Hello Barry,
Thank you for responding in such detail. You are correct with respect to various points. You understand the material well enough to dig that deep. I will respond point by point(hoping to keep it short):
1 Typos. Yes, this is irritating and can be confusing. It is due to the medium! Like with e-mails "writers" are often in a hurry to quickly answer "online" and this results in improperly edited text. I will try to be more mindful of the readers.
2 I agree that the flaw is not as serious as it at first appears...a diamond with a flaw is still beautiful...and expensive. In subsequent discussions I have gone on record that the "Flaw"
has some merit: When a falling stock price reverses the "Flaw" causes a sell-order delay as the rising stock price has to move through the (pc-y)-range, becomes zero and then produces a Sell Order when the signal is strong enough. This is a good effect. But what AIMers tend to say about the Flaw I cannot follow: That the "feature" could be a blessing in a decreasing market does not make sense. The updating of the pc with 1/2*Buy specifically makes the Lichello AIM much too aggressive, and that is why the SAVE is used to temper the buys. The very reason that the 50%-Buy is added to the pc results in a buy-signal that is too large...and specifically if you look at the AIM a little later the buy-signal is much too large again and again.
For the specific aggressiveness of the Lichello AIM I devised a method to get rid of the Lichello-pc-corrector and created the Vortex AIM in which the buy or sell order is exactly as large as the investor intends it to be, and in that sense the SAFE-effect is incorporated in the f-factor. The two separate factors simply control the buy and sell aggression separately, and at the same time the Flaw is eliminated as pc=y after the buy is then the result.
3 Your conclusion on my method is generally correct, except that with the f-factor I can cause buys that are much smaller than the standard Lichello buys. And I do not need to temper the buy with a SAFE!!!
4 Precisely correct: The fact that Lichello used pc2=pc1+0,5*Buy gave me the idea of starting the synthesis of the Vortex Method with pc2=pc1 + f*Buy in the endeavour to stick with the Lichello Concept of raising the pc-value!!!
5 In essence we are indeed discussing semantics. I stand corrected on some of that. The important point is however that the Lichello Buy Order had the form of (pc-y)*S in which my S means the same as your (1+S). This was, I think, evident, as I certainly did not mean that the Lichello Buy Order was 10% of the Buy Advice (pc-y). The important thing I wanted to convey was that my method is not substantially different than the Licehllo Method in its mathematical form.
My summary-point that The Vortex Method eliminates the use of the SAFE was therefore certainly not based on an incorrect equation but is specifically based on the fact that the use of a single f-factor results in a Vortex Buy Order=F*Buy that eliminates the SAFE completely because with the correct choice of the f-factor you can make the Buy and Sell as small or as large as you want it.
In closing I want to mention that the Vortex Method, of course, also uses Buy/Sell Resistances in order to calculate the next ACTION POINT: If the Buy Resistance is 10% then I use a share price drop of 10% to calculate how many shares I need to buy for the Buy Order F*(pc-y)...with F=1/(1-f)
With respect to the effect of a negative f-factor it will give surprisingly interesting results. With a large negative value you essentially reduce the buying or selling rates so drastically that you end up with a Buy & Hold Strategy, and I give that name new meaning: if you use a negative f-factor for selling and a positive one for buying you Do the Buying and Hold off on the Selling !!!! If you reverse that strategy you end up with a Hold and Sell Strategy.... buy only little(or nothing) on the dips, and Sell more aggressively on the top! This is effective for liquidating the Portfolio!
This was the Short reply.
Conrad
AI
