Hello RtS,
Interesting idea for a thread, Full Disclosure, but the format is not really suited for displaying AIM trades in any meaningful way to non-AIMers. However, I'm happy to present an example from my semi-equips, which I believe are ideal for this system.
First, a few words about Automatic Investment Management, invented by the late Mr. Lichello. AIM is a position averaging and risk management system that uses CASH as an integral part of any equity investment. AIM generates BUY and SELL orders, based on the size of movement from the last trade, building up cash reserves on upward movements and deploying cash in down markets. It forces us to buy low, sell high, and helps manage capital at risk.
Ideal stocks for AIM fluctuate widely around a steady, long-term appreciation. But it will work well even with no price appreciation, as long as there is enough volatility. AMAT comes to mind as an excellent AIM stock. However, I will use ASYT as an example below. I've had good results with ASYS and KLIC and have high hopes for my AXTI and EMKR positions.
AIM will, however, underperfom in that rare stock that goes more or less straight up, because it needs downturns to buy cheap shares and run-ups to sell off more expensive ones. We then like to repeat the process :).
The following is a real example of trades since Sept with ASYT, using the AIM system. Each trade changes the level for the next buy or sell order:
Approaches differ but many use 2/3 equity, 1/3 cash at the outset:
START: 1000 ASYT @ 13.80, cash reserve of $6900
WEEK 1: buy 300 ASYT @9.80, cash falls to $3960
WEEK 2: no trade 1300 @10.01, cash at $3960
WEEK 3: no trade 1300 @11.19, cash at $3960
WEEK 9: no trade 1300 @12.38, cash rises to $3960
WEEK 10: sell 200 @16.75, cash at $7310
WEEK 11: no trade 1100 @ 16.40, cash at $7310
WEEK 12: no trade 1100 @ 14.58, cash at $7310
WEEK 13: no trade 1100 @ 15.79, cash at $7310
WEEK 14: no trade 1100 @ 16.97, cash at $7310
WEEK 15: sell 100 @ 17.00, cash rises to $9101
WEEK 16: no trade 1100 @ 17.30, cash at $9101
WEEK 21: no trade 1000 @ 18.20, cash at $9101
WEEK 22: no trade 1000 @ 15.84, cash at $9101
WEEK 23: sell 100 @ 19.09, cash rises to $10919
Current position: equity $17191 + cash $10919 = $28100
You can see that AIM has recorded gain of almost $8000, but the increase of capital at risk is only about half that. Also, note that by creating the cash reserve at the start, we were able to buy those cheap shares on the big dip to 9.80. We then sold off shares periodically on the run-up. AIM's next targets for this account are BUY at 14.00 and SELL at 21.50.
Users set their own parameters at the outset for BUYs and SELLs (most used 10 pct either way) and for the size of the minimum transaction (I use around 10 pct of equity position, a bit less in my larger holdings).
Tom Veale is the AIM guru at SI and elsewhere. See his thread at:
Subject 12596
I'm no veteran user but am happy to answer questions or refer you to more experienced hands for the answers.
Best rgds,
Jonathan |
