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Strategies & Market Trends : A.I.M Users Group Bulletin Board
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To: labestul who wrote (10402)3/8/2000 5:03:00 PM
From: Bernie Goldberg  Read Replies (1) of 18928
 
Hi,
In addition to Tom's answer I would like to add my interpretation of AIM by the book. Mr. Lichello says to ignore any trade unde $500. When I set up Newport I set the minimu transaction to $500 and the minimum # of shares to 5% of the number of shares that I own.
I set up PCA with a minimum of $500 and ran a simulation based on the conditions you set up.
I got results different from yours;
Trade 1 -----150 shares at $4.00
Trade 2------148 shares at $3.875
Trade 3------166 shares at $3.50
Trade 4------195 shares at $3.25
Trade 5------237 shares at $3.00
Trade 6------189 shares at $2.875
Trade 7------183 shares at $2.75
Trade 8------196 shares at $2.5
At this point there would be only $261 left which would not have satisfied the conditions for another purchase. What I would do in this case would be to purchase an extra 104 shares on the last purchase bringing the total to 300 shares.
What I come up with is 1,568 shares purchased in 8 transactions after the initial purchase. In addition the final 20% of them were purchased at a 25% lower price than in your example. At this point there would naturally be no profit since there has never been an uptick in the price. However, following Mr. L's advice you would have accumulated about 800 shares more to give you profits on the way up when it does occur. I think you may be taking the two different methods of investing and somehow intermingling them.
Bernie
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