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Hi Gang, I just had an odd thought. For IRAs and other deferred taxation accounts where you are into the required distribution phase (RMD), like I am, it might be a good idea to have a volatile position or two such that your end of the year value is "down" so the RMD is a bit lower to avoid taxation on the distribution for the subsequent year as part of your personal tax.
Not sure how to actually accomplish this other than tax loss selling, which is not necessarily a good idea. Perhaps looking for positions that go ex-dividend about the middle of December as, typically, positions lose value right after ex-dividend day. Maybe a 2x or 3x ETF? Anybody got other ideas?
Thanks,
Allen
Hi Gang, Does anyone know of a list of alternative ETFs to use when selling a position to use to avoid the 30 day wash sale rule? I am interested in sector, industry, and bond ETFs.
Thanks,
Allen
Hi OldAIMGuy, Thanks for the reply. Praveen Puri of "Stock Investing Riches" says LIFO is the way to go but I like belt and suspenders so I was checking in with the gang to see what makes the most sense for a taxable account. I just realized I had not made a choice for the trust accounts so I thought I'd better make a choice now.
Best,
Allen
Hi Tom, Speaking of LIFO and FIFO, my understanding is that it does not matter much in a retirement account but one should use LIFO in a taxable account, correct?
Thanks,
Allen
Thanks OldAIMGuy, It is also nice that they rank them in a chart so you can compare a variety of metrics that make a difference, such as expense ratio.
It seems that each of these sites has some extra, secret sauce, thing that you need one time or another so have to jump around. Too bad no one has invented a selection tool that works as well as AIM does at managing things after you have selected them.
Best,
Allen
Hi Tom, Thanks for the list of possible income positions. Here is what I found that seemed might the best for an income position by doing a volatility check for about the first half.
As you can see volatility does not always follow in direct parallel with the high/low ratio. The one with the lowest volatility also has the lowest ratio, but you might not want to select it as it is a currency ETF, WisdomTree Chinese Yuan Strategy ETF (CYB). This somewhat explains why the volatility is low because the Chinese are maintaining a stable, low, fixed exchange rate to maintain their exports.Symbol Volatility High/Low Ratio Income
PSK 9.37% 1.19/1 5.89%
BIV 6.83% 1.35/1 3.62%
BKLN 4.67% 1.12/1 4.09%
CYB 3.84% 1.08/1 4.08%
Hi Tom, I'm not sure how to do what you suggest.
Hi Gang, Stumbled on an interesting paper at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=76248
Here is the abstract.
Hi Bowler Bob and Gang, Yes, that is correct, short term capital gains on "exotic" ETFs. See http://www.dailyfinance.com/2010/02/09/exotic-etfs-may-hide-an-unpleasant-tax-surprise/ for a decent explanation.
Alas, we do have to think about the total taxes, state and federal, when we select investments and the way we work them. This is made a bit easier, if my understanding is correct, because both short term and long term losses can be used to offset both short and long term gains. An additional $3000 of prior year losses can be used as well. This makes it a bit less painful to accept a bad choice of a position in our portfolio and having to sell it at a loss to right our investment ship.
But do not get too big a loss reserve as it dies with you and is not available to your beneficiaries. I found this out the hard way when my mother died last year.
Warmest Regards,
Allen
Hi Tom and Gang, I do not suggest that volatility be the only metric to use in selecting position. What it is good for, I think, is to weed out those that do not have enough high to low pricing to get AIM to kick into action and have low volatility to boot, i.e, almost never trade. The other use is to find a very low volatility position with a very narrow range of trading that actually makes a bit of money that you can use as a "bank" for your cash reserve.
Now, more on volatility and a good site to look at almost all ETFs.
Let's get the site out of the way first. It's http://www.zacks.com/funds/etfs/etf-categories/. They have the bulk of the 1700 ETFs listed in "...six major groupings; equity sectors, international, fixed income, trading tools, commodities, and alternatives. Look through these groupings and the more granular categories within them in order to find the ETF that is right for you." Happy hunting!
Now back to volatility. I've added a couple of items, highest price, lowest price, and the ratio between the two. This provides one more point to exam to see if it is a good fit for AIM.
