A.I.M. Users Bulletin Board

[OldAIMGuy]

Hi Lou, Re: SAFE settings for ETFs and using Zig Zag analysis........

Adam has led you in the correct direction. Let's take something vanilla to start - RYT the S&P 500 Equal Weight Tech ETF. The first graph approximates with the Zig Zag line a need for a 30% reversal as a minimum before the line changes direction.

http://stockcharts.com/c-sc/sc?s=RYT&p=W&b=5&g=0&i=t70553569982&r=1483371625947
Note that Zig Zag (the red line) never changes direction indicating that in the last three years its been very steady with no reversals. 30% Zig Zag is close to what AIM needs with SAFE at 10% for buying and selling and 5% of position being the minimum trade. (10% buy + 10% sell + 5% min buy + 5% min sell) So, while you might have sold some shares over the last three year, you would not have made any purchases.

Now let's assume we would like a bit more activity and are willing to take a bit less profit on each turn around. I don't suggest reducing the Buy SAFE less than 10% but that's personal experience. So, let's reduce the Sell SAFE to zero (10% buy SAFE, 0% sell SAFE, 5% of position as minimum). This would give us a hold zone of ~20% instead of 30%. So I reset the Zig Zag to show 20%.
http://stockcharts.com/c-sc/sc?s=RYT&p=W&b=5&g=0&i=t99547405969&r=1483371877713

Here we see that AIM would have sold some shares heading for June of 2015, had a chance for an opportunistic buy in Aug or Sept, 2015 or possibly early in 2016. While not a lot of activity, this would mean that ~5% of our money would have been "recycled" at least once for approximately a 20% gain. Not bad.

We make money with AIM by recycling the cash over and over. With each recycle we accumulate gains on that amount. So, obviously the more times we recycle the cash, the better our overall performance will be. As indicated this isn't "Get Rich Quick" by any means. The market's moves determine whether we trade or not. In times of high volatility we'll probably trade more frequently.

AIM is well suited to keeping our assets managed with a high sensitivity toward preservation of wealth. Or maybe another way to describe it is "growth with risk moderation." Picking the right fuel for the AIM machine is very important. It won't run well or long if the underlying asset isn't going to survive.

Try taking the 2nd example and putting in the tickers for the various Vanguard components you are considering. Most Sector and Style ETFs seem to do well with ~20% overall Hold Zone size like the 2nd example. Note the settings for the graphic (Weekly, HLC Bars, Simple Moving Average 26 weeks, Zig Zag 20%, Williams %R 14 weeks, Accumulation/Distribution 14 weeks) as these seem to pattern well with actual AIM usage.

Please feel free to ask questions as they arise. Here at I-Hub there's also our "In Depth" question and answer page: http://investorshub.advfn.com/AIM-%22In-Depth%22-Q&A-992/

Keep up the good work. It was January of 1988 when I finally turned over management of my investments to AIM. I've never doubted that decision since.