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

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To: OldAIMGuy who wrote (11246)	5/25/2000 2:01:00 PM
From: rgammon	Read Replies (1) of 18929

Inverse Correlation Tom and all, One of our common dreams is to find a pair of stocks or mutual funds that have a 'perfect' inverse correlation. That is, one rises and the other falls. The sells of the rising one generate the cash to make the buys on the other. Well, I see a problem. The feedback loop in AIM is raising the bar with each purchase. Assuming that you started with a non-trivial cash reserve, i.e. 33%-50%, won't this feedback loop eventually run you dry of cash? I have done a bit of simulation, and this appears to he the result. Can anyone confirm/deny this statement?

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