In the process I have taken some back 20 years and then chopped off everything prior to January 2010 to see if the volatility was much different. Yes, there is some difference without the 2002-3 and 2007-9 dumps, but not as much as I expected.
The other thing I noticed is that most positions, ETFs and single stocks, have a dip roughly from the middle of September through about the third week of October. Some shorter, some start later, some take longer to claw their way back to where they were, and a few don't really have a dip at all.
Out of it all, so far, I have found that VBR has a high to low ratio of 3.84 but only a yearly volatility of 24.62%. So it would seem like a slow AIM position but given the range, probably a good one to think about fot the future. Right now it is near its peak price so just put it on your wait and see list.
Now if you can stomach the volatility and the fact it is a individual stock in a regional bank, try BLYK. The volatility is 43.18% and the ration high to low is 5 to 1. Again, I would put it on a watch list as it is trading near its high.
If you really like a roller coaster, try WHX, which we have discussed before. The volatility is 56.2%/year and the range top to bottom is 13.58 to 1! This you might consider because it is near its low and just ex-dividend today so it will likely dive a bit more. Given it is a trust they have to disburse the bulk of their earning, I believe, and so their rate of return is great if you buy in near the bottom like I accidentally did. The lowest payout was $0.453/share and the highest $1.547/share. Recent dividends have been a low of $0.468/share and a high of $0.561 in August. The current dividend is $0.509/share. The current price is $2.28/share and the historic low was $1.79 on May 27th this year. I bought it at $2.44 so, if they keep up the current payout rate, dividends alone will pay for my position in a year and a half. That doesn't count and AIM buying and selling, which given its volatility, could be several in that time. We'll see.
Anyway, welcome to the fun house of the investing world. Lots of weird mirrors to look at.
Best,
Allen
Whoops! Small error in the previous post about WHX. Starting 1/4/2010 through today the actual daily volatility is 3.62% and the yearly is 57.44%. Daily volatility from 5/1/2008 until today today the daily volatility is 3.52% and the yearly is 55.94%.
Not big errors but..., well I input the wrong cell number in one place and then replicated it throughout the spreadsheet.
Best,
Allen
Hi Gang, Looking at WHX it seems like it might be a good candidate for AIM. Starting 1/4/2010 through today the daily volatility is 3.64% and the yearly is 57.79%. I think it is fairly consistent because the daily volatility from 5/1/2008 (the first day it is possible to calculate from) until today today the daily volatility is 3.54% and the yearly is 56.22%. I was a bit surprised at this as I thought including the 2007/9 downturn would bias it toward higher volatility. But it is some roller coaster when you look at the charts, nevertheless. At the moment it is in a down phase. Who knows what happens next.
Best,
Allen
Hi Tom, It is true, great minds think alike, but often by different paths!
And, thanks for the list. Now I'll check them against volatility.
Since AIM thrives on volatility (I'm not sure why I didn't do this before) for the last few days I've been using an Excel spreadsheet to model volatility and here are two results.
and then
As one can see SSO has almost twice the volatility of SPYG. For the examples I've just shown a few days of each to give you the idea. I would not suggest using so few days for real trials. Not sure how long to use at this point.
The info on how to create the spreadsheet is at Finance Train. One thing to be careful of is that they don't mention that you do not use the last entry because, as you may see, it is a 100% loss because the next day's figures are not there. I'm going to try to automate that.
Have fun.
Allen
Hi Tom, Yep, Good til Cancelled orders fit the AIM bill to a T. That is what Automatic Investment Management is all about. The hard part is transitioning from what was to what needs to be is subject to all the frailties of the human spirit and anxiety of second guessing yourself, "Did I make the right choice?".
The WHX that Toofuzzy was concerned about was one where I used a price a bit lower than AIM told me to buy at and, as I have learned elsewhere, the price dipped about 10:30 EST and I got my fill. The neat bit about it, not planned but serendipitous luck, it was a few days before ex-dividend day and so I will collect almost 15% of my costs before the 1st of December.
