Hi Keith,
You wrote:If you can AIM with Calls & Puts, is there a possible method for Shorts?
I intend to be objective, but I want to improve if at all possible (AIM).
Since I already had “The Book” out, I decided to look up the answer to your question. At the same time I came up with Mr. Lichello’s feelings about margin which refer to a short dialogue I had with RFH not too long ago.
I am going to quote the “Book” page 199.
Q. I’m sure you realize that the closer a person is to retirement age, the more volatile a portfolio he requires to accomplish his goal with AIM. I’m a stockbroker nearing that age and have been working on an idea using your formula. It entails selling the shock short and repurchasing it at a lower price, but I haven’t been successful in establishing a PORTFOLIO CONTROL to manage the program. Have you ever attempted the procedure, or do you have any idea of how it can be accomplished?
A.No, I haven’t attempted it, nor do I have any idea of how it could be accomplished. Why don't’you get together with the doctor who wants to use AIM for buying on margin? The two fo you could have a grand old time. My point is AIM is what it is. I built it to serve one purpose only, and that is safety---perservation of capital---plus high performance in a single program, something that had never been done before to this extent. What you and the doctor are trying to do is insert your own diodes, transistors, and varistors into my Money Machine circuitry, without realizing that every action has a reaction, and that what might work over here is very likely to cause a short over there. Instead of trying to force my Money Machine to cough up trading stamps, why not start from scratch and design a machine specifically for coughing up trading stamps? I think it would be easier.
Just because you’re approaching retirement age, don’t ask AIM to make you rich in a hurry. As a broker, you know better than that, and I’m sure you would chastise a client who told you the same thing. (This emphasis is mine)AIM cannot be concerned with our age, our infirmities, our emotional needs, our pressing financial problems, our moods. It has sealed order to perform a specific job, and it does that job in its own good time. Stocks are even more brutal than AIM. They don’t have any job to do except perhaps torture you.
After the last thirteen months we all know how good they are at doing that.
Bernie |
