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Hi Ocroft,
What a wonderful, calm, analysis of AIM, its limitations and benefits in your various posts. I've gone back to your July 2012 and more recent posts and read them all coming forward.
Two questions. You refer to BTB AIM and AIMST. I assume BTB means "Buy the Bottom," right? What does AIMST mean and how does it work?
Warmest Regards,
Allen
Hi BowlerBob,
I've read Orcroft's recent posts but the idea of taking a backward look through AIM as a setup for a real trading position had not occurred to me as a way to try to peek under the skirts of the future. Thanks.
I've just been using back testing to evaluate what might be a possible trade. Similar but not the same as what you suggest.
Yeah, I know the view of the future is at the very best is Snow White's mirror, full of false promise and to be treated with great caution.
Warmest Regards,
Allen
RE: Diverse, equal weighted stocks, equal weighted sectors,...
Hi Is7550,
When you say "equal weighted" you are saying equal monetary value, correct? Or is there some other weighting mechanism you have in mind?
Thanks,
Allen
Hi Folks, a favor, please...
When you use an acronym or initialism, (SNAFU - Situation Normal, All F$%^ed Up - an acronym is a pronounceable word. An initialism is unpronounceable so one tends to pronounce each letter - MTS is one example), unless it is an extremely common one, please spell it out the first time you use it.
When ls7550 used MTS I had to struggle because the meaning, based on my own experience, was that he was talking Market Trend Signal but I knew that could not be correct so I was lost. After some thought I came to, Minimum Trade Stock, but I'm not sure that is correct.
A general rule of technical writing for manuals - which this often is - is to restate the underlying meaning every ten to fifteen times you use an acronym or initialism, but since we are posting, not constructing a whole technical manual, just one piece at a time, it is a good idea to do the less common ones in every post.
The style would be: "In the Financial Times (FT)..." and then just FT in the rest of the post. This way a newbie has it all in front of them and doesn't have to ask "What the f$%^...."
Thanks,
Allen
RE: With equal weighting periodically rebalanced...
Wow, great info and explanation. Dense. I'll have to read it several times and work some samples to make sure I understand it all.
Best,
Allen
Hi Toofuzzy,
Hi OldAIMGuy,
Thanks for the very clear explanation. Helps a whole bunch.
Hi Is7550,
Actually you almost answered my question with:
Question RE: Cash Burn
On http://web.archive.org/web/20051222071617/http://www.aim-users.com/cashburn.htm there is a spreadsheet of cash burn (Would love to know how it is constructed) and % drop of stock value titled AIM - Bear Market - Sustained Diving Market. It seems that, given the 2007-2009 S&P 500 was down 56%, that holding 33% cash would be enough to not run out of cash until -50% with a safe of 30%. Even 50% cash would not run out until a stock is down 60% with a 30% Safe. Yet I see comments that suggest that as much as 60+% cash is needed if you hold individual stocks.
What gives with these wildly divergent figures? What am I missing or misunderstanding?
Thanks,
Allen
Hi,
Could you please identify each of the sectors next to the figures? Also, do you know how they compare with equivalent US sectors?
Thanks,
Allen
Hi Toofuzzy,
"Just multiply stock value by # of shares to get total stock value."
That is not what I was talking about. For the online calculator you can enter either the stock value or the price to generate the hold zone. It is that functionality that I'm trying to mimic. Not really needed as you can get the stock value as you say. Just another toy.
Best,
Allen
(Quote function not working at the moment.)
GRUB game...
I had no clue. BTW what does GRUB stand for?
LOL,
Allen
Questions and an observation...
When you do a Vealie and increase Portfolio Control, does this mean that when a downdraft starts the buying will be delayed? It seems like that to me but I'm not sure.
Also on this, is there any reason to do Vealies for a while and then sell a bunch at what you are guessing is at or near a market high? I recall someone on the forum suggesting that sells be accumulated looking for a better market price. Isn't this sort of an informal Vealie?
