Hi Tom
It appears that you are not quite so often taking part in the discussions nowadays. It's therefore an honor to get such a long reply form you. . an honor that I may possibly not deserve.
Your in depth understanding of how AIM functions allows you to present an elaborate analysis on the subject of how buying more, or less, stock and what it means to an investor and how these actions might manifest themselves. . .for better or worse. . .in terms of investment yield.
Hi Is1755:
I feel the same is true for the skillful reactions that you present on the performance of AIM in regards to various options that one can apply to variations in SAFES, investment size calculations(Ladder Concept for example), etc. and many more things that are rather difficult for me to fathom.
In regards to my view on Residual Buys I hope I have made it clear that it is not focused on how AIM it to function in regards to if one should or should not execute Residual Buy Signals. I certainly tend to accept Is1755's conclusion that in the long run various effects might average out in most cases.
My point is purely a technical issue, that you Tom, would probably appreciate: AIM, with the use of the Trade Advice Generator and PC definition is very much like a control system for the operation of a process that gives a signal as output to make a correction in the process management when needed. As the value of the investment changes corrective action is taken to reduce or to increase the number of shares so that in principle the value of the investment does not change a lot.
As an engineer one would design the control system to give the correct signal that is required for the intended process control. The idea is that the output is used as it is "received". It would be completely ridiculous to say then: "Oh well, ignore some of the outputs. .its not important, or if you like use them as you please then it's fine too, no one cares what happens anyway".
I do not disagree that this is a possible option. . .clearly it is already so for many years in regards to the Residual Buy Signals that AIM produces for buying and selling. No one has died because of it(I presume) and in the long term, as Cliff pointed out so well, it makes little difference, if any, for the portfolio yield. In any case you have no way of knowing what the effect of ignoring the Residual Buy Signal is going to have be because the result is dependent on what a stock price actually does.
Consider however that someone(say a junior operator=JO) picks up an operating manual for a control system in a process plant and the there are no clear instructions as to how to handle the feedback signals at the summation device where it is to be added to the SetPoint signal. The controller gives various signals to buy but it is not stated exactly if they are to be used or not. The JO asks his supervisor and the Chief says: "Just ignore the residual signals or use them as you like or use then tomorrow if you think it is better that way. . .its not important".
I say simply that is not a logical way to deal with automatic control systems. The output signals should be used as they are designed to be used. To ignore them is illogical and no one will be able to make sense of it on their own. This creates again and again the need to explain how best to deal with the multiple outputs whereas the way the output is to be used should be crystal clear right from the beginning.
As is clear in regards to Residual Buy Signals there are many ways to deal with it but if that is not made clear so that a newcomer to AIM can not find this out on his own then it is so much better to alter the system so that What is to be done is not subject to questioning. My advice is clear: Create a way to make it unmistakably part of the system that the Buy Signal is correct right away so that there are not a residual Buy Signals. The fact that experienced AIMers know how to handle this ambiguity in AIM is no reason to let newcomers time and again "break their legs" on the Residual Buy Signals that pop up when thy start using AIM.
AI