The way I selected the buy price was to look at a chart to see what types of moves it had made in the past and how low it would typically go. I selected a price a bit above the low to see if it would execute, not really caring all that much because I was primarily interested in it as a single place to hold money for the AIM portfolio that would actually pay a bit of a dividend. It turns out that while it does earn money it is too volatile to make a good vault. AWF turns out to be a better choice. So, as AIM gives me a sell signal for WHX I'll put the money into AWF unless I can find a fund with even less volatility that still pays something reasonable. Even 3 or 4 percent would do if the volatility is low enough.
The value today has dipped below where I bought it at but that is typical as the "quants" often buy to harvest dividends and drive the price up only to have it fall the day after. Then it climbs back over the next month or so until the run up prior to the next ex-dividend day.
Warmest Regards,
Allen
Hi karw,
Could you explain why you delayed execution a month?
Thanks,
Allen
Hi Toofuzzy, Excellent points and very well stated about socially responsive investing.
About your point,
Hi Toofuzzy, Walking across the street is prediction and subject to emotion. It's just easier to do fundamental analysis of the traffic flow but let me tell you once you've been hit in a crosswalk with the light green for you, like has happened to me many years ago, your heart will do a little dance, like it or not, every time a crosswalk awaits you.
As to owning something for the rest of my life, the Social Security Administration expects that I have another 14 years and I'm sure that at least some them I'll be either too gaa gaa to care much or my daughter will be smart enough to take charge of her potential inheritance to protect it from my wild, wild ways of wine, women and song.
As to choosing "...those funds you want to own for LIFE..." that is fundamental analysis and very subject to emotional response. I do everything I can to avoid buying anything from Walmart, Amazon or using PayPal for a variety of reasons. It is primarily a visceral response to the way they treat people. That is an emotional response if anything is, but what if they actually make sense to buy their stock, a sector fund, or other ETF that has significant positions in them and AIM tells us to buy some to harvest profits? Should we do it anyway?
Again, it all goes back to choosing the right feedstock for AIM, which is inherently subject to our emotions as well as our analytical skills.
Then, again, we could, I guess, put ALL 1700 stocks in Valueline and the ~1600 ETFs into AIM and select the best after a few years, but I'm not sure if I have time to wait for results, after all I could be hit by the truck that is behind the bus as I cross the street. Also, do I have the patience to input all the data every week until we get enough data for AIM to wave its magic wand?
In any case I'm doing better than my broker was and that's a big plus. I know it is not as good as I can do but a significant improvement, and with the excellent help from my friends here I know I will learn to do better still.
Warmest Regards,
Allen
Hi Toofuzzy,
Hi Doug, Thanks for the commission info.
As to ETF sector rotation, I'm not sure what would be a good index to guide the rotation. Clearly what state the market is in is a very subjective call. Back to my mother's notes for a moment, she notes that,
More from my mother's notebook - inflation and financial independence:
If we assume she was figuring about 3/4 of a loaf for a dollar, then inflation for the 43 years was about 6.44%/year. Sounds about right given the inflation during the oil crisis of the early '70s.1944 $1 = 11 loaves of bread
1964 $1 = 5 loaves of bread
Today $1 = less than 1 (9/1987)
@ age 65 75% dependent
23% will be working
2% Fin Independent
14-15,000 yr.
Hi Doug, The only real defect I see in your article is the use of the $7.95 stock trade price for the full range of the time frame. I don't know when discount brokers really became the real deal but from what I understand there weren't many back in 1998 nor were their prices as cheap as that. It might not make all that much difference, not sure.
One other thing you might consider looking at is rotation among the various sectors as they go in and out of favor during the normal market cycle. You might find improved results doing this.
BTW, very clever using that set of ETFs. It seems they all started on the same day!
Warmest Regards,
Allen
Hi Gang, Great find as I was reading my mother's 1987 notebook about investing.
Hi Is7550, Thanks for this analysis. I would expect that AIM would correlate with stocks as the S&P is solely the 500 biggest stocks. What I would like to know is what are the results of the 9 sets of cycles. Also, where did you get the S&P back to 1876 and the inflation figures as well?
