The problem that I see is that even if you could tell what the exact price that EVERY stock would be next week (or whatever), how many people would you let know. When would that knowlege begin to affect the price. At what point does it become a self furfilling prophecy?
If everyone knows that there is a January effect then people will start buying in December and then it becomes a December effect!
AIM will ALWAYS work because it REACTS! It does not predict. The worst that could happen is that the volitility of the stock market would go down because everyone (or enough) people are using AIM.
AIM says in ADVANCE: I will sell if it goes up or I will buy if it goes down but it does not predict which will happen or when.
In the short term in a rising market buy and hold is better than AIM and in a falling market selling everything you have is better than AIM. But can anyone with any certainty tell me what will happen tomorrow let alone between now and the end of the year?
If you can please let me know! This market is killing me!I feel like that guy in the monopoly game who is pulling his pockets out of his pants!
Toofuzzy
Take the road less traveled. It will make all the difference.
Like the medieval chemists who thought that because they understood the magic of compounds they could find the elements to reconstitute Gold. Today we try to predict future stock price moves because we have the computers to crunch the numbers.I wonder if we will look as foolish as them in a few hunderd years.
I hope so because it's that quest for the unreachable the desire to understand which has taken our species out of our caves and into the future.
"You cannot teach a man anything you can only help him find it within himself" Galileo
2) Although I think I know a thing or 2 about mathematics, maybe 3, the task completely eluded me and escaped between my fingers: I could neither formulate the input and the various parameters(Like Aptus noted), nor the output into any understandable or analysable structure which would lend itself to systematic analysis. I gave up for all I saw a chaos.
and
I do not think that such a formal in-depth attach will ever get off the ground, nor do I think that it will be worth the trouble.
I wouldn't mind being proved wrong on this.
I agree that the analysis has to promise some benefit to balance the effort. I think, with some good tools like Mathematica and a few little programs, one can generate a better picture of what's going on. I'm not necessarily proposing a closed-form, analytic solution - Monte Carlo immediately comes to mind as a likely technique. Certainly the problem needs to be posed in terms of summation rather than integration.
Also, the inputs are always going to be controversial. You could start off with backtesting stock data, then backtesting sectors, then maybe a means-reverting log-normal variant simulated signal. You don't need elegance - just a better intuitive understanding for what's going on and how the parts fit together.
A couple of things bug me, and set me off on this line of thought. First, http://www.jjjinvesting.com/chap12.htm the "Why Aim Works" chapter on Jeff's page, basically says to me not that the system works, but that it fails under some conditions. Here you have to put $35K at risk to rescue the stock... seems like a good chance to cut and run, or to reset the system as Tom suggests for deep divers.
Secondly, Myst's X_DEV http://stockwerld.com/xdev.htm claims to be an AIM derivative but doesn't give much insight on how it's different from AIM. Understandable, since Myst wants to sell the program, but intriguing nonetheless.
So, some kind of framework for testing and reduction of the problem could be useful, IMO.
Hope this isn't too much to digest in a single post...
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