If you do decide to accumulate sales and/or sell after Vealies, what criteria is best to use to choose when to sell? I can readily see large risk that you would actually sell after the top and when the price is below where your target sell is.
Now for the observation. Looking at http://www.aim-users.com/pic.htm#csco" rel="nofollow" target="_blank" >Perverse Investment Candidates it seems clear that for the most part a higher beta works better for AIM compared to B&H, but not always. COGN with a beta of 1.2 does much worse than B&H (2007 data) as well as ELX with a beta of 1.9 (2007 data).
It seems to me that if you compare the various parts of the normal business cycle for a given sector, B&H is better in the up cycle and much worse in the down cycle, whereas AIM does okay in an up cycle and gang busters in a down cycle in that it holds losses to a minimum and regains losses faster than B&H. This is what I get from Lichello's book(s) and observation. Is this correct?
Warmest Regards,
Allen
Hi Gang,
Is there a replacement for RiskGrades?They don't see to exist anymore.
Thanks,
Allen
RE: N=Portfolio Control...
RE: Wow, nobody seems to have noticed.
Re AIM Hold Zone calculation
Hi Mr. Grabber,
E-mail to my Gmail account? Sorry, it has not arrived at itrulyhate@gmail.com. I only have that account so I can set up secure, encrypted e-mail using ZSentry for healthcare clients.
I get so much spam now that I hesitate to put my real e-mail in a public forum but you can use my masked e-mail:
fa1f248f@opayq.com
If you use that it will get to me and yet I can block any spam that might try to use it.
Abine is great. It will be even better soon as they will be able to cover more than one e-mail address. I've got 7 so it can be a bit of a pain.
However, I caution you, do not use a masked e-mail address for logging in to websites on the net as they seem to not work well at this point. I'm having a problem with a site I tried it on, alas it is an important one for me so it is a bit of a pain to get it sorted out.
Hi Is7550,
Thanks a bunch. Had I realized that I could download the calculator I would have save my breath recreating it in a spreadsheet.
This is why we need stickies so we can find this stuff. Oh, well.
BTW, I did a version of CAGR on a spreadsheet that actually allows you to calculate the rate of return over a number of days, weeks, months, or years. If anyone wants it they are welcome to a copy.
Best,
Allen
Hi Tom,
I still have an XP machine (and I can run it virtually on W7 or FreeBSD) so ooo, I would love to buy a copy. I can get it off of any storage format, 3 1/2", 5 1/4", Iomega, DAT tape, whatever, except for 12 Track 3870 tapes. Those I'd have to farm out to a friend.
Any clues as to where to find a legit copy?
Thanks,
Allen
Can I chime in with a question?
When Grabber says:
Thanks OldAIMGuy.
I had forgotten Zig-Zag as I have not yet mastered it. Not enough practice yet.
Also, thanks for the explanations and comparison to a strictly adhered to Buy and Hold.
Your point about the majority of people being out of the market at the bottom is, to me, indicative of a fear mentality. When is the next storm (earthquake, tsunami, blow) going to hit without considering that the sun WILL rise again. America used to be less like that 100+ years ago, but even then it was very significant.
Warmest Regards,
Allen
Hey Tom, you'll never guess what I got in the mail today!
Given that I have the 2001 version of "How To Make $100,000,000..." and that people on the forum often refer to page numbers in a prior edition and I can't find what they are referring to in my edition I did a bit of sleuthing to see what I could find and how much it would cost me to get prior editions. I found 3 at Alibris and 2 at eBay and the total cost was only a buck over shipping costs, except for one that was $3.45, or about $30 total.
I have already gotten a 1980, and a 1985 and today a 1992 that is in practically mint condition. I'm not sure it was ever read but there was a receipt from Walmart (Area Code 615, Southern San Diego) dated 2002.
Well, guess what? Inside the front cover is one of your www.aim-users.com labels. It too is in mint shape.
