Replies to post #35767 on A.I.M. Users Bulletin Board (AIMUSERS)

[OldAIMGuy]

Ocroft, Re: AIM refinements.............

Your arguements are sound relative to the conditions as they prevailed. Going back to the '90s it was nearly the same type of condition but in an upward trend. It became difficult for AIM users to remain invested to the degree they desired during a bull market. Continuous consecutive sells pushed cash levels to way up if one didn't attempt to place a governor on AIM's engine.

Hindsight might say that all that cash wasn't such a bad thing, but that's not the point. The point is that we don't know what the trend is until it unfolds and then we don't know its longevity until it changes. The basic AIM engine works well enough without too much manipulation. What we add to it to personalize it is a matter of comfort and effort.

Technically, AIM has reasonable efficiency as can be seen when plotting its activity against moving averages, crossover moving averages, Williams %R, Relative Strength and many other traditional measures. It is usually doing the right thing at the right time when viewing the long term and not the day-to-day changes. It manages this technical efficiency without the need to do the comparisons or calculations.

AIM can be likened to a distillery. A mash of technical and fundamental information is put in the still. Turn on the heat and AIM passes good advice to the user from the condensing coil in a very pure form.

Years ago I had a "competition" with a friend where we owned and "managed" the same company stock for several years. This was "real time" with "real money." He, did the "technical trade" route and worked it well and profitably. I ran the same investment as an AIM holding and after over three years we compared notes. I had traded essentially the same number of trades as he had. Mine were the trend-following AIM trades both up and down. His were, for the most part, well timed trades and there was some emotional influence in there, too. If he found himself whipsawed, he sometimes over-rode his own rules to get back in or out of the stock if the trade turned against him.

We both made about the same amount of money on a gross level. We both paid commissions that were about the same. (I think my comm. costs were a bit higher if I remember right) However, his taxable base for his profits was higher and essentially all of his capital gains were short term. So, AIM won for a taxable account hands down. It also won in that I played a lot more golf than he did since his methods required a lot more supervision! We talked a lot about combining the ideas. Our long time friend, Mr. Carlson, did a massive amount of work on just such a system as someone else mentioned. I think most people here enjoy seeing the variations and most treat the board here as a buffet. They sample lots of things and fill their plate with what seems to them to be the most appealing. We're all winners thereby.

Improving AIM efficiency isn't a bad thing. Fiddling with any system can potentially decrease costs and improve total return if done in a very well studied fashion. There always lingers in the shadows what is referred to as "opportunity risk." It is a haunting idea that we could be doing just a bit better if we only............

:-)

Best regards,

[lifo]

Hi ocroft, your method seems interesting from the perspective of profiting from upcycles.

Below is the Buy / Sell advice from a backtest done a few minutes ago in AI (Automatic Investor), using GSC.TO (GSS on one of the US exchanges).

Standard A.I.M. parameters were used:
Buy Safe = 10
Sell Safe = 10
Minimum Trade = 5

You'll notice that there is a large number of consecutive Buys, and then finally there is a Sell on Sep. 5, 2012.

If I understand correctly, with your method, one would not have bought shares until a price is reached where Buy Advice = $0, i.e. Portfolio Control = Stock Value. Backtesting in AI doesn't show when that occurs. Are you using a spreadsheet with automatic data feed that shows when Buy Advice = $0?

Also, in the example below, between Sep. 8, 2010 and July 23, 2012, could there have been some false signals where Buy Advice = $0, indicating that it is time to buy, but then the downtrend continued?

