Advanced Automatic Investor

[Conrad]

Irwin: The Bull or the Bear?

For some reason, after having been investing since 1992 or so, I still can't figure out if Bullish means Up or Down.

When I was kid of about 10 I wandered into a meadow in which a fully grown Holstein bull was standing, looking at me with e mean eye when I walked towards the Terrible Beast. His head was in Neutral, but when he charged it went down, the nose close to the ground, blowing steam(I heard it!). I broke the short distance land speed record for human beings getting out of that meadow. I just managed to escape under the 10 000 Volt fence wire, with the beast inches from my butt. So, Bullish meant Heads Down for me from that day on.

Later I watched Bull fighting and I saw the bull's head go sky high when he flipped the Matador into the air. From that day onwards Bullish was Heads Up for me. In Canada I went black bear hunting, but never encountered one close up. I shot the neighbour's favourite dog instead, from a distance of about 400 meter(unlucky shot, straight into the heart. I was simply trying to scare him away from our sheep). The neighbour was already 90 years old and died not too much later. I never new if it was from grief or old age. At that time I had no idea how to AIM.

How the hell am I supposed to remember the difference between Bearish and Bullish?

As to your question on B.2: If I have some expectation from a pattern recognition subroutine(SR) then I think I would think as follows:
1) If my AIM would advise a sell, and the SR would indicate a high likelihood of a continual rise(Upward Momentum?) then I would A) not sell or B) buy extra stock, or but a call option or write a call option(I know this better than the Bearish or the Bullish stuff). The B.2 SR would override the AIM Advice. I have not yet any strict format for doing this. Obviously one need to set up a criteria for activating the Override.

When the market is diving(I can remember what diving means!) Clearly the Reverse would take place: I would Override the AIM Sell Advice and conserve cash.

(Bailing out is only an option if I want to prevent losing any substantial portion of the stock value if the stock is not worth holding. Bailing out is only sensible at the top, or perhaps at the middle of the price range!

Being an AIMer I would already have let the stock dive without bailing out. It is then handy to know via an SR if the dive is diving deeper. If Yes then I would override the AIM Buy Advice. If No then use the Turbovest Method to buy more stock than AIM Advise, and buy and write Puts. That's the strategy.

In this I suspect that it might be better simply to have automatic parameter optimisation for the AIM and use the overriding separately. To link them in the SW would probably be unnecessarily complex.


Conrad