Hi Larry,
The risk envelope in AIM can be managed several ways. You can use the Vealie, adjust the resistances, or change the minimum market order levels.
The current version of PCA won't support portfolio control adjustments (though the upcoming version will), so you can't pull a traditional Vealie. If you feel that your cash reserve is fully funded and your getting a sell, you can raise the minimum amount to trade to a level that makes it a hold. I recently used this technique on the flip side. I decided to place a gtc order to buy 150 at 9.5 rather than 100 @ 10.5. I would have got filled had I placed the latter.(There's the emotions creeping in again).
A user was telling me about an interesting simulation he ran on MSFT for the past 10 years. He said that AIM performed like a cash machine, taking profits 11 times and building a huge cash reserve, while the original exposure remained fairly constant. Very interesting. He summed it up by saying "If you were willing to risk $5K on the stock then, why should you be willing to risk more now?".
Aside from be a bazillionaire, I can't think of any reason :)
Really, with the market at unprecedented (staggering?)levels of valuation, having a healthy cash reserve could prove wise if we get a repeat of last fall. Remember that guys? I think this year could bring the same type of action. Maybe a big blow-off rally first?
Does anyone know the average correlation percentage of stocks with that of the overall market?
Tom, great advice. this stuff makes more sense to me everyday!
Regards,
D1
ps. 3 buys and 1 sell, and I'm up @1/8 on CHRZ...time to rethink the envelope myself |
