I am a recent AIM investor using a mutual fund and the 50% cash reserve method. I assume if the fund's value is declining you ignore any buy signal if your cash reserve level is below 50%, and you would do nothing else.
Welcome!
You're on the right track having the cash reserve. The point of the cash reserve is for it to be there to use it on the sort of price decline that you're seeing with the mutual fund (and what we're all seeing on just about everything else)! Lichello's 50/50, later revised to 67/33 and even later to 80/20 is to have a starting amount for when you first set up an account using AIM. Once you "activate" the "money machine" the amount of equity vs cash will change dynamically over time as the AIM logic shifts money between the two sides. According to Lichello, what you're (pardon the pun) AIMing for is to run out of cash at the very bottom of the market, to be 100% in equities at the absolute low. You can then accumulate cash again as things go back up.
BTW, The "Vwave" that you'll see mentioned on here looks at what the market is currently doing and based on various calculations tries to recommend a starting cash percentage rather than using an arbitrarily fixed percentage. Usually mutual funds can carry a lower starting cash reserve amount instead of individual stocks, owing to their greater diversity, though in this uncertain time an extra measure of reserve is likely prudent.
So if your system is telling you to buy, go and do so. Hopefully the rewards will be worth it later. Do let us know if you have any more questions.
Best,
AIMster
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