A.I.M. Users Bulletin Board

[aim hier]

There is no "Lichello Flaw". Lichello addressed the residual buys in his book. At it's heart, AIM is simply a constant dollar plan, the granddaddy of all formula plans. Lichello added to a constant dollar plan two subtle refinements.

1) Stock values tend to increase over time. Thus whenever directed to buy more shares after a price decline, we add 1/2 of the new investment to portfolio control as an estimate of the long term growth (the other half just being normal volatility noise).

2) Price trends tend to persist. Thus Lichello made AIM less responsive to price changes than constant dollar formulas, by introducing the concept of 'safe' which puts a brake on purchase and sale orders.