a TA holy grail - I'll let everyone know (for a price, of course ;>) )
Anyway, are you AIMing, or trying to outguess?
Regards, David
GTC Orders - A good thing. An advantage of AIMing is that, when using GTC LIMIT orders, we often get a BETTER price at market opening than what we specified. Where a typical trader with STOP orders often gets a WORSE price (often much worse) than he specified.
I had a limit BUY in for $26.53 for PAAS since my last sell on 2/28. This AM, at 09:30:33, I got a fill for $26.18. Yee-haw, that was a GOOD thing. Back up to $26.43 at the close.
OTH, pity the fool with a stop loss order sitting at $26.53. :>(
Psychological Price Points - Again, the importance of setting your GTC buy and sell points at psychological points, when possible.
Someone just "forced" me to sell him some PAAS at $31.84, my GTC sell price. I had that order in for some time, and the price was just touched this afternoon, then backed off substantially. But my order was filled.
If I had set the GTC at 31.85, a "nice round number", my order would not have been filled today. It might have not been until tomorrow, next week, next month. Who knows?
For sells, I suggest setting the price a cent or two below nickle and dime prices. For buys, a cent or two ABOVE nickle and dime prices.
Frequently, the "even" nickle or dime price may be approached but not hit. The price you set a penny or two away may well be. Even on 100 shares, the penny you may "lose" by taking a price that is likely to be hit rather than waiting for the even nickel or dime or even a penny or two on the other side, amounts to only a buck or two.
AIMster -- Money Spinner. I am one of the "dirty guys" that snapped up one of the copies via Amazon. Some time after I get it and have a chance to look through it, I'll put in my two cents worth about what I think of it, and a comparison to AIM, here. And likely also on my website and/or blog.
I don't post even on my sites very often, but FWIW,
http://beand-cpt.blogspot.com/
http://www.bean-d.com/cpt/main-core-position-trading.htm
Women Everywhere, Beware of Tom and his remote butt-pincher. Tom, wishing you speedy recovery.
Hello Is7550 and others about aging population. Yes, more medicines and equipment are NEEDED. But remember, ECONOMIC demand means both a desire for something AND the ABILITY TO PAY FOR IT.
So, consider that a third-world country, which the U.S. is rapidly becoming, cannot afford first world amenities.
The healthcare and health insurance growing crises are a plain indication of problems.
Take that into consideration before "overweighting" into the medical sector.
BTW, I am more weighted to "resource" stocks.
Regards, DB
Hello Cap: Beta...
Isn't the beta of the market "as a whole" equal to 1.00 by definition?
Yes.
But frankly, I don't pay that much attention to beta. And that is evidenced by I don't really know or care which "market" is the baseline. The Dow? The S&P500? 100? Rusell 5000 (or more)...
I, myself, look first to low-price stocks because of that SRV rule of thumb, then rather than looking for beta, run a ZIG-ZAG with different percentages to see which had good sized action -- zigs and zags -- percentwise -- within a couple of years.
If I recall correctly, I think Tom and some others like the Zig-Zag also. Maybe someday, I will add something about that, along with the SRV.
Regards,
Hello again Clive - volatility. I think we are talking about two different things. Maybe Fosback's term is unfortunate. Not talking about daily fluctuation, but the amount a stock at a given price range will move in comparison with a "market" move.
Individual stocks are looked at compared to the market with "beta". The SRV mentioned is a rule of thumb that lower price stocks have higher beta. So if you want higher beta (us AIMers do) then look at low price stocks instead of higher priced stocks. Better chance of getting a beta that AIM will like better. Regards,
Hello TF - Dividends covering services. Someone wrote a whole book about that years ago. Unfortunately I don't recall title and author. Your post just brought back memories. That was back when companies were actually profitable and paid worthwhile dividends. Stocks then were an investment, even though many traded for captial gains. Dividends were important then to stock owners. Now there are few investments; it's all a casino. So all we can do is speculate and/or AIM for gains.
Culprits -- Politicians, bankers, federal reserve, income tax. And ultimately the people of the U.S., who in actuality are no more intelligent than the rabid Arabs they look down on. The U.S. populace has been more fortunate than others, but no more deserving. And reality is asserting itself.
Cheers - ;>)
Clive - scan website - square root volatility - The page
VOLATILITY IS YOUR FRIEND™
http://www.bean-d.com/cpt/aim-square-root-volatility.htm
is a summary of Fosback's observation from
"Stock Market Logic: A Sophisticated Approach to Profits on Wall Street".
http://www.amazon.com/exec/obidos/ASIN/0917604482/davibeansheal-20
It "formalizes" a RULE OF THUMB - derived from simple observation - that lower priced stocks have more volatility -- on a PERCENTAGE basis -- than higher priced stocks. Volatility in this case being simply the amount of price movement, not some esoteric statistical calculation. I thought it an interesting tidbit worth posting.
I do not see that "sigma square root time" (whatever) is of any relevance. That has nothing to do with AIM calculations. You don't need to overcomplicate things. Picking a stock, however you do it, and AIMing it, are two different things.
Regards --
OT - Hi AIMster and Tom. About Berkshire site. I'm learning about the info business (not that I have implemented much on my pages, yet.) There is a difference between "kewl" and EFFECTIVE. Especially bad are those sites with light/white text on black or dark colored backgrounds. Plain old light/white backgrounds with dark (black, dark blue...) text are more effective. Plain design is more effective than sites with graphics and animations all over the place. At least for sales sites and for sites whose audience is, shall we say, "substantial" rather than those with ADD.
