Replies to post #35724 on A.I.M. Users Bulletin Board (AIMUSERS)

[Conrad]

Forgot to add the Note(1) in the above:

(1)
In Regular AIM at a +/- 11.8% price cycling may not do this effectively due to the Residual Buy Effect. . .waiting extra long for the recovery price change to be large enough to trigger a reasonable Sell amount. . .The Vortex AIM does not have this feature. . .It advices a proportional Trade Size in proportion to the Price Change from the last trade. . .Vortex is a Ratio Trading System (Y= aX). . . .Standard AIM is more like an Offset Trading System (Y = AX - b).

The difference between the two systems is actually more complex that . . .AIM is also extra Asymmetric due to the PC-Update is not done for rising prices. . .this makes AIM and Vortex very difficult to compare on a one-to-one basis for any example.

All that can be done practically on this is to Compare the End Results for the Portfolio's in which the starting conditions are identical so that the First Buy and the First Sell would be identical under identical Hold Zones . . .From that point onwards the results will start to diverse. . .either Vortex or AIM would perform better after a long trading period. . . .this is solely determined by how the price changes develop.

I might add here that in Vortrx AIM the Yeild as a Fraction is now defined quite differently as in Standard AIM:

In AIM this is done as Y-fraction = (Profit)/( Initial Cash +Initial Equity)

In Vortex this is:
a) Y-fraction ROTAC = (Profit)/(Time Averaged Cash Investments)
b) Y-fraction ROTAI = (Profit)/(Time Averaged Equity Aquition Costs)

In these two formulas I have included cost factors for the the equity aquisitions, interest earnings and dividend in an appropritae manner.

The Yield Figure is therefore a veru realistic figure for the Capital At Tisch

[Conrad]

Hi Ocroft:

"Move in for the kill at the bottom."

This issue has been on this Forum for as long as I can remember, although I can not remember now just how long that is

What you are suggesting is essentially a sort of fundamental technique that is used in combination with TA. . .and with any other investment concept:

Identify the Bottom and jump in. . .Identify the Top and jump out

This is nothing else than the foundation of investing that any kid can undestand:

Buy Low & Sell High

There is nothing new here!

Saying that you would Not buy at 41 but at 46 (+12,2%) could just as well be

Not buy at 41 but at 44 (+7,3%) or even Not buy at 41 but at 48 (+17%)

Any Recovery price could work out fine or it could work out wrong(you said as much yourself).

So, you Buy at 46 and invest a Lump Sum =10000(you may have been waiting a year for this), then the price drops to 42. . .What do you do then? Do you have an algorithm for what to do at 42 ???

As has been pointed out this method can result in a disaster of repeatedly missing the bottom and buying high and repeatedly missing the top and selling low. . .(extreme example of course).

In the year you have been waiting to identify the Bottom @ a 12,2% Recovery the stock price may have cycled +/- 11,8% 10 times while on the average the price has dropped from 100 to 41 and then you would have been waiting for a year doing nothing An Vortex AIMing(1) approach with a Hold zone of +/- 10% may have executed 10 profitable Sells and reaped a good profit while you have been waiting 1 year for a 12,2% Recover after a price of 41 and have done nothing yet. An AIMer may have dropped in value a bit on the first 10000 but may have invested more money at low process and his number of shares would be increased a great amount on the cycle profits(Volatility Creaming).

On a down trend one can even increase the Total PV and then when the Recovery starts the large number of share acquisitions will accrue profits rapidly, and if the up trend is just as volatile then there is more profit reaping even when one is in a selling spree.

The point being here is that any one of us can propose a scenario that would work best for a particular Investment Scheme. . . and if the price follows the proposed scenario then it would beat most other system(if not all of them) that were not “geared up” for that specific scenario

You method is well known already. . . .So I am curious what you are actually presenting in relation to AIMing??? We already know about all many techniques that can be used for delaying the investments to lower prices.

So, is that the only thing you are saying. . . that it is better . . .generally. . . to invests only at the Bottom. . . and I presume. . . that it is better to sell only at the Top?