At http://www.in2013dollars.com/ you can get what they calculate it to be, but you would have to go year by year to get it and that is a pain. Then there is always the question of how did they come up with the figure in the first place. It's a gypsy mystery.
BTW, when I was talking about selection basis in reference to your link about an analysis of the Ivory Portfolio, I found that looking at the inflation figures given by http://www.in2013dollars.com/ was a perfect example of this type of bias.
If you go back as far as they cover, historical inflation for 1665 - 2014 is only 0.94%/year but if one only goes back 50 years to 1964 the rate is 4.12%/year. Then if you go back 10 years it is 2.37%/year. Which one should one use to plan for your future needs? Tough call, but I would use the 50 year one and add in a fudge factor as they have been f$%^ing with the way inflation has been calculated. At least with the DOW or the S%P 500 you can look at how they come up with their figures and see what biases there might be, such as moving the selection around as the DOW does. Another example of selection bias.
To show a different view of inflation take a 1964 Chevy Impala. It had a Manufacturers Suggested Retail price of $2,779. The current one, roughly, is $27,670. Granted there are a bunch of newer requirements compared to the 1964 model so a direct comparison is almost impossible, but as a rough guide it has to do for cars. This is 4.7%/year.
The concept behind Chained CPI (which is what the Republicans are pushing for SS beneficiaries) is that if steak is too high then you will move to a cheaper cut of beef and therefore inflation is less in real purchasing terms. Great, but what do you do when you need medical care and the price is sky high? If you have enough money you pay, if not then you do without, therefore you really didn't need that medical care, did you?
The actual alternative is go overseas. A friend of a friend (before the Affordable Care Act) had no insurance and blew out his knee. He hunted around in the US and the best he could do was about $150,000. He finally went to Belgium and paid just over $15,000, including his travel and meals and stay while recovering enough to travel safely, about a month if I recall correctly.
There is an interesting PDF from the Social Security Administration at http://www.ssa.gov/policy/docs/ssb/v67n3/v67n3p73.pdf. On the right of the graph you can see the results of Chained CPI.
Anyway, as has been said, there are liars, damned liars and statisticians. Personally I tend to substitute politicians for the last in the list. Most people drink deeply at the well of knowledge, politicians only gargle is the way I think of that class of "humans."
Best,
Allen
Thanks for the pointer Clive. Please don't take my review of the book as an endorsement of every aspect of it. As I mentioned before one of the critcal elements to success is finding the right feedstock for your AIM engine. Having some insight into what Yale and Harvard have done and what feedstock they use may well help us select the best feedstock.
Your link is a very interesting read but, oddly, the one element he leaves out of his analysis is, "Three-year returns are annualized and assume no rebalancing." the element that might actually harvest some benefits.
Another thing is that annualizing, which I understand to mean taking the end point price for the year as the starting point for the new year, locks in losses, and as we know, it takes more to get out of a hole we dig than just waiting it out like B&H does. This means that any "momentum" portfolio will lose money compared to B&H when you have a mix of investment sectors/types, some of which are out of favor in a bull market like commodities has been lately, when there are dips and then rises.
Finally, covering only three years in an analysis of this sort is a type of selection bias that can lead to defective choices, especially if, like I suspect most of us are, in for the long haul, not just three years. True, we can not go back and enter the market at the best point. We enter when we enter no matter where the market is at the moment, good, bad, or ugly. I wish I had better understanding to better help my mother manage her assets in 2007. I'd be "rich" today and my daughter would have no debt when she gets out of college if I had, but time has its way with us, like it or not.
The above chart demonstrates the advantages of B&H over any momentum approach when one does not rebalance and/or move to cash during downturns and rebuy on the way up. It also shows how momentum plays are going to miss the bottom and lose much of the gain possible.
Oddly Doug Short (http://www.advisorperspectives.com/dshort/) does a better job at http://www.advisorperspectives.com/dshort/updates/Monthly-Moving-Averages.php of following the Ivy Portfolio than do the authors!
What the chart also shows is that AIM acts, in some ways, like a smart momentum strategy because it buys when the market is going/is down. What momentum lacks is the sell on the way up to fund the buy on the way down. This is why AIM is much better than a pure momentum play.
