Replies to post #29947 on A.I.M. Users Bulletin Board (AIMUSERS)

[lostcowboy]

Hi Tofuzzy, one day I'll have to get that fourth edition.

When the original book was written the settings were 10% buy and hold SAFE and 5% MIN order size.

Reducing BUY and SELL SAFE to 5% but increased the MIN order size to 10%.

Off hand, to me anyway, he kept the +-15% hold range, but allows AIM to take a 10% bit instead of a 5% bit. This would give you more action near the holding range, but would burn cash faster when the market fell.

Wonder what would happen if you made the (BUY and SELL SAFE) and the MINIMUM order size, adjustable dependent on how much the market had moved from your starting point?

[lrp42]

Hi Tf,

I apologize if the following post sounds argumentative or contradictory. I am writing this post with a lot of respect for your extensive AIM knowledge, which is much greater than mine.

When you described the period of 1995 to 2000 I assume that you are speaking of Mr. Lichello's development of the AIM-HI method, which he describes in the 4th edition, which was published in 2001.

Now then, I guess I am now confused about the SAFE settings for an AIM-HI program. In the past, I have interpreted the SAFE settings for setting up an AIM-HI program differently. The reason is because on page 262, 4th edition, where he describes how to set up an AIM-HI program and the spreadsheet (which he calls a chart) for tracking an AIM-HI program, he states:

“For the sake of simplicity, the Safe column has also been expunged. Safe is nothing more than 10 percent of your Stock Value anyway, and to get 10 percent of any figure, all you need do is drop the last digit: 10 percent of $2,000 is $200. Even I can do that in my mind. With a $5 calculator in my hand, I have no problem entering these figures as I go along.”

“Its possible that some of you may prefer, for whatever reason, the old AIM chart. You have my blessing to continue it”.

On page 263 of the 4th edition, he goes on to state:

“The cure took another year to develop, and its simply this: Make your minimum purchase or sale 10 percent of your Stock Value. Another way to look at it is this: The amount you insert into your AIM-HI Action column must be at least equal to your Safe figure. Thus, if your Stock Value is $2,000, your Safe figure would be $200. And the minimum figure in your Action column must be at least that much: $200. Otherwise, just insert a Zero in the Action column.”

He goes on to talk about how this now works for both a large investor as well as a small investor, because the program now works on percentages instead of dollar amounts for the minimum transactions.

Since I became acquainted with the original AIM and the new AIM-HI program it was my belief that AIM-HI increased the holding zone from 30% to 40%, thereby allowing an investor to have more in Stock Value and less in their Cash Account, because the increase in the holding zone would naturally cut down on the number of transactions……it would make the program more like Buy-and-Hold.

Personally I feel that if Mr. Lichello had lived through the two vicious bear markets of this decade he never would have invented AIM-HI.

Best regards,

Ray