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Strategies & Market Trends : A.I.M Users Group Bulletin Board

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To: OldAIMGuy who wrote (15498)4/3/2001 6:38:53 PM
From: Todd Reichardt   of 18929
 
Hi Tom,

I was thinking about the feedback system in AIM and then my mind wandered over to mechanical feedback systems in the power industry. With the mechanical feedback systems, I seem to remember that bad things tended to happen if you hit the limits of the system. Basically the feedback system loses control when the limits are hit. Seems to apply to AIM as well. If you hit the no cash left limit, you can't buy anymore if it goes lower. I guess that's one reason why the limits on AIM are set fairly wide.

I think this line of thought might help with AIM modifications for a UOPIX type fund. Since the additional leverage will increase the likelihood of hitting the limits, modifications might need to be added to reduce that likelihood. One way would be to move the limits further out. There are probably several ways to do this. What do you think?

Todd

Todd
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