Thanks for keeping the dialog going. We all learn that way.
Warmest Regards,
Allen
Hi Gang, I just read an interesting book that approaches the "the investment pyramid" Tom talked about in his post.
"The Ivy Portfolio - How to Invest Like the Top Endowments and Avoid Bear Markets" by Mebane T. Faber & Eric W. Richardson, John Wiley & Sons, Inc., 2009. It is available at http://www.alibris.com for about $12 used, or less, including shipping, so don't buy it at Amazon or eBay.
The book uses the extraordinary results that Yale and Harvard had gotten from about 1985 to 2008 for their endowments and then presents a set of possible portfolios in an attempt to mimic those returns. They suggest a 5, 10 or 20 ETFs, equally balanced as a starting point. The five are VTI, VEU, BND, VNQ, and DBC with the alternates to those being SPY, EFA, AGG, IYR, and RJI to use to avoid the 30 day wash rule.
Then they add in a few other possible actions that might be used, momentum using a 10 month moving average, rotation in and out of sectors and some other tweaks.
One aspect that sort of mimics AIM is that when things are not looking good they suggest moving to cash, then buying back in when the SMA line is crossed on the upswing. While this is not as good as AIM at selling while headed to the peak and buying on the way down, they show good results
They give a good overview of various types of investment vehicles, their pluses and minuses and reasons that should be considered such as taxes and opacity before deciding to invest in them.
A very worthwhile read. Also Faber has a blog at http://mebfaber.com/ that is worth looking at. He has updates and charts at http://mebfaber.com/timing-model/. There is also a web site for the book with a suggested reading list at http://www.theivyportfolio.com/reading-list/.
Best,
Allen
Hi Gang, I think the problem I'm having with Newport is that I need to reset the "Original Investment" amount to the value of the position as of the date of purchase without any "Cash" on hand and, I'm guessing, the date of the purchase. Then do I fill in the weekly prices from the purchase date to the current week?
How do I accomplish these?
Thanks a bunch,
Allen
Hi Gang, I'm having trouble whipping Newport into shape for positions I already hold and I'm not sure what to do to get it to work. What it seems to use is the current price of the position rather than the price it was purchased at. This puts the hold zone way out of whack with the realities of the market, especially given when and why things were bought during my mother's lifetime. Too many things were bought at too close to the 52 week high and hover somewhere below but not enough to generate a buy signal, even if I was interested in buying them for the future, which I'm not.
Thought on how to solve this?
Given that the "bull" market appears that it will continue for a bit more my sense is to hold on to the losers until they break even and then sell. With this in mind I have placed GTC orders for each just under (a few pennies) where they were bought.
Thoughts on this strategy?
Best,
Allen
Hi Toofuzzy, Nope, bought it in both a taxable and an IRA, but not anywhere near the top. Not at the bottom, but less than a dollar from the 52 week low. As I said I was looking for a flexible and reasonable income generating place to hold money for AIM purchases down the road when they come up. I've tried two others and dumped one already as not suitable. The other, AWF, is about what I was looking for to hold cash, not great, not the 0.01% of the dealer's money market. H%^&, even the small credit union I'm the BoD of pays 15 times that pathetic amount and it ain't no great shakes.
My goal is that the income is greater than any trading commissions and position loses to buy/sell and to buy/sell the AIM positions money is coming from or going to, plus a little. Given how infrequently AIM trades about 3-4%/year will do this given a ~20-30% cash pool.
What I am finding is that I need at least 3, probably 4 different funds, to avoid selling a loser to get cash for an AIM position and to avoid missing a dividend. If I could find monthly pay ETF/ETN/Trusts that would help a lot.
The big issue, in my mind, is not the exact AIM protocol you choose to use but rather selecting the great fuel to feed your AIM engine to get it to zoom down the highway. My personal set of metrics at the moment include:
Near the 52 week low (also look at longer term low)
Beta above 1.25 (Some may work with beta below 0.6)
A history of volatility even in a bull market
Valueline Timeliness 4 or 5
Price less than $20 - seems seems threshold for best volatility
Not less than $2 averaging 52 week high and low
ETF/ETN/Trust
Out of favor sector/broad industry
Diversified if possible, but not massively so
Nothing I find fits them all so it can be a craps shoot, which is why I am trying to use No Down AIM before buying. Any suggestions to improve the selection screener most welcome.
