Replies to post #37728 on A.I.M. Users Bulletin Board (AIMUSERS)

[Conrad]

Adam,

It would appear to me that two different interpretations create a very different response if the equity does not dive as Ocraft would in any case buy the Advised Accumulated Amount on a Dip Recovery and the Sell at 20% profit. But the big difference is that If the total Buy amount is Less than Reserve the Ocroft Buy is larger than the AIM Buy. It could very well be that at this point with a cycling equity the Ocroft Method may remain in the Hold Zone longer

A the Deep Diver would reach the Reserve value then the two methods would generate the same Buy = Reserve. Then after the Recovery the methods would no linger be the same as Ocroft sells everything at the 20% profit level.

[ls7550]

My understanding of ocroft's approach is that you run AIM as normal, reviewing monthly, maintaining AIM records as though you had bought, but don't actually buy when indicated and instead buy afterwards.

i.e. AIM can at times generate several sequential buy trades in a row, after which there may be no AIM trade indicated - and that is the time you actually buy.

So rather that multiple cost averaging in's month after month during the down-run of a deep dive, you add more shares at a single (larger trade) price that's somewhere after the bottom.

That shouldn't result in you missing any trades - rather you just pay a higher price than you might otherwise have. Price dips, AIM suggests adding 10 more shares at $x, but you don't actually buy at that time. Next month no AIM trade indicated and you're 10 shares short, so you buy at the current price - which might be higher than $x. In which case you've relatively lost, but in other cases queuing multiple buy trades into a larger single buy trade will relatively win. Rather than perhaps 13.3 shares being bought at $75, another 14.8 shares at $67.5, another 16.5 shares at $60.75 (combined $3000 paid for 44.6 shares at average cost of $67.25), you might buy all of those 44.6 shares at a price ('average cost') of $63 price (being the first month with AIM indicating no action/trade after a series of buy trades).

Even if the average of relatively win and relatively lose situations balance out overall, the deferred purchase approach IMO is better suited to a deep dive than is 'normal' AIM (conventional AIM might have exhausted cash reserves due to repeated buy trades as the price declined, and not been able to continue to buy as the share price sank further down. Deferred AIM buys would still have its cash reserves available, waiting for when AIM indicated no further buy trades were being made). i.e. potentially safer/better, with potentially no/low overhead cost (generally) for that additional safety (although there may be a cost for some individual situations (mouse traps where the share price dipped down briefly and then subsequently recovered again).