A.I.M. Users Bulletin Board

[SFSecurity]

Hi Clive, Great, short explanation of LD-AIM.

A couple of additional points to consider when selecting a position are the beta, volatility relative to market as a whole, and 52 week price range.

For the first, most advice seems to be select ones with at least a beta of 1.2 up to about 2.0. More than 2.0 may have too much risk. Some people have seen good results with very low betas as well. I haven't really tested this myself.

The traditional advice is to select a position with a 52 week range of two to one, i.e. as an example, $10 to $20. With the traditional buy/sell safe figures this works well for most stocks but ETF/ETNs typically have a much smaller range so you may have to tinker with those settings.

Keep in mind that four things affect the price that generates a buy or a sale:

1) Portfolio control
2) Buy/sell safe percentage
3) Minimum number or percentage of stocks to buy/sell
4) Minimum dollar value of a buy/sell

In some cases you need to play with them to see what works by backtesting. I've found doing more than about two years counter-productive, but it also pays to look at the charts going back further just to see if the position tracks the market long term. For example WLT did not react to the 2002-3 downturn but did to the 2008-9 downturn. Also it has lost much more stock value recently than others in the basic materials/energy sector with a high in November of $3.29 down to recent price low of $0.34, nearly a 90% drop where others have lost around 50% in the same time frame.

Best,

Allen