Toofuzzy,
You have made a claim as a generality without supporting the this is generally happening!
<If you have a security that stays relatively flat or just on a mild projectory and optimize for that, if the security then crashes, you have not allowed for enough cash>
When people are investing. . . with or without AIMing. . . equities do not generally "Crash" routinely. . .It is just the other way around. . .equity crashes are rare. No matter what you do when an equity crashes suddenly and deeply then there is something wrong and in most case the best thing is to Bail Out.
The case in which an equity is FLAT you better not invest in it at all. Let talk reality for AIMing
1 The equity must be volatile
2 The equity must be relatively safe so the likelihood for a crash is very low.
Lets take the perfect example for an AIM Equity such as a Saw Tooth or Sine Wave profile:
3 Such an theoretical equity optimises identically irregardless you start at the top or at the bottom. The optimised point are obvious at the top and the bottom of the Trading Range:
a. At the bottom 100% Equity
b. At the top 100% Reserve
You do not even need any optimisation. .it is a trivial case.
If the stock crashes at the top. . . @ 100 In the Money. . .to a point deeply below the bottom only a fool would invest any further and will wait what happens. If he stock drops to the normal bottom of the Trading Range there is generally no reason to assume it will crash so you go in 100% In the Equity. . .so far so good. . .that is what you want.
Should at that point the equity drop a little lower then there is no panic. .usually it will rebound. . .If you have chosen am equity that is regarded SAFE by any standard then you wait for the rebound OR better yet, buy extra equity from other resources that you have. . .Only a fool will put ALL his savings in an investment unless he had magical power to see that he will not lose it. . .people with magical power would be fools anyway if they us a system like AIM :-) . . .Buying extra equity when the Reserve stand at 0 is an excellent investment method. With Vortex I call it Vortex TurboVest!
Anyway if an equity crashes deeply then something is very wrong and one should bail out. I there is only a drop beyond the normal bottom then waiting is advised. . A rebound usually occurs
There is nothing to worry about. If the stock has crashed and remains a penny stock or becomes worthless de money is lost anyway. The case you refer to would be a rarity and is therefore not relevant.
It is better, in such a case to run 10 years with an Optimised AIM than to play safe and use non-performing parameters. If one is scared for a 1 in a hundred cases that an Equity does not recover from a DEEP DIP then he should his money in a bank account and do gardening all day long.
In case a real stock does not at all follow the price behaviour that was used for the optimisation then the parameters should be changes anyway in a manner that is best for the occasion.
This type of AIM investing requires spending time on it .
The type of AIMing you advocate . . .with all sorts of conservative settings and looking at the market one per month. . . is fine too, for people that have no time to spend on their AIMing not to studying how to get an optimised yield.
Playing 100% Safe is a legitimate Life Style. . I am not arguing against that. . .It is a choice. . I grant you that.
Using one’s skill to Play the Stock Market with an optimised AIM, and to endeavour to maximize investment yield that way, is another choice :-)
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