A.I.M. Users Bulletin Board

[lostcowboy]

Allen! I am not sure you had your thinking hat on when you came out with this idea. Did you test this with pencil and paper? I think that will answer the question. when I come up with a Great Idea, I just compare it to AIM by the book for one year and see if I come out ahead or not. Just 12 calculations will answer your question.

I think a bigger question is are you compatible with AIM, some people are not. Which is OK, someone needs to be around to buy when AIM want's you to sell. You may want to read, Five Minute Investing. It explains scaling and reverse scaling, AIM is a type of Scaling formula. In the book they explain why reverse scaling is the way to go.Note they do introduce the concept of buying on margin, I don't think they highlight the risks of margin enough.
Enough on that.

Aim where did it come from? The best way to answer this is to look at the history of formula plans. Karl recently gave me a link to Successful Investing Formulas by LUCILE TOMLINSON While you can read this book online you cannot download it unless you are a member. You can download it a page at a time, you can also switch between the original scan and text.

In the book she explains what a Constant Dollar Plan is, and why most people don't use it.She also talks about ways to improve on the original plan. Some of her ideas Robert Lichello liked, or came up with on his own, to use in his AIM plan. One was the ideal of adding to the portfolio control after a purchase. She also talks about using different percentages for buying and selling. she also talks about having a delayed buy/sell based on where current price is in relationship to the last bull/bear market, 50%/33.5%. She also talks about starting ratio's of stocks and bonds and how one may want to adjust it based on whether one thinks the market is high or low.

Robert wanted to make as simple a plan as he could, that's why he uses add and subtraction,and 10 percent so much. That way any old truck driver could do it while drinking coffee, place a order and get back on the road again.

VEALIE's, at the top of the bull market, one needs enough cash(bonds) to handle the expected drop in a bear market, if you don't have enough you run out of cash before the bottom where all the bargain prices are, but if you have to much then you get cash drag,as you did not need it. once your cash percentage reaches what you think you need then you start doing VEALIE's to maintain the percentage.
How much do you need? Check out the CASH BURN RATE For AIM
The way the page works is you have increasing price drops going down the page, on the right half of the page you have your starting cash percentages, 50%, 33%, and 20% in three columns. In the columns you see the safe settings as percentages,from 5% to 70%.
A example, the stock market has been going up for a long time, and you want to get in but you are fearful that a bear market may start so you go with a 50% cash plan and 10% safe. Find the 50% cash column, go down the page till you get to the row that has 10% in it. Then go left on that row until you get to the Pct Drop From Top column, and you will see the percentage where you will run out of money, and all your money will be in stocks, that should be a -50% drop.