Replies to post #3111 on A.I.M. Users Bulletin Board (AIMUSERS)

[2mc]

Hi Tom,

Thanks for the graphs and the instruction on how to do columns. I appreciate it.

As you'll come to know about me, I hate tweaking. I did not test for any other parameters.

What I have appreciated about you and your 'tweaks' is the fact that you came to your ideas through reasoning, not by optimization or investigation.

I came up with 5% logically. Since the investment is split into 2 parts of 50% percent each and since Safe is only calculated at 10% of half the portfolio value, I realized it would in reality (at the beginning) be 5% of the total portfolio value.

I'm really not interested in tweaking. I want a sound idea based on sound principles. I *am* interested in as emotionless and automatic investing as I can get. I'll leave the nerve-racking, never-ending tweaking to others. (Which is not to say that improvements from sound reasoning are bad.)

Thanks again, Tom.

Matt

[ergo sum]

Tom

Got the book today. Seems like it's the third addition.

My cost value in AIM is now $7.50.

This better work.<g>

Ergo Sum

[aptus]

Regarding Matt's modification...

I found it very interesting and wanted to see how it would perform in the real world. So I modified the AI 2.0 software to use Matt's modification and ran a few tests. When used with DOW stocks over a 5 year period there was very little difference in results.

However when used with some tech stocks over a 5 year period there was a significant difference.

The stocks are:
MSFT, IBM, AMZN, YHOO, EBAY, AOL, MOT, HWP, ORCL, SUNW and AAPL (the most volatile stocks beat the lichello settings significantly, the least volatile had approximately the same returns).

I've included a summary below (I can post the full reports if there's interest).

Standard Lichello settings:
AUTOMATIC INVESTOR ANALYSIS RESULTS

Total Portfolio Value: $181,331.70
Total Investment: $110,000.00
Simple Return: 64.85%

======= CONFIGURATION =======
Buy Resistance: 10%
Sell Resistance: 10%
Initial Cash Reserve: 50%
Margin is Disabled
Minimum Purchase: $0.00
Minimum % per Purchase: 5%
Minimum Sale: $0.00
Minimum % per Sale: 5%
Control Increment: 50%
Maximum Cash: 100%
Vealie: 50%
Volumizer is Disabled


Matt's Modification settings:
AUTOMATIC INVESTOR ANALYSIS RESULTS

Total Portfolio Value: $241,419.10
Total Investment: $110,000.00
Simple Return: 119.47%

======= CONFIGURATION =======
Buy Resistance: 5%
Sell Resistance: 5%
Initial Cash Reserve: 50%
Margin is Disabled
Minimum Purchase: $0.00
Minimum % per Purchase: 5%
Minimum Sale: $0.00
Minimum % per Sale: 5%
Control Increment: 50%
Maximum Cash: 100%
Vealie: 50%
Volumizer is Disabled

regards,
Mark

http://www.automaticinvestor.com