InvestorsHub Logo

AIMster

02/16/11 11:57 AM

#33802 RE: Conrad #33797

So the entire question amounts to how well one can set the parameters of the investment machine so it will be optimum for the prices that are to develop. . .the skill of the investor is the key in all this . . .it is all about fine tuning the Investor as well as his Machine.

I think this is starting to segue into an idea I've touched upon before, i.e., applying some form of AI or neural networking to AIM such that as it gets fed the daily price movement, it then "learns" or sees patterns, making AIM calls based on what it's learned. In other words a self-optimizing system. Which I realize is all well and good to talk about in theory, how such a system would be developed is another matter.

Best,

AIMster

ls7550

02/16/11 4:41 PM

#33807 RE: Conrad #33797

At any one instant in time prices will tend to be set, as best the collective market can estimate, with 50-50 probability of a gain or loss.

A good example is US long dated treasury's. Some wouldn't touch them with a barge pole when interest rates are so low, but in being priced to around 4% current yield levels there's an equal chance of the yields declining to 2% - and the current price doubling as there is the yield rising to 8% and the price halving.

Over longer time periods, perhaps 5 or even 10 years out, you might predict that yields would be more likely to rise from current levels, but equally a Japanese investor might have thought exactly the same back in 1990 for their market and here they are 20+ years out still with low (or lower) yields.

AIM has a natural tendency to steer the weightings over time to appropriate levels. Neither the best, nor the worse. But in averaging down the middle overall it does OK and if you look back at the actual exposure amounts it did adjust to over time, likely it will be much the same as the VWave i.e. auto-aligns in an appropriate manner whilst cost averaging down the average cost of stock over time.

Few investors consistently correctly predict the future. Those that do achieve above average gains over longer time frames tend to either be lucky or have an element of competitive edge. Warren Buffett's choice of stock picks for example are often widely followed, but those followers fail to recognise his competitive edge of having access to twice the amount of his actual investment funds available at zero cost (insurance float where premiums are paid in and the funds sit there until claims are paid out). Under such conditions, achieving a 20% yearly average compared to everyone else's 10% is a given.

Toofuzzy

02/16/11 9:55 PM

#33809 RE: Conrad #33797

Hi Conrad

I use AIM so that I do not have to TRY to predict the future ..... I can just react to what happens, and have both enough stock to sell and cash to buy with.

If I depend on what I predict I will be wrong.

ZEN investing

Toofuzzy