(1)
In Regular AIM at a +/- 11.8% price cycling may not do this effectively due to the Residual Buy Effect. . .waiting extra long for the recovery price change to be large enough to trigger a reasonable Sell amount. . .The Vortex AIM does not have this feature. . .It advices a proportional Trade Size in proportion to the Price Change from the last trade. . .Vortex is a Ratio Trading System (Y= aX). . . .Standard AIM is more like an Offset Trading System (Y = AX - b).

The difference between the two systems is actually more complex that . . .AIM is also extra Asymmetric due to the PC-Update is not done for rising prices. . .this makes AIM and Vortex very difficult to compare on a one-to-one basis for any example.

All that can be done practically on this is to Compare the End Results for the Portfolio's in which the starting conditions are identical so that the First Buy and the First Sell would be identical under identical Hold Zones . . .From that point onwards the results will start to diverse. . .either Vortex or AIM would perform better after a long trading period. . . .this is solely determined by how the price changes develop.

I might add here that in Vortex AIM the Yield as a Fraction is now defined quite differently as in Standard AIM:

In AIM this is done as Yield-fraction = (Profit)/( Initial Cash +Initial Equity)

In Vortex this is:
a) Yield-fraction ROTAC = (Profit)/(Time Averaged Cash Investments)

b) Yield-fraction ROTAI = (Profit)/(Time Averaged Equity Acquisition Costs)

In these two formulas I have included cost factors for the equity acquisitions, interest earnings and dividend in an appropriate manner.

The Yield Figure is therefore a very realistic figure for the Capital @ Risk

[Toofuzzy]

Hi Conrad

While I see some issues with Ocroft's method they are not as bad as you suggest.

1) He identifies a stock he wants

2) He pretends he buys it and pretends he buys more on each AIM directed buy

3) When it moves up in to the hold zone (after a directed buy) or the actual first sell (I forget which) he then institutes an AIM directed buy

So it would be like a stock dropping from 100 to 50 in one month and doing the buy instead of having a lot of little buys along the way.

Of course you might miss some AIM sells along the way, but I think if you would have gotten a sell that would have been a buy point for him.

4) If a stock reverses and goes back down, you wait again to purchase more till it goes up.

5) You wait to sell anything till it goes down from a high instead of selling along the way.

Like I said, it might not be perfect, and I may not like it, but it is not as bad as you think.

Toofuzzy

[ocroft]

Hi Conrad
"The point being here is that any one of us can propose a scenario that would work best for a particular Investment Scheme. . . and if the price follows the proposed scenario then it would beat most other system(if not all of them) that were not “geared up” for that specific scenario."

I don't believe that you can propose a scenario where your Vortex AIM will out perform the way that I apply the BTB AIM method!

"You method is well known already. . . .So I am curious what you are actually presenting in relation to AIMing??? We already know about all many techniques that can be used for delaying the investments to lower prices."

Application. Knowing about and not applying an application that works is two different things.
Look at the Clive example scenario which I didn't create.
Vortex , not applying an application that works, has a cash reserve of $5,746.
AIM Uptrend, applying an application that works, has a cash reserve of $10,000.
Again, I didn't propose this scenario, but I have already out performed Vortex by knowing and then applying an application that works.
Now let's look at a real live example. 1 Step mentioned GE.
I don't know how to introduce charts like Clive.
However, I notice you have access to this AIM dofusdaddy link.
http://dofusdaddy.com/aim_internet.htm
Using the yahoo monthly closing prices for GE from March 3, 2008 to March 2, 2009, If you put those prices in the AIM dofusdaddy spreadsheet, how would the Vortex AIM method have fared?
You have a starting capital of $20,000. Set your own buy/sell parameters. Here are the closing prices of GE.

37.01 -32.70 - 30.70 - 26.69 - 28.29 - 28.10 -25.50
19.51 -17.17 - 16.20 - 12.13 - 8.51 -10.11.
Please propose a scenario that would work best for Vortex, I am curious to see how I would fare.


ocroft