BTW, if draw down is the biggest concern, then why get into the market, especially during a bull run, at all? We know that we can not predict (well, Sam Seiden excluded) how far down the market will go or when we will hit bottom so getting into the market is totally a craps shoot. The best we can do is look at the chicken's entrails, wet our finger and hold it up and hope that we are not too far off and that time will fix our mistakes.
Warmest Regards,
Allen
Thanks Clive for the info about the tabs.
Also thanks to whomever talked about WHX (I think it was here) because after looking at it I bought a small amount. Now I look like a bloody genius because of the dividend! 70+%/year. I was just looking to see if it was a viable holding tank for cash that would give me a better return than the bank, Treasuries, or a money market so I was surprised at the amount of the dividend.
Warmest Regards,
Allen
Hi Tom, A bit off topic, just mechanics. How do you get tabbed columns when you post like you did? Every time I try to do columns here they don't take. I even tried to quote you and it failed!
Thanks,
Allen
Hi Bowler Bob, What can I say, dense? What is read is not always what is said. Something about the gray matter not being engaged, I think. It was obvious once you pointed it out but I missed it and I did read it twice. Oh, well.
Thanks for your patience.
Allen
Hi Bowler Bob, Sorry, I guess I got a bit carried away once I started to look at the leveraged gold position. One bit in your reply is not clear to me is where you say:
Re Leveraged ETF/ETNs, there is an interesting set of charts at:
http://www.macrotrends.net/1333/gold-and-silver-prices-100-year-historical-chart
This chart might help you figure out whether to invest in gold or when it might be best to stay away. It is interesting to note that a peak in silver seems to lead a peak in gold.
For those who feel that looking at past events has no merit for figuring out investment strategy I suggest that "Those who cannot remember the past are condemned to repeat it." "Notable Quotations from George Santayana Life of Reason, Reason in Common Sense, Scribner's, 1905, page 284"
Also down the page where the gold and silver chart is are a bunch of other charts that are worth a look at.
Best,
Allen
Hi Bowler Bob, I'm a bit confused. You say you have 230 share and are worried about losing them all because the price has dropped below $10. If I understand a reverse split correctly (which I very well might not) a 1:10 reverse split wold give you 23 shares at $98 instead of 230 at $9.80, correct?
If the price continues to drop to below $10 then there is a risk of another 1:10 and the value of the stock would have dropped to ~10% of what it was, or ~90% drop, correct? Then since 23 is not divisible by 10, you would be left with 2 stocks and have sold off 3 at, say, $9.80, correct?
The math as I see it is:
You have 230 shares @ $9.80 = $2254
Reverse split 1:10, 23 shares @ $98 = $2254
Price drops so you have 23 shares @ $9.80 = $225.40
Reverse split 1:10, 2 shares @ $98 = $196
plus cash for 3 shares at $9.80 = $29.40
for a total value of $225.40
So you wind up with the same cash total after the reverse split but you have lost 90% of your investment, plus whatever is the difference between the current price of $9.80 and what you bought the first 50, the second 50 and the 130 shares.
A true disaster. This is why my trading plan is written to use a stop loss order. Selecting the right price is the hard part because AIM needs the draw down to function properly. I don't know what the biggest draw down has been historically, but the ~-86.0% of the DOW in 1929/1932 is probably the biggest. Given this a -90% stop loss would not stop you out in a "normal" crash so you would be able to take advantage of the next bull market.
I think that various measures taken since then would prevent quite that extreme a crash now, but 2007/2009 at ~56.7 of the S&P is certainly quite large. Will we have a crash that large going forward? Who knows, not me for sure. But it does give us a clue as a possible reasonable place, -60%. This would most likely keep AIM in the game but prevent the disaster Bowler Bob might suffer with NUGT.
