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The Grabber

02/19/15 2:22 PM

#39090 RE: SFSecurity #39087

Hi Allen. This isn't exactly what I said yesterday that got wiped out, but...

For portfolio positions it seems one wants a higher beta (volatility) position to be able to catch the trend moves over a shorter time period, but not so volatile that there is a high risk of losing your shirt on the way down. This is where the LD-AIM model seems to help as you have less at risk in real dollar terms. Orcroft's delayed buy also helps. Now trying to figure out how to model the two together is the problem.


Modelling them together should not be a problem.

LD-AIM works exactly like Classic AIM.
All the Calcs are the same.
Settings and initial PC are the same.

The virtual shares portion of LD-AIM simply serve as a placeholder to represent the initial core position that you do not really buy and put at risk.
The number of Virtual shares stays constant throughout the life of the program.

Over time, if you do not sell out of actual shares, the accumulation of same will cause the impact of those virtual shares to diminish. But they still need to be a part of your total.
This has been true for my oil stock (AXAS):
- I started the program in October of 2005 with 2.16:1 Virtual:Actual.
- Virtual shares represented 68% of my total.
- So not a lot of $ at risk relative to my program's internals (PC).
- After 9+ years, the program is still running (over 70 subsequent trades).
- As of today I own more than 11 times the Actual shares from my starting point of Actual shares.
- My Virtual:Actual ratio has totally flipped over to 0.19:1. They now only represent 16% of my total.