I noticed your discussions about the problems with parameter tweeking. Notably that for each stock, and for each change in the behaviour of that stock, the parameters would not be optimised. This we recognized, but some of us who liked tweeking believe that tweeking can be automated, and was therefore justified as a mechanism(if not a practical one if done manually). You suggested that your idea does not need tweeking at all.
Interestingly, I just received a 2mcspread sheet from Don Carlson that was made up by Tom Veale. So I tried to figure out what was done different than in the Standard AIM. It appears that the 2mc feature simply replaces the two SAFES of the Lichello AIM with a single SAFE based on a percentage the Portfolio Value. After some research into your posts I discovered that you had invented this from the reasoning that cash was no less important than stock. I realised immediately that you were 100% right. I had too argued frequently(a long time ago for my Investment Club)that this was so! But with the development of my Vortex AIM I had not implemented this idea in my program. In effect my cash was always depleted into liquid stocks or into other liquid investments.
But in message # 1778(AIM Board)I wrote"
In the Test AIms I used various options. I wanted to make the minimum Trade amount(did not use SAFES) a percentage of the Portfolio Value but the program refused that(circular Reference) so instead I used a percentage of the equity value.
Intuitively I sensed at this time that using the PV value would give a more logical buy/sell criterion but I did not relate it to my earlier conviction that cash should be more than simply a reserve. In fact I had argued(in other discussions) that cash should never lie dormant but should be invested at all times. This would provide me with the opportunity to shift between (minimally)two investments: 1) An easily liquefiable portfolio, and 2) An opportunistic portfolio with which I could take advantage of high volatility. The fact that these two portfolios could contain various equities is less important here. In my Investment Club I used this concept, for example by lending out the cash at a 15% interest rate(and I used some bank credit as well when we needed cash in a hurry for opportunities, to increase the capital leveraging).
When I read your explanation of the simple 2mc concept I was impressed at your basic reasoning, as it condenses the equal importance to cash and stocks, as I had practiced it for years without being able to quantify it in my AIM structure.
I believe your 2mc method illustrates the important aspects of AIM-Investing in a very simple and effective way:
A) Volatility Capturing creating Leverage B) Effective Capital Management
As I understand it now this re-balancing (or shuffling as I call it)the capital between liquidity and stock is the essence of effective AIM investing.
I appreciate your AIM-contributions and all the AIM-contributions of others on the Aim Board(as well as on the X_DEX Board). It has finally allowed me to understand the full power of AIM-Investing, not to forget that Jibes, with his Re-Bal-AIM also has had very similar ideas.
Thanks to all of you for making me see a lot more light, and light with different colours! The reason I can see as far as I do now is because I have been allowed to stand on the head and shoulders of people that are a lot smarter than I am.
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