A.I.M. "In Depth" Q&A

[extelecom]

Idiot Wave - Newport
Q.....
I am considering purchasing the newport program for aim investors. I do not
completly understand what idiot wave is, but is it a part of the newport
program or is that something extra that has to be purchased with newport.
Thanks
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A.....
Hi Bob,

Bob Norman of Newport Programs is the author of the AIM software, along with Dave Ratatori who did the graphics. In Newport are all of the years of experience of using AIM in the real world. It allows for the SAFE to be split for buying and selling, lets you make graphs, keeps track of the accounts for you, and lets you make internal adjustments for stock splits, distributions, additions, and the usual things that come along in an active account. It's AIM without the drudgery of maintaining a spreadsheet.
My Idiot Wave is a separate, free, report that I have kept going for many years. I needed a market risk monitor that mirrored what AIM's opinion would be. The Idiot Wave is an attempt to make a better judgement of what the market's risk is at any particular time, independent of the psychological burdens usually gathered by watching or reading traditional financial news. I wasn't comfortable with Mr. Lichello's "one size fits all" mentality with either 50% Cash Reserve or 33%. The Idiot Wave floats around with market risk and gives a 'reading' that seems to be appropriate for the starting of new accounts.
I also use the IW as a guide as to how much cash reserve should be built up in an account. It's my opinion that it's just as senseless to keep large amounts of cash reserve around in a low risk environment as it is to have too little cash on hand when market risk is high. The IW helps me to target the size of my cash reserves for existing accounts.
Although the Idiot Wave isn't necessary for running a good AIM/Newport account, it's a good partner. It was nice to know in mid summer 1987 that the market was getting a bit 'flakey' (IW peak of about 56% Cash Reserve). It was just as nice to know in December of 1987 that the world hadn't come to an end (IW dropped eventually to less than 20% cash reserve). It took great intestinal fortitude to follow AIM during the '87 "crash". At least the IW was there to sooth the AIMer's nerves by indicating that the market had become a very Low Risk environment.
I don't know if the IW is as good in more normal markets, but it seems well suited to guide us during market extremes. I report the weekly values of the components and the resulting IW suggestions at the AIM web site (http://www.execpc.com/~oldcat/3bbs.htm) for all to ponder. The main thing that can be said is that if all four components agree with the total AIM rational, then one can be fairly certain about the outlook. Less caution needs to be given when only some of the components agree with the overall view. This is the case right now. Some components are high risk, but not all.
This got a bit long winded, hope you don't mind. I have really enjoyed the Newport software. It's a nice, tight application specific program. Its default settings are pure Lichello. If you want to tinker, you can, as the flexibility is built in. It isn't a full blown spreadsheet like Excel or 123. When Bob did the design for Newport he took only what was necessary to run a successful account - no excess baggage. Hope this helps in your decision-making.
Best regards, Tom Veale