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Strategies & Market Trends : A.I.M Users Group Bulletin Board
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To: aptus who wrote (12055)7/14/2000 9:52:31 AM
From: Bernie Goldberg  Read Replies (1) of 18928
 
Hi,
I respectfully beg to differ with your statement:If you look at IBM over the past 3 years, its share price hit $43.5037 on June 23, 1997. Before that its price was even lower. If you go back to 1990,the price was about $10.00.
I've checked two different charting sources on the web and this is what I have found.
IBM had a 2 for 1 stock split on May 25 1997.
IBM had a 2 for 1 stock split on May 27 1999.
If you look at a 10 year chart for IBM you will indeed see a price of 28 1/4 in December '90 and 10 1/2 in September '93, but what you are not considering is that those prices have been split adjusted. In order to accurately calculate those numbers they must be multiplied by 4 when looking at the chart today.
Bob said that IBM had gone from 160 to 44 in his simulation. The drop from December '90 to Sep '93 was 174 to 42. I haven't run the simulation yet but I intend to.
this demonstrates one of the flaws that I have observed in running historical simulations in both Automatic Investor and PCA. While they are very fast they tend to misrepresent the actual event of a stock split. Newport has a much slower process of doing a historical simulation but it allows one to see what happens in a stock split. If you are going to say that in September of '93 the price of IBM was 10 1/2 you must also indicate the stockholder had four times as many shares.
As far as shorting goes, I am aware that one can make money in a down market while shorting. Since I am a firm advocate of AIM by the book I prefer to follow Mr. Lichello's admonition not to use it with AIM.
I think your program is very nice except for the problems that I have noted above.
Bernie
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