Thanks,
Jack

08-Sep-10 START shares @ $5.1400 own 1,361 valued @ $6,995.54 Cash: $7,004.46 Portfolio Value: $14,000.00
18-Nov-10 BUY 93 shares @ $4.4000 own 1,454 valued @ $6,397.60 Cash: $6,585.27 Portfolio Value: $12,982.87
25-Nov-10 BUY 83 shares @ $4.2800 own 1,537 valued @ $6,578.36 Cash: $6,220.04 Portfolio Value: $12,798.40
11-Jan-11 BUY 79 shares @ $4.1700 own 1,616 valued @ $6,738.72 Cash: $5,880.62 Portfolio Value: $12,619.34
18-Jan-11 BUY 171 shares @ $3.8700 own 1,787 valued @ $6,915.69 Cash: $5,208.86 Portfolio Value: $12,124.55
25-Jan-11 BUY 234 shares @ $3.5800 own 2,021 valued @ $7,235.18 Cash: $4,361.15 Portfolio Value: $11,596.33
02-Mar-11 BUY 578 shares @ $2.9600 own 2,599 valued @ $7,693.04 Cash: $2,640.28 Portfolio Value: $10,333.32
09-Mar-11 BUY 328 shares @ $2.8700 own 2,927 valued @ $8,400.49 Cash: $1,688.93 Portfolio Value: $10,089.42
20-Apr-11 BUY 155 shares @ $2.8500 own 3,082 valued @ $8,783.70 Cash: $1,237.19 Portfolio Value: $10,020.89
05-May-11 BUY 254 shares @ $2.7000 own 3,336 valued @ $9,007.20 Cash: $541.40 Portfolio Value: $9,548.60
12-May-11 BUY 247 shares @ $2.6000 own 3,583 valued @ $9,315.80 Cash: -$110.79 Portfolio Value: $9,205.01
10-Jun-11 BUY 472 shares @ $2.3800 own 4,055 valued @ $9,650.90 Cash: -$1,244.14 Portfolio Value: $8,406.76
17-Jun-11 BUY 569 shares @ $2.2000 own 4,624 valued @ $10,172.80 Cash: -$2,505.93 Portfolio Value: $7,666.87
04-Jul-11 BUY 326 shares @ $2.1600 own 4,950 valued @ $10,692.00 Cash: -$3,220.08 Portfolio Value: $7,471.92
28-Sep-11 BUY 1,209 shares @ $1.8100 own 6,159 valued @ $11,147.79 Cash: -$5,418.36 Portfolio Value: $5,729.43
15-Dec-11 BUY 689 shares @ $1.7600 own 6,848 valued @ $12,052.48 Cash: -$6,640.99 Portfolio Value: $5,411.49
22-Dec-11 BUY 746 shares @ $1.6600 own 7,594 valued @ $12,606.04 Cash: -$7,889.34 Portfolio Value: $4,716.70
14-Mar-12 BUY 567 shares @ $1.6100 own 8,161 valued @ $13,139.21 Cash: -$8,812.20 Portfolio Value: $4,327.01
19-Apr-12 BUY 902 shares @ $1.5000 own 9,063 valued @ $13,594.50 Cash: -$10,175.19 Portfolio Value: $3,419.31
03-May-12 BUY 1,259 shares @ $1.3800 own 10,322 valued @ $14,244.36 Cash: -$11,922.60 Portfolio Value: $2,321.76
25-May-12 BUY 3,659 shares @ $1.0900 own 13,981 valued @ $15,239.29 Cash: -$15,920.90 Portfolio Value: -$681.61
15-Jun-12 BUY 1,310 shares @ $1.1000 own 15,291 valued @ $16,820.10 Cash: -$17,371.89 Portfolio Value: -$551.79
23-Jul-12 BUY 845 shares @ $1.0800 own 16,136 valued @ $17,426.88 Cash: -$18,294.48 Portfolio Value: -$867.60
05-Sep-12 SELL 1,412 shares @ $1.4900 own 14,724 valued @ $21,938.76 Cash: -$16,200.59 Portfolio Value: $5,738.17
06-Sep-12 LAST shares @ $1.4800 own 14,724 valued @ $21,791.52 Cash: -$16,200.59 Portfolio Value: $5,590.93