Replies to post #6440 on StockCharts Support Forum

[blasher]

The book at the bottom of this page:
http://www.blashing.com/_products_/
is the originator of AIM investing.
Very good method for Long-Term Investors.

[Toofuzzy]

Hi Peter

You need to buy a relatively cheap book (under $10) called

How to make $1,000,000 automatically

What I described in my post is the RESULT not the process.

The site www.aim-users.com describes the PROCESS adequately. Just stay away from all the supposed "improvements"

1) Because the market has moved up so much I would consider it to have at least average risk. I would therefore invest only 50% in stocks.

2) Stocks can go to zero so are riskier than funds so I would only buy funds (VANGUARD or Exchange Traded Funds)

3) I would start each security investment with at LEAST $10,000 (otherwise the trades get too small) so I would invest $10,000 in cash and $10,000 in a stock fund

4) Ideally you invest in more than one fund for diversification and each one would start with $10,000 in stock and $10,000 cash. You can diversify over time by starting a new fund every few years as you save more of your income from working.

5) You do the calculations below ONCE / MONTH and therefore trade AT MOST once / month.

The process:

1) STARTING STOCK AMOUNT = PC (portfolio control)

2) SAFE = 10% of STOCK

3) Minimum Order Size = 5%

so PC = $10,000
SAFE = $10,000

if the stock value (SV) is higher than PC then

(( SV- PC ) - 10% SV ) - 5% SV = SELL ORDER SIZE

if (SV-PC )- SAFE (10% of SV) is not greater than 5% of SV than there is no SELL

If there is a SELL PC STAYS THE SAME

.........................

If the stock goes down then the PC value is greater than the STOCK VALUE (SV)

((PC - SV) - 10% SV) - 5% SV = BUY ORDER SIZE

again if( PC -SV) -SAFE is not greater than 5% of SV than there is no BUY

If there is a BUY then "PC IS INCREASED BY 1/2 OF THE STOCK VALUE BOUGHT"

.......................................

Notice that in both cases, whichever is larger (PC or SV), is put in front in the formula.

............................................................

Trading this way will have you sell SOME as a fund rises and buy SOME as it goes down. AND DO IT AUTOMATICALLY without emotion or having to decide which way you THINK a fund will go.

Not always
Toofuzzy