A.I.M. Users Bulletin Board

[Tim Reese]

Conrad, Toofuzzy; sounds highfalutin doesn't it...

"means-reverting log-normal variant simulated signal"

It's just a simulation of a price history generated with a series of random numbers. Most of the name describes the attributes that make the fake prices sorta kinda resemble a real price history. I've done a lot of numerical simulation, but this term is just something I picked from the literature about a model that should resemble stock prices.

Mean reversion is interesting ... it just says that markets fluctuate around some long term value. A very realistic idea actually. I expect that equities do this too, that is, that prices are only loosly coupled to value, but that prices eventually return to value like gravity. GMO has one or two interesting white papers on this, http://www.gmo.com

Toofuzzy wrote

The main thing to watch out for is anything that requires you to make a decission to modify the formula along the way because emotion will then come in to the picture. The beauty of using AIM is that it removes emotion from investing once you decide what to invest in.

I hear that, although it's hard when you are learning so much day by day not to modify the plan to accomodate new info. Plus, I think one needs to incorporate R&D into the business plan to remain competitive. The business analogy appears a very powerful concept for investors, from my (possibly) naive POV.

Got to scoot - best regards Tim