And, as someone commented, except for additions the content is as close to exactly the same from edition to edition as far as I can tell. There are minor differences in book size, layout and type size. For example Chapter 10 starts on 137 in 1980 and 1985 but 145 in 1992, but nothing significant.
What I am amazed at is that so many copies were sold - what I have at hand so far are a 7th, a 6th, a 10th and the most recent a 1st printing - and that so few are using it. It may not be the swiftest donkey in the race but it does seem to be the reliable one to have at your side when you are prospecting for gold in rough terrain.
Tsamaya sentlê,
Allen
(go well - Botswana)
RE: Parameters & Vealie
Screening metric possibilities:
1) Beta - 1.25+ in order to capture volatility
2) 52 Week ratio - to locate higher volatility positions
3) ValueLine Timeliness 4 or 5 (Not sure what this one does but then I don't really understand ValueLine all that well. If you know of a good tutorial on using ValueLine and what the various metrics mean, let me know, please.)
4) Volume - Too thinly traded has some gap risks it seems to me. Large volume seems to dampen volatility. I'm not sure if this is an important metric.
5) Industry/sector - What are the prospects going forward. We don't want to be buying buggy whip industries/sectors.
6) Value metrics like quality of management and their stability, how they have done, dividends, etc.
7) Fits well with AIM - I have tried Buy & Hold, AIM, Stock Trading Riches and Market Trend Signal with a few different ETFs. Over the 5 year period from 7/1/2009 through 7/31/2014 with monthly figures from Yahoo some return more with one than another. Mind you this is a mostly bull market, with some downdraft as shown in Stock Chart of the Day in 2010-11 and 2012.
Add whatever else you think is a good idea. You might want to copy and paste the above into you additions so we can look in one place to find all the great ideas.
Warmest Regards,
Allen
Thanks AIM1979.
I have to admit to an embarrassment. I looked at the link a while back and kept getting 404-Page Not Found every time I tried to move off the front page. No clue why. Since then I have upgraded my browser and eliminated a couple of plugins so when I went there today it worked. What a miracle. Now I am able to browse through the archived site.
Thanks Tom for making me go back and look again.
Allen
Re: how AIM behaves...
You said:
Hi Gang,
I've identified 3 ETF's with a 52 week high/low over 2 to 1 and wondered what the rest of you think of them. They are TQQQ, SMIN, and USD.
On another subject, it seems to me that AIM needs to "settle" in for a couple of years, or so, before it hits its stride in profits. Is this an artifact of the bull market or is this a known behavior?
On still another subject, as I understand it AIM has two primary, key potential problems:
1) Running out of cash in a down market by buying too soon.
2) Amassing too much cash in an up market by selling too soon.
I've modified the AIMBARES.XLS to automate back testing and added the Buy/Sell/Hold zone calculator that is on Archive.org as well as a % profit calculation and commission costs. In working with it I am seeing the strong interaction between % profit, % cash, buy/sell safe and % of stocks/$ for a minimum trade.
By automating it I can see the % profit change as I play with the variables. Oddly enough it sees a lower than 10% buy safe combined a higher than 10% sell safe seems to work best in the bull market over the last 5 years. Though I haven't tested, except by hand, the period of 2007/2012, and on that only two items suggested by Tom. (How do I convey to you, Tom, what I got to see if I did the paper and pencil correctly?)
Each stock/EFT seems to require its own cash % to avoid running out of cash, but then this is a "bull" market so I can see that it would require more cash in a down market but from what I see the amount is relative to the particular stock/EFT, not other factors that I can identify. Does this make sense?
Well, enough for now.
Allen
Where is Tom's AIM site? I thought www.aim-users.com was off line. When I attempt to go to it I get, "aim-users.com expired on 04/10/2013 and is pending renewal or deletion."and links to a whole lot of other sites but no useable info.