There is a good article on crashes since 1901 at:
http://news.bbc.co.uk/2/hi/business/3746044.stm
Frankly the 3x leveraged ETF/ETNs and Inverse ETF/ETNs scare the s%^& out of me. Even the 2x are spooky but might be needed to get the volatility that AIM needs as its life blood when the market stagnates and we want to avoid investing directly in stocks.
One thing that might also help prevent this big a loss is to avoid any ETF/ETNs that are so narrow that they only really have a single item they follow, like gold, silver, etc. Perhaps there is a precious metals ETF/ETN that covers gold, sliver, platinum, etc., and maybe even other minerals like aluminum and copper. The spread would, I think, reduce the likelihood of it going to near zero.
Another thing to consider is using a delayed buy during a downturn. This would preserve cash and make recovery faster when the bull market arrives.
Thanks for raising the issue Bowler Bob.
Warmest Regards,
Allen
Hi Toofuzzy, Perhaps I used the wrong analogy.
What if, before you left on a trip, a friend gave you a map of where there were potholes in a highway that you were unfamiliar with? Some of them might well have been repaired, but even then perhaps they came back, as chuckholes often do. Would you refuse the help your friend offered?
While past experience is no guarantee of future experience, it does seem to me that it should not be totally ignored, especially when it has been validated by multiple people over many years. This is what I see the value of charts and historical evidence to be, guidance, not orders.
As an example, to use the auto analogy again, would you buy a Corvair or a Pinto given their history? I sure wouldn't even though the actual risk is in reality quite low. Not all cornering is that rapid nor are all rear enders that damaging. Why take a chance when we know that a significant risk exists?
Would you avoid a auto manufacturers over a defective ignition switch design recall because only about 13 people have been killed out of over 1.6 million of those in use? Would you avoid a recall for defective air-bag deployment given that only 303 people have been killed?
The risk of those items is at least a couple of orders of magnitude smaller than handling your investments so if you would not take the known risks there, why take them with your investments?
This is not to say that using AIM as a major part of your risk management arsenal is not the very best thing. However, one might well enhance it by knowing where typical potholes are. This might help us avoid them and to relax our restless minds to avoid overreacting when we are on a long journey and there are severe storm warnings that might cloud our judgement.
I appreciate and enjoy this conversation with you as it makes me think more clearly about all aspects of my investment journey. Thanks!
BTW, I'm curious why you have not responded to others on the list who are investing in stocks, not ETFs?
Warmest Regards,
Allen
Hi Gang, Two questions on No-Down AIM. First, how far back do you model data to get what you need for the first buy signal? Second, do you use daily, weekly, monthly or other data samples? To me monthly seems too infrequent, daily seems a bit much. Weekly or biweekly seems about right but I'd still like some input on the question.
Thanks a bunch,
Allen
Thanks Tom, much clearer.
One question,
Thanks Clive, that is what I did with Netstock before he did an update to fix the problem with running multiple version in one directory. I didn't try this because the file structure is more complex, older, and I wasn't sure that it could find itself if I renamed the base file location, especially since I seem to be having troubles with permissions to save a file of notes in the Newport directory. Not sure why, I took the Read permission off but it still doesn't let me.
Thanks,
Allen
All great information Tom, but lacking a couple of pieces I need.
How do I segregate the different positions? Do I run multiple instances of Newport or is there a way to do this directly in Newport? I don't find any info on this in the help files.
Also I can't make it print. It keeps saying, "Cannot open output file for writing. Check to ensure path and file name are correct." I used c:\FAQ.ps
Is there a way to print out all the various help files from outside Newport?
BTW, the sticky has a bit of wrong information in it. "...and then run the #start.windows31.bat file that starts up dosbox etc." The file to double click on is (in my installation) c:\Program Files (x86)\Newport_AIM\DOSBox-Win31-Newport\Newport.exe
Thanks,
Allen
Hi Gang, A great chart is at: http://www.seasonalcharts.com/classics_dj_ia.html. Granted it only goes back to 1982, but it seems convincing enough that late September and almost all of October are going to be rocky.
There are other charts that are well worth looking at the site.
Warmest Regards,
Allen