A.I.M. Users Bulletin Board

[Tim Reese]

re testing and reduction

Hi Toofuzzy - you wrote

In talking to a friend who has been investing a lot longer than I when asked by me "so what do I do, the systems are proposing two different things, which one works" He Said "Both! but once you pick a system you need to stick with it "

I see your point. By definition, the system requires you to double-down (isn't that what it's called?) to take advantage of the AIM leverage. But I also understood that AIM puts a finite amount of money at risk, and in most cases your cash reserve will not run out. To continue to put money into a constant down trend seems contrary to AIM's aim to reduce risk ... adding more cash increases risk, with the expected potential for increased return.

I'm not a long time investor, and most of my time has been devoted to managing my 403b(7) money, so I'm really new to investing in individual stocks. A couple of principles I've heard in many places are 1) always buy quality companies, and 2) at some point, you're going to lose money. To me Jeff's example has already violated the quality rule, and it's time to accept losses. Geez, Jeff's example seems to have more in common with your doubling-down gambling example than real life; at least in the gambling example the casino won't go out of business while you continue to place your bets.

Wow, a lot of traffic on this board. Wish it were more obviously threaded.

Thanks for responding so quickly to my post - cheers Tim