A.I.M. Users Bulletin Board

[OldAIMGuy]

Hi Conrad, Re: EverClear Liquids...................

That may be the method to which I had referred. It sounds more like momentum trading than I remember, but maybe that was the idea.

The part about "starting a pilot investment" may be the part that was most like AIM. But the "adding to the position should it show upward strength" is sort of Anti-AIM.

I didn't read the Loeb book, but an article that referenced "Ever Liquid Portfolio" management. In that article it also referenced R. Lichello and AIM as being something akin to scale trading and had in common holding a significant cash position as a cushion. All I do remember is that it was the first time I'd heard of AIM and Lichello. I went to a book store and got Mr. Lichello's book and read it from that small clue.

Here's the description of Mr. Loeb's method from a reader's review:
I've read many recently published books on how to profit from the financial markets. Too many of them leave me feeling like I wasted my time and money.
I decided to go back to the "classics"--Schabacker, Edwards and Magee, Graham, Hamilton, Rhea, and of course, Gerald Loeb.

The more I read these "classics" of investment literature, the more I see the market hasn't fundamentally changed at all. All of those books have taught me something important, but I will always have Loeb's "Battle for Investment Survival" close to the top of my list.

Loeb demonstrates he is fundamentally honest. Unlike most books, that get you to think becomming a millionare through daytrading is easy, Loeb teaches that there is no such thing as "easy money" in the financial markets, nor are there "safe investments" (bonds) as the value of money is constantly depreciating.

He also teaches that there are NO guarantees, and that most people WILL lose money regardless of what they do. I think this is true, but most people cannot face it--even those "efficient market" types who advocate the buy and holding of index funds. (I believe Loeb would be a big fan of Exchange Traded Funds, however)

So, what is one to do in order to preserve purchasing power? His answer: intelligent speculation and the ever-liquid account.

To speculate intelligently, Loeb advises focusing on actively traded stocks--not illiquid "penny stocks" for your SPECULATIVE activities.

Let's be clear--Gerald Loeb is no "buy and hold" advocate. Loeb could be considered an advocate of the "relative strength" approach--before the concept of "relative strength" ever existed.

The moment your stock is failing to deliver superior profits, and you have no fundamental reason to believe its uptrend will continue, he advises you sell and look for another. If you can't find anything interesting, or the market is going down--you stay in cash. For Loeb, you MUST avoid catastrophic losses like those sustained in the crash of '29. A stock that doesn't rise (or fall if you like to short) is a waste to be avoided.

Loeb is not a fan of too much diversification. He thinks it is a crutch that guarantees mediocre performance.

His most important teaching would focus on money management (what we would now call "asset allocation"). Loeb would consider it foolish to allocate a significant (more than 50%) of your capital to stocks. You always need a cushion for those inevitable losses in trading operations.

I've taken Loeb's advice to heart. His advice is even more applicable to options trading.

By keeping a small amount of money in a volatile asset, and ruthlessly cutting losses, you give yourself a chance to match the market or even outperform, but with significantly less risk (volatility), due to the large cash reserves.

Loeb's advice isn't easy to follow. But making money isn't easy. And by following Loeb's advice, I'm quite pleased.


Thanks for the link!

BTW, there's a brand name of special liquid called EverClear sold here in the U.S. It's nearly 100% grain alcohol. That's nearly 200 Proof for those who care. Probably not a good idea to have sources of ignition around while drinking the stuff!!!


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