Replies to post #38539 on A.I.M. Users Bulletin Board (AIMUSERS)

[BowlerBob]

Allen,

The answer to your "puzzlement" is contained in the Quoted block,

and another, equal amount, was set aside for future purchases, for a total of $6,666 toward the stock position

Initial purchase of approximately $3,333 and reserve Cash for future purchases of approximately $3,333. The total available for stock purchases is $6,666.

Initial Position $3,333
Reserve for additions $3,333
Cash Equivalents $13,334
Total $20,000


I wasn't trying to address your questions, nor those of anyone else, just expressing a "caution" about AIMing an Inverse or Leveraged ETF.


I tend to agree with you about the "prospects" for the next year, or so, but it is just a "guess", nothing more. I think that the Central Banks of the world are going to "tag-team" QE for the next little while, and that should keep the market rising -- but it is just my opinion and is worth every cent you are paying for it. I simply do not know!

I also agree with you about the "problem" of so many issues being near their 52 week highs, which makes it hard to buy in. That doesn't mean they won't go higher, we don't know! As TooFuzzy might say, "That is why we use AIM!" My choice of the Gold Miners ETF was because it seems to be exhibiting a "negative" correlation with the general market, but after realizing the impact I illustrated in my post, I would most likely want to AIM the Basic ETF, GDX, if I was starting today.


I still think that an earlier post I had written to you could be of help in your decision process -- find a stock or ETF that you don't mind "living with", go back two to four years in time, and start AIMing it to see what AIM would advise you to have in terms of shares and cash currently.

Regards,

Bob

[karw]

Hi SF,

how many weeks (months?) to put into a No Down AIM as a starting point to wait to get the next buy signal.

Looking at the trend of your AIM-equity you could make the following decisions:

- trend down, use a ND-AIM
- trend horizontal, use a LD-AIM
- trend up, use a classic BTB-AIM

How to size the amount of stock and cash in for example a SP500 AIM.
Go back to 2007, start with a virtual 50-50 AIM and execute all transactions. Then you know what amount of stock and cash you are supposed to have now.

Then look at the stock, how much virtual, how much real? You can look at the probability of it going down. How to determine the probability. You could say PE=15 will mean classical AIM and PE=25 will mean ND-AIM and everything in between will be scaled proportionally. Of course you can do this in many other ways.

Remember Buffett says 90% SP500 10% ST-bonds.

Hope this helps a bit

Best,K