Hi Toofuzzy, I'm using the AIM spreadsheet that I have modified somewhat but the basic formulas are the same. What I added is being able to enter the cost of commissions, the dividends received, and the calculation of the % gain.
The spreadsheet has both a % of stock to buy/sell and a minimum transaction size. This helps reduce the % of the transaction that is for commissions.
The "standard" settings, per Lichello, are 10% buy and sell safe. I've been using 0% sell safe since Tom suggested it a while back. I've played with the minimum buy safe and have found that an entry of -5% gets better results, on the average, than the standard +10% in my back tests. As I said in my last note, -10% did even better than -5% for the back test of AMZA. I can't do the math in my head so I'm not sure how to explain it more clearly.
My understanding is that the old settings of 10% buy and sell safe as used in the online calculator: http://web.archive.org/web/20120609073103id_/http://www.aim-users.com/calculator.htm, created the following with a Control of $10,000, 1000 shares and 10% each for buy, sell safe and minimum % shares to buy/sell: @ Stock Value Above $12500
Min Sell Order Size $1250
Min Sell Price $12.5
Min # Shares Sell 100
@ Stock Value Below $8333
Min Buy Order Size $833
Max Buy Price $8.33
Min # Shares Buy 100
This results in requiring a 25% increase in price to get a sale and a drop of almost 17% to get a buy while a setting of 0% sell safe, -5% buy safe and 10% minimum share trade gets: @ Stock Value Above $11111
Min Sell Order Size $1111
Min Sell Price $11.11
Min # Shares Sell 100
@ Stock Value Below $9524
Min Buy Order Size $952
Max Buy Price $9.52
Min # Shares Buy 100
This reduces the sell price to 11.11% and the buy to a drop of 4.8%.
The logic of this is that, historically, the market has moved up roughly 3%/year, averaged out, so that it would take roughly an 8% drop to get a buy and 8% above average move to get a sell. This is a much tighter range than Lichello was using. The example in his book assumes a bit over 100% rise from the bottom and about a 60% drop from the peak twice a year. See the chart on pages 64-71 of the 4th edition to see the very volatile market he uses to prove AIM works.
AIM does indeed work but the market is never as volatile as he shows so adjusting the buy/sell safe to meet real market conditions makes sense to me.
Best, and a Happy New Year,
Allen
