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Toofuzzy

03/03/10 9:27 AM

#628 RE: 2040forsight #627

Hi 2040

Sycrovest is used when you don't have the lump sum to start an AIM account. When it grows big enough you can switch it to AIM.

My own personal feeling is that if you don't have enough to start an AIM account then you should be creating an emergency saving account in a Money Market fund first.

Toofuzzy

AIMster

03/03/10 11:31 AM

#629 RE: 2040forsight #627

I bought at borders book store the aim book. a month later I bought the synchrovestbook at amazon book. Is there any way the two can be unified.Is there software that does this.

I'm not sure the reason for your emphasis on unifying two algorithms that work pretty well independently of each other. There is no "holy grail," though they come, year after year, system after system, trying to find it.

Any investing system, really, is an attempt to solve the problem of "how do I make money in the stock market?" As you've noticed, there are as many systems as there are people trying to invest, and methinks quite a few who make more of their money by selling newsletters and the like telling you how to invest than they do by actually investing themselves!

With that caveat in place, we can then start to look at options (not investing in stock options, a whole different kettle of fish altogether!).

Elements of the problem are simple enough:

1) we start with x$ in cash to invest

2) we want to get a return on our investment, in theory through riding the efficient frontiers of growth, dividend appreciation and volatility capture.

3) we want to also be mindful of that other more traditional expression of the efficient frontier, i.e., to get the maximum return for the least risk.

4) unless we want to get into the more esoteric realms of selling short, if we're going to take long positions we ideally want to buy low, and sell high.

5) keeping a portion in cash, rather than going all-in in one shot allows us to adjust the position(s) for optimum performance, instead of nervously waiting for the now falling stock to find a bottom, much less move up to paths of glorious return far above our initial entry point.

We can, of course, continue to expand that list, and it may be a good idea to do so if for no other reason as to give us some reminders of what the basic goals are as we look to either directly implement or adapt trading systems from others to a use suitable for our own circumstances.

The advantage we have is that we can draw on the wisdom (or fallacy) of many of the investors who've gone before us, thinking out systems and seeing how close their ideas come to ours and whether we can take these and run with them as they are, or adapt them as a starting point.

Obviously your requirements of being a periodic saver make effective use of an ongoing cash stream a main concern. You don't want to put more in than necessary, only to see the price crater next week - if you'd only waited!

To differentiate:

AIM acts as a closed-loop system, primarily acting on volatility capture to best buy-and-hold. Thus, it needs rather volatile stocks to drive its engine. Synchrovest is a cash-delaying mechanism, allowing you to grow a holding, but optimized to invest more when the price is lower, less when the price is higher.

Another option outside of these is either a constant value plan as Praveen Puri's written of, where one is always taking on new positions, or my own adaptation of same toward a constant ratio plan where one makes periodic investments in the same holdings, usually by adding additional cash to the smallest of the positions and keeping the lot at an even ratio toward each other. In other words, if I had ten holdings I'd keep each at 10% if one wanted to equally distribute the risk. This works better for funds or ETF's as it keeps you from "betting the farm" on a single stock.

I could continue, but you probably get the idea. If you've any more points on this, do feel free to ask!

Best,

AIMster

lostcowboy

03/04/10 2:04 AM

#630 RE: 2040forsight #627

Hi 2040forsight, first well done on buying both books. What I like about Lichello's books is, when ever I read them it gets my inventive juices flowing. About combining AIM and Synchrovest, as far as I know there is no software that does that. If you are femailar with EXCEL or openoffice Calc, you can try to build a spreadsheet. There is a free AIM spreadsheet here.
http://www.aim-users.com/aimware.htm