Replies to post #5243 on A.I.M. Users Bulletin Board (AIMUSERS)

[Qarel]

Hi TooFuzzy, initially we were talking about stocks that were close to or making new highs, so the simple formula would apply. I think your formula may result in too little cash when you are near the bottom of the cycle. In your example, with a Price of 30 and a Low of 20, 24% cash is very optimistic. Perhaps simply (Price-Low)/Price would be best as a rule of thumb(!) for cash allocation, or the equivalent Low/Price for stock allocation.

Regards,

Karel