A.I.M. Users Bulletin Board

[SFSecurity]

Hi Gang, I think I might have a partial answer to the question I asked about reducing buy risk in case of a market downturn when one is adding a figure to the PC to account for inflation, etc.

I said:

Using the online calculator with:

Portfolio Control 10,000
Number of Shares 1,000
Sell SAFE 10%
Buy SAFE 10%
Min Purchase/Sale % Stock Shares 5%

You get a buy signal at $8.70

Assuming a 9.8% PC growth over the year, or $81.66/month the buy price moves up to $8.77, two months to $8.84, and up to $9.55 after a year.

One way to reduce the rate of increase of the buy signal is to add double the growth % to the buy signal as you do to PC. When you do this the buys signal only moves up to $8.76 after one month, $8.81 instead of $8.84, and $9.39 instead of $9.55 after a year.

Using 5 times the PC % change might be better as you get $8.74 after one month instead of $8.77, $8.78 instead of $8.84 after two months, and $9.16 instead of $9.55 after a year.

While these figures might not be sufficient for best protection against a correction as the 5x PC % change provides only a 4.08% cushion, I think the general idea of increasing the buy SAFE when increasing the PC is an approach that might work.