The idea of "Variable" or "Changeable" Safe continues to rumble around for me. The concept of continuing to purchase - until oblivion - just is a very painful one to accept. However, the entire idea of AIM is to "Buy the Dips" and that cannot be avoided.
If the equity initially selected Goes to Zero, the investment is lost. Avoiding additional buys on the way down will not prevent a severe loss - but will not make it quite as severe. Further, being too restrictive will cause the AIM program to miss out on those buys near the sustained lows - during those long flat bottoms that lead to a turn around in price and recovery. It appears that it is not the first Buy of the declining stock the really drains and kills the Cash balance. It is consecutive Buy number 3, 4, 5, 6 that eventually suck assets into the unrecoverable black hole.
I have not been able to alter the AIM spreadsheet to accept the Safe Numbers generated by divergance from a series of moving averages. As I continue to think about it, and about the powerful effect of the Safe component of the AIM formula, I wonder if anyone else has previously attempted to use Variable Safe in building a Spreadsheet to test.
I want to capture as much of the "normal" bounces as possible. So suppose I use a Safe Value of 0 with a $1,000 minimum trade size. After a trade in a particular direction, suppose a Buy, I adjust the Buy Safe to 5%, leaving the Sell Safe at 0. Another Buy - adjust the Buy Safe to 10%, without any adjustment to the Sell - still 0. Continuing to build some very large hurdles for additional Buys.
A recent post included the idea that AIM was not interested in price trend. And that AIM gave no indication of price trend. I guess there are so many difinitions of what constitutes a price trend that it is hard to argue about this. However, everyone should agree that the only reason AIM gives a BUY Advice is because the price has Declined. It is must be Lower for there to be a BUY. A series of Buys, without an interviening Sell, certainly would indicate a down trend - at least so far as the AIM parameters themselves define the ranges of reversal of trend.
I recall several threads on SI about avoiding declines and deep divers. Has an Increasing Safe been investigated to see if this approach could be employed to increase returns or avoid catastrophic loss?
Regards
Charley
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