Replies to post #9196 on A.I.M. Users Bulletin Board (AIMUSERS)

[lifo]

Hi Conrad and Jibes,

Conrad mentioned the following regarding DDCA PPTM.

Your latest discussion on the progressiveness of the factors could well lead to a more effective use of cash and increase the real yield. The ideal form of this progressiveness will undoubtedly totally depend on the actual price behavior of the stock. For this reason I dare to state that this ideal form cannot be a single predetermined mathematical formula.

I tend to agree with that last sentence.

I did some manual number crunching using DDCA PPTM with Mr. Lichello's price model of 10,8,5,4,5,8,10. What I found was that DDCA PPTM ran out of cash before the stock reached $4.

By the way, the original DDCA might have done much better in this regard, because it seems to be based on a periodic 'check up', whereas DDCA PPTM is intended to be used with GTC orders, so that one would not miss buy / sell opportunities.

After manually going through one complete cycle of Mr. Lichello's model of 10,8,5,4,5,8,10, I noticed that DDCA PPTM underperformed standard AIM. That does not mean that DDCA PPTM is not a good idea. It was just an interesting exercise.

Anyway, here is one of the issues that needs to be addressed with DDCA PPTM.

When a stock drops from $10 to $4, that represents a 60% decline. In the first cycle of AIM BTB, when the stock bottomed at $4, the first sell occurred when the stock reached $8, which is double. Maybe, that's a long wait in real life. However, to begin selling shares at that low level (60% decline) when the stock goes up just 15% from the last buy price, as DDCA PPTM suggests, is not good business. To my mind, the percent of price change in DDCA PPTM needs to be variable, depending on the reality of the situation.

Regards,
Jack