A.I.M. Users Bulletin Board

[Conrad]

Hi Mechanical: AIM vs AIM, The Short Answer.

PS(Pre Scriptum): I intended to give a simple answer but found I had to dig deeper into the meaning of Standard AIM. This I have done right here and discovered a very interesting thing. Read on!

Glad you asked MM:
Regular AIM is what I would interpret the same as Lichello AIM]/b] or [B]AIM By The Book. Let's call it AIM BTB.

The important Features of AIM BTB are:

1) The fixed PC-Correction Factor: PCCF=0,5*Buy. This gives:PC2=PC1+0,5*Buy, and PC2=PC1 for Sells. Note also that the AIM BTB also creates a Residual Buy Advice for the same stock price as the Buy was executed at. I call this the Lichello Flaw. I hated it!

2) The SAFE=S(% Reduction Factor=PRF is also called the Buy/Sell Resistance. I have seen this interpreted in two different ways for braking the aggression of the buying and the selling on the Advice=(PC-V). V= Stock Value.

2.1) Buy(& Sell)=(PC-V)*(1-S). With S being the SAFE fraction to create a lower Buy/Sell Order, typically S=0,1 for the 10% SAFE.

2.2) Buy=(PC-s*Y) with s=(1+S) for a Buy and s=(1-S) for a Sell.

These two methods are more or less the same generally as they both result in a Buy/Sell Ratio 1 for say the same S=0,1 but method 2.2 creates a more aggressive buying and a less aggressive selling for the same S as method 2.1 does. It is a very interesting difference to me: method 2.1 buys more aggressively than method 2.2 but also sells more aggressively than method 2.2.

This means, if I can keep al this in the correct perspective, that, for say a given S=0,1 for both cases:

Method 2.1 sells off the stock at a relatively high rate on the rise but buys it back at a relatively slow rate on the next dip.

Method 2.2 sells off the stock at a relatively low rate on the rise on the rise but buys it back at a relatively high rate on the next dip.

It appears uncertain, without running a test on the two methods, parallel to each other, which method will perform better in term of total yield. If I must make a stab at it right now I would predict that Method 2.1 is a cash accumulator and Method 2.2 is a stock accumulator.
Maybe some of you will run a test on this?

I had to think on my feet here on these interpretations, as you as you asked me for the difference between Regular AIM and Vortex AIM, I had to understand these differences first. This result proved that there are two Regular AIMs already! If my memory serves me well, Method 2.1 was the original Lichello AIM. Method 2.2 was. I believe, this difference was pointed out to be by Qarel, in a technical sense, about 4 months ago, although I did not know the different performance features between them. I am a slow learner, but I dig deep!

This is very significant as any Regular AIMer has two Regular AIMs to choose from, depending on what he wants to achieve next to simply portfolio growth. He can select to let his cash grow faster than the stock(Cash Engine Mode= RSP for old people over 60) or he can select to let the stock grow faster for increasing the portfolio growth potential(Stock Engine Mode for young people like all of us under 60).

The Vortex AIM was created to remove all the things I did not like about the Lichello investment method I liked very much! basically. So, I went to work on the fundamentals. The Lichello AIM was far too ridged for me, for one thing, and I hated The Flaw. I reasoned that, if I go through all the trouble of designing an Advice Generator, the least the damn thing should do it to give a Zero Advice if I just bought a bunch of shares! Also I wanted flexibility for the PC-Correction for I did not believe for a second that this Lichello Factor=0,5 was the best choice. Lichello never justified the choice other than it being a Golden Mean of some sort that he found via an old car licence plate with the number 2 on it!!!! So, I knew that 0,5 was not chosen by any synthesis process: If you pick something on a hunch there will most likely be a better method.

I did as follows and chose Variable Constants to create the Vortex Mehod:

1 Eliminated the SAFE and introduced only the Minimum Buy/Sell(MB & MS);

2 Introduced a Buy and Sell Resistance for the Holding Zone(RB & RS); Please note that the Resistance is not used in the calculation for the buying and the selling but can be used for calculating the next Buy or Sell on the Holding Zone Boundary if required. Simply a nice feature!

3 Introduced a Buy and Sell Factor(FB & FS):
Buy=BF*(PC-V) and Sell=FS*(PC-V). I call (PC-Y) the Index, or Advice if you will.

4 Introduced a Buy and Sell Aggression Factor(AB & AS) used them as follows:
PC2=PC1 + AB*Buy=PC1 + AB*FB*Index for updating after buying,
PC2=PC1 + AS*Sell=PC1 + AS*FS*Index for updating after selling.

5 Introduced the requirement that after a Buy there was no Residual Advice. This meant that Index= 0 after any Buy and after any Sell must be true, and this meant that PC=Y after any Buy/Sell. This requirement resulted , via a mathematical synthesis process the following:

5.1 That FB =1/(1-AB). and by general demonstration this relation is proven to be correct to get PC=V and Advice =0 after any Buy that is calculated in via these algorithms.

5.2 By analogy the result for the buying was assumed to be also valid for the selling. By demonstration this assumption proves to be correct.

Now, after you have read al this there is no longer any need to read my book, so, I hope you will not understand any of this and order the book soon(sorry only in Dutch for now). It goes to show that the essence of the Vortex Method, as well as the Lichello Method, can be shown on one page. But only fools will pay $ 10 for one page, so Lichello filled his book with non essentials. My book costs Euro 17 and has less volume by at least 2/3rd of the Lichello Book.

I might add as an explanation that the guts of the Vortex Method lies in the coupling of the FB to the AB and the FS to the AS. This gives two Aggression Factors that define the full range of Operating Modes between aggressive stock accumulation and aggressive cash accumulation. Additionally there is also a setting for aggressive selling while only buying a little on the Dips. This is the Portfolio Liquidation Mode. This means that you take our the cash as you need it, as in de case of needing an income. The Vortex Investor is the King in his Vortex Domain.

Yield optimisation can be achieved as you define the optimisation goals. That is up to the investor. When one is used to the impact of changing the parameters one can set the parameters for cash accumulation or stock accumulation.

The utility of the Vortex AIM is that all this is achieved with only two Aggression Factors, rather than creating various models for different purposes.

In addition to these fundamentals the program VORTEX contains various aspects that supersede the basic requirements as outlined here. However these are niceties and make it easy invest from a practical perspective(Portfolio Management & Administration) as an investor typically wants it. The program is mostly debugged now but has a Dutch Users Guide and User Interface. The Guide is not yet comprehensive enough to show all the features. At this time I have no extra subroutines for the optimisation of the Buys and the sells based on stock pattern analysis. This of course could drive the Vortex AIM buys and sells to the extreme limits of the pattern in the same fashion as Don Carlson and Myst are doing for investing the cash or selling the stock efficiently. The ultimate goal in this optimisation is that Vortex AIM will buy sell 100 % of the stock and buy with 100% of the cash on each top and each valley respectively, outside the Holding Zone. Zzzzzz(this means I am dreaming!).

Any Questions?

Please note that I would like to prevent clogging up this board with non-essential features of the Vortex Program. I like to restrict the discussions here on the features and the meaning of the construction. Some aspects of the optimisation belong on the Aptus iHub Board for Advanced AIM stuff. I do have various Excel spread sheets that were originally set up for me by Don Carlson. These models investigate things such as making the Minimum Buy dependent on the stock value rather than on a fixed quantity. Also I investigated making a floating PC but I do not remember what it was floating on, or if it sank of if floated into the sky.

Anyone looking for other information can contact me at [e-mail] or look on:

http://www.vortexcw.nl ------Link: Vortex Methode: Page: Book.

Zzzzzzz



Conrad