A.I.M. Users Bulletin Board

[OldAIMGuy]

Re: Suggestion for simple i-Wave replacement.................

Use Value Line's "Appreciation Potential" which is shown weekly on their cover page of the Summary & Index section.

Take 100 minus the Appreciation Potential as the IW substitute.

This week's value is 40%, so VLIW would be

100 - 40 = 60% Cash Reserve for individual stocks.

Back on July 20th it was 35%, so the VLIW would have been
100 - 35 = 65% Cash.

That would have been a good call back then.

Basically the higher the appreciation potential, the lower the cash reserve needs should be. It's available weekly for review and is responsive over time to the market's condition. Also, it doesn't react too quickly either, so it's relatively subtle.

In Feb of 1998 it was signalling:
100 - 35 = 65% Cash
That year the market sagged heavily in the Fall.

March 14, 2003 it was signalling:
100 - 100 = 0% Cash Reserve!
Coincidentally that was the market bottom.

October 5th of 2001, less than a month after the WTC attack:
100 - 105 = -5% Cash.

So, if you're looking for a "fix" this might just do the trick.

Best regards, Tom