Replies to post #25793 on A.I.M. Users Bulletin Board (AIMUSERS)

[lostcowboy]

Hi AIMster, at one time I had a spreadsheet that tested this. I used the 10,8,5,4,5,8 data, and decided that it was not worth bringing up. Basically if PCIR (Portfolio Control Incrementation Rate) is set to zero, then AIM should behave as a (constant dollar plan). As you increase PCIR you increase the likelihood of getting a second buy, even though the stock price did not change. You could look at PCIR as a dampening factor, the higher percent PCIR is, the less the dampening is, at (100% of the buy), you end up with none stop buying.
I don't think Mr. Lichello did much more testing, after getting it to work, remember he was doing it all by long hand.

Take care,
Clifford

[Neil Scott]

Hi Aimster,

That is indeed the problem we have with tweeking systems to optimise the returns on a particular stock, it is all hindsight tweeking and that is why it is not particularly useful.

The only tweeking that I do to AIM these days, other than the LD AIM is the increase of SAFE on the buy side on successive buys.
I tend to do this on the smaller companies rather than the larger more stable companies.

One thing that may be useful when considering successive buys at lower prices is to look at the price/book ratio.
If the ratio is getting lower you are at least safer as the price approaches the book value. If the company gets liquidated at least the assets, if sold should provide some return rather than nothing.
It was also one of the parameters that Ben Graham considered the most important.

Regards

Neil

[slow lane]

re: PC+buy increment,

I've done a little work with altering this parameter. When it is set higher it creates a more volatile portfolio. Buys are larger and sooner, sells are larger, and it accumulates more shares over time in an example like AVCI. It is also more apt to run out of $$.

Here's a quick & cheap run:: starting at 5.90 on your chart (jan 05), $10k, 50-50 cash, 4% interest, 10% safes, $500 min trans, monthly upd8 ... price at end 6.80 (jan 08);

PCIR @ 50%:
- $2002 max loss
+ $6384 end
848sh start
995sh end
28% min cash

@60%:
- $2126 max loss
+ $7213 end
1170sh end
20% min cash

@70%:
- $-2171 max loss
+ $7809 end
1342sh end
15% min cash

@30%:
- $1972 max loss
+ 5814 end
813sh end
32% min cash

In back tests running the PCIR higher seemed to work well with indexes and funds long term, increasing overall performance. But with individual stocks the greater volatility might create frequent cash-busts?

oh, and ... "Go You Packers". OT-(Was that Seattle game not The Best Lambeau Field game in recent memory? Favre, Holmgren, Comeback, Snow? doesn't get better.)
-sl