Thanks,
Allen
The current vWave uses a 0.73175 multiplier. Where did that come from>
I've also noticed a few comments about the vWave suggesting that more cash be held than is needed. IIRC the figure was about 15% - i.e. a 60% vWave might be set at 51% and be closer to being at the right point.
In looking at this, from what I see via back testing, I think the vWave is a bit conservative but I'm not sure how much. Anybody got any input on this?
Best,
Allen
Hi Grabber,
Thanks for the reply. All good points and exactly my thinking. I'm having a h#$% of a hard time trying to find EFTs or stocks that meet the standards that I understand would be a good fit with AIM. The relative long, relatively steady up trend in the market it makes it hard to find something that won't kill me in the current minor ups and downs or in the coming down market.
BTW, I got some conformation yesterday that we are headed for a down cycle ~18-24 months out. A fellow I know does foundation settlement work and back in February/March they had 10-12 weeks of work lined up for the four crews they have. Now they have 3-4 weeks worth. He's been at it long enough, 20 years, that he sees his potential workload in relationship to the business cycle as a leading indicator. Also I was in a class and as an aside the instructor mentioned that real unemployment is a lot higher than the ~6.5% that is the public figure. While the class had nothing to do with the market, he did seem to know what was happening in tech recruiting and some allied industries.
I've been playing with several formula approaches to EFTs and stocks and some seem to fit one approach better an another.
One system, Market Trend Signal, seems to do well on the whole, but when I did a backtest with it against Buy & Hold for the DOW, B&H beat it by almost 3 to 1. So I started to look at other approaches and stumbled on AIM in my bookshelf and now have been playing with that and others.
Out of all the time I've spent it seems clear that a fundamental key is selection. That seems to make much more difference than the exact system one uses if one is methodical about using the system. Clearly emotional trading is flighty and for the birds.
Tom's look at ValueLine from years ago is useful but then there were no EFTs so clearly one needs to change one's approach given that things have changed in the marketplace.
Given all that I would love a clear explanation of W%r and how it relates to volatility and how to find good AIM positions. Any tips?
Best,
Allen
Am I delusional or is there more volatility in lower priced EFTs and stocks?
It seems like getting a 10% move on a $100 position is much less frequent than a 10% move on a $10 position, overall, but it just may be what I've been looking at. What do you think?
Best,
Allen
Great explanation! Step by step like that is easy to follow. Thanks,
Allen
Are you doing the options trades when you expect a sale like I saw mentioned in a post I can't seem to find at the moment?
Thanks,
Allen
Thanks. I though he had it wrong, but..., well you never know as slippery a slope language is.
One of my creations for explaining homonyms for classes I've taught on technical writing is:
Thanks for the very clear explanation of a vealie! Reading snippets here and there it is easy to think two comments are about two different things, not just different ways of saying the same thing.
Now a question. At: HubPages there is a description of AIM used with SANGAMO to illustrate how it works except he changes one element, the amount to buy. Here is how it puts it:
Most excellent, Tom.
Great review and overview of AIM. My post was, to some extent at least, verification that AIM is an excellent approach but that situations vary and no system is perfect for all time or with all possible investments. The modern stock market is not at all like the original Dutch one. I'm sure AIM could have been applied to some of what went on with Tulip Mania and the later South Seas crash in London's stock market but would it have been the best, who knows?
My looking at things is to verify, and pass on what I learn, about how AIM works in today's markets and if any tweaks might work with basic "Sell High, Buy Low" approach of AIM. One example of a tweak that has been suggested, including selling in portfolio control, makes a lot of sense given the changes in taxation of capital gains income and how it is handled. And, of course, using "vealies" to keep from from hoarding cash that is not earning much in the current market, as opposed to when AIM was developed by Lichello where he figured ~5% income on cash. I'm doing real good when I get 1.76% with my credit union. Very different world these days.
BTW, do you have a more detailed explanation of how to apply vealies?
Thanks,
Allen
Hi Toofuzzy,
Re: Get together: When and where? I'm in.
Best,
Allen