Hi A - Commodity AIMing
I use my e-gold calculator for trading the metals against each other. Most of the gain has been, frankly, due to general rise in fiat prices.
http://home.earthlink.net/~beand/finance/forum_ac.htm#Fiat
Some AIM gain with that a few years ago because the price ratio changes allowed quite a few trades of one e-metal against another. Now, since all have been rising and falling more or less in the same percentage unison, not a whole lot of AIM activity. With e-metals, I look at any gains by AIMing as "icing on the cake" in addition to the "cake" of generally rising prices.
I had CEF some time ago, but that was B&H, didn't AIM it.
http://home.earthlink.net/~beand/finance/forum_ac.htm#BH
Not AIMing coins or bullion.
Using the stock/ETF calculator, I am AIMing several PM stocks with gains (non-annualized) ranging from about -10% to about 180% with an unweighted average of about 105%. Unweighted average annualized about 20%.
http://home.earthlink.net/~beand/finance/forum_ac.htm#PM
Closed AIM PM accounts had annualized gains of -49%, +3%, +13%, +5%. (You can see why I closed them -- movement sustained in the wrong direction or no movement to speak of.)
Hi A - AIM calc program trial - None per se - but paying by PayPal or Amazon if you don't like it, you can get a refund of the modest cost if you apply within a month. Some day I may update those pages to reflect that.
(See links below).
A - Software - Blatant plug:
May I suggest mine (link at bottom of page).
It calculates buys and sells, with much flexibility as to with and without commissions, buy and sell SAFE, minimum transaction methods and amounts.
Provides a list of amounts to buy/sell at different prices and as part of that indicates the "hold" or "no transaction" zone.
A negative to most people is that it does no record keeping and charting.
One screenshot -- see link at end for more info
http://home.earthlink.net/~beand/graphics/aim/aim_nextbuy.gif
Tom & A - Direct Commodity Investing
From http://home.earthlink.net/~beand/cpt/maincpt.htm
"... Actual physical commodities, especially the precious metals (PMs) are excellent in the sense of always maintaining some value, but transaction costs (spreads and/or commissions) can be high. CPT proxies for the PMs can be either individual PM stocks (which individually can be quite risky), PM stock funds (where the risk is distributed), or PM exchange traded funds (ETFs)."
Physical coins and bullion:
Plus: Good if you have some place to store them.
Neg: High transaction costs (bid-ask) and shipping/insurance to/from. Gold one-ounce coins are high priced, so need large account to trade efficiently. Fractional ounce coins even higher bid-ask spread.
e-gold:
Plus: Convenient and can deal in fractional ounces -- and can play one metal against another. Can buy/sell/trade gold, silver, platinum, palladium. (See "signature" at end of this and drill down the URLs to get to e-gold site.)
Neg: The government hates e-gold even more than physical. They are going to have to complete their move offshore before I can again wholeheartedly recommend them.
Gold and Silver ETFs (GLD and SLV)
Plus: Convenient -- trades like stocks.
Neg: High price per share. So need large account to trade efficiently. May not actually have the bullion they say they do.
Canadian Central Fund of Canada (CEF:AMEX)
Plus: Convenient -- trades like stocks. Low share price. Probably more honest than GLD and SLV about actually HAVING the physical they say they do. Long time established.
Neg: None that I know of.
Comment: Combines gold and silver. NAV sometimes at a slight premium or discount relative to bullion.
Mining stocks: All kinds available, more highly leveraged (volatile) in relation to bullion, so get more AIM "plays".
Glenn - Limit orders are still possible with small accounts. You need to wait for a bigger move, or (my preference) adjust the quantity at a given price.
You can get an idea of the effect of commissions by looking at illustrations at
http://home.earthlink.net/~beand/cpt/demoaimfixedcbs.htm
Partial explanation at
http://home.earthlink.net/~beand/cpt/aim_comm.htm
In the Buy example, the transaction price is $5.42 (for the parameters set, including commissions of $10.00, which you can vary).
You can see that for zero commission, the NET price is also $5.42. And you would buy 21.25 shares (round to 21).
For $10.00 commission, the NET price is 5.886393 if you could get 21.44 shares which is the theoretical amount you should get.
If you have to, like most, buy only an even number of shares, then you would get 21 shares at a NET price of 5.86190.
WHERE THAT NET PRICE ALSO COMES IN IS DETERMINING HOW MUCH WHAT YOU ACTUALLY PAID WHEN YOU BUY OR WHAT YOU GET WHEN SELL.
I use the net price in addition to what AIM says to determine my next buy or sell price for GTC limit orders. (I also use a minimum dollar difference figure.)
See the last column in
http://home.earthlink.net/~beand/cpt/aim_rangecalcex.txt
So, I have three criteria for a SELL, and I "have" to make my order for the quantity at the highest TRANSACTION price of the three. And conversely, for a BUY, the lowest of the three.
This was derived due to the fact that YOU CAN LOSE MONEY WITH AIM if you take every possible transaction that AIM says is OK. YOU WILL SEE THAT, IF YOU LOOK AT NET PRICES AND DOLLAR DIFFERENCE NUMBERS, THAT USUALLY YOU WANT TO WAIT FOR A HIGHER (SELL) PRICE OR A LOWER (BUY) PRICE, and size your order to what AIM says at THOSE prices.
OT AIMster - TA/Swing - Another indicator - the parabolic blow-off. If really acrobatic, testing the inverse head and shoulders neckline. When in the Asian markets, a breakout of the sideways channel. And you can always short against the box.