A.I.M. Users Bulletin Board

[SFSecurity]

Hi OldAIMGuy, You point is important but ignores the common way of seeing how percentage changes are calculated. $117.65 is not 15% more than $100, and $86.96 is not 15% less than $100, no matter how you slice it.

I don't think it matters all that much on the sell side but I think it does on the buy side as it would get you to buy sooner in a down market. We've had discussions about the advantages of delaying buys to get in as low as reasonable and that it produces better results overall so something that goes against that approach is not to our best interests in the long run.

I looked back at the book and I think I understand how this strange way of calculating happened. In the book Lichello does the calculation as addition and subtraction of dollar amounts, not percentages of Stock Values or Portfolio Control, to calculate buys and sells. This works great for paper and pencil calculation but is a bit of a pain for using with a spreadsheet. Someone way back in the Pliocene era of AIM converted to using percentages and, for whatever reason, used a non-standard method of calculation for them. Then it got incorporated into some spreadsheets and Newport.

So now we have it across the board. Does it really matter? Probably not, but I think it is important to know the issue exists and that it might have consequences.

It is also worth noting that:

1.1 = Buy SAFE
0.9 = Sell SAFE

you use the traditional way of calculating the Buy and Sell safe. I.e., 100 plus 10 (10% of the base figure) for the Buy and 100 minus 10 (again 10% of the base figure) but what happens is by dividing rather than multiplying (inverting Buy and Sell numbers) you get a 12.36% change on the sell and 9.91% on the buy. This is then amplified by adding in the dollar amount into the safe calculation resulting in a 17.65% on selling and a 13.04% on buying.

Enough of higher math.

Best to you and yours you hold most dear, now and throughout the New Year,

Allen