Replies to post #1546 on A.I.M. Users Bulletin Board (AIMUSERS)

[OldAIMGuy]

Hi Conrad, Now that I've read the entire tome, I can answer more directly!

Yes, The feedback to PC is a very important and potentially adjustable feature. Back in the days of the Raging Bull, many people were increasing the feedback to force their AIM accounts to get back to fully invested. AIM did "buy on dips" but not as heavily as they wanted.

When the Bull died and the Bear took his place, suddenly PC additions of 100% or some other factor turned out to be way too heavy for the conditions. Sort of like a full set of sails plus a spinnaker during a gail!

Like many things, it's hard to find "one size that fits all" in a comfortable fashion. I agree that Mr. Lichello gives all of us as franchise AIMers considerable freedom to fiddle as much as we want. The fiddling makes it less "automatic" but seems to satisfy some need by many in the AIM community.
:-)

Best regards, Tom

[Rico_]

Conrad,

My intentions with that old post/email was showing what the effects on next buy-price are of adding 0% of buy-order to PC, or adding 50% or 100% of the buy order to PC. I tried to point out that incrementing PC with 0% would allow you to buy ever cheaper shares as the price drops, but your portfolio remains limited around the PC value. There's not much growth in that. If you do this with Mr Lichellos constant 10-4-10 price cycle the only thing that grows is your cash account.

Incrementing with 100% of the buy would cause the next buy to occur almost immediately. Almost no price-drop required. Buying at price values close to one another is not why AIM is partially invested, is it?

I'm not saying that Mr. Lichello was right with his 50% increment of PC after buys, but I think it's a good middleway if you want to avoid the above mentioned drawbacks. But that's my newby opinion. I have yet to reach the buy side of things, fortunately. :)

Maybe it wasn't the most clearest way of explaining. Using combined bargraphs of the different values would probably have been more helpfull. (that is how I visualised them) But I'm no expert on using graphics programs to make them. And I was probably to soon with writting anyway because I think I haven't thought everything through enough. It's not complete And to be honest, I've done thought simulations mostly, so I may be way off on some points.

I've read that free chapter 6 (http://home.wanadoo.nl/christiaan.kruidenier/vortex/method-1.html) on your Vortex page and you got me quite interested in buying that book of yours. You can expect an order comming in soon. It is still available, right? I've noticed too that the 50% increment to PC can cause immediate follow-up buys before the price drops. I think Mr. Lichello was a genious with coming up with AIM, but every invention can be improved, customized and trimmed down to the basics. I'm not really sure of a need for SAFE values either. A substantial minimal order has the same effect IMO. (and mine is relatively big, 10% of PC) Although, SAFE does seem to allow you to hang out longer until you go cash-dry. But I noticed I missed out on a small buy-sell cycle because of safe. AIM's been sitting still on my Postbank Internet MF since Dec 5th based on By-The-Book rules. I reallize I ought to have patience with AIM, but I didn't feed it a volatile fund for nothing.

As for Mr. Lichello himself, you have appearantly not noticed he died allready. (that's why I pictured him in his grave) As you can see at the top of Tom's website frontpage, he died Febuary 1st 2001.

Lottery tickets and casinos? The casino at the end of my street (at the beech in Zandvoort) is down for rebuilding. I consider lottery tickets and cardgame/roulete gambles a waste of money anyway. You can be pretty sure you won't recieve any money at the end of one game unless you are really good and playing as bank. Where as in the stockmarket, at least you get something in return, the shares themselves. And no less cash-able in the next round. They are only going to be worthless if a company goes (near) broke. And those odds don't measure up (in a positive sense) with casinos and/or lotery tickets, do they? That's my view anyway.