There is a issue involved in the general concept of slowing down cash depletion (buys) during prolonged down trends, that I do not understand to the point that I agree (yet).....it has to do with delaying the buys.
Let's say the alternatives are weekly versus monthly updating, and then taking the AIM recommendation (and variations such as HWTTW or increasing SAFE can be included in deciding how much to buy).
Here is what I think would usually happen:
MONTHLY: Advantages: For the 3 weeks that you have determined not to update or buy, your cash reserves would remain static.
Disadvantages: (1) When the month had elapsed, and the buy was finally made, it would be much larger (perhaps 4 times larger?) so that after the month had elapsed, the cash reserve would be depleted to about the same amount as if buys had been on a weekly basis.
WEEKLY: Advantages: If there should be a bottom made during the one month interval, this timing of a buy would probably come closer to getting a buy near the low of the bottom.
Disadvantages: If AIM was calling for a buy each week, it would seem like your cash was being quickly depleted.
SUMMARIZING QUESTION: If the buys are separated by a month in a strong down-trend.....you keep the cash for 3 weeks that would have otherwise made buys.....but at the end of the month you make a huge buy, because the price has moved so far from its' previous buy point. Are you really ahead?
I can be easily swayed to monthly updates by the argument that shows I don't have an accurate understanding of the advantages of slowing the buys.....it's just that right now I don't see the advantage......thanks for any explanations.
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