You are certainly welcome to use the "vealie" concept in your software. I won't mind if you acknowledge from whence it came, however! I have to maintain bragging rights!!
But of course Tom. We are in this together and we always give credit where credit is due. The "Vealie©" concept is one of the most innovative additions to the original theory, and fits perfect with the strategy of maintaining a reasonable Cash Reserve using guidance from the IW. The more flexibility the better.
As I mentioned before, I am intrigued with the idea of somehow using a stop-loss in conjunction with the Vealie©, so that if perhaps your decision to hold when AIM would normally have locked-in some profits proved to be the wrong decision, it would not detract from the overall long-term return.
Say you have a cash reserve that matches the IW and a stock you feel is going to continue up. You decide to pull a Vealie© and add 1/2 the suggested MO to the PC. So far so good. Then say the market experiences distress and your stock suddenly drops 20%. I am looking for a way to protect the profits so you don't have to look back and say "I should have listened to AIM and sold a little rather that letting my subjectivity get in the way."
The Cash Reserve, as we are finding out, is not set in stone. AIM users are finding ways to personalize the way they manage their Cash Reserve, and it is not always necessary to actually have the cash on hand for each separate stock, as long as you are willing to commit the funds when necessary.
I have seen numerous examples of stocks that actually generate their own cash reserve by skyrocketing from the outset. Also, with our system, the user can decide for himself if he wants to continue to buy a stock once the cash reserve is depleted. The PCA will not issue a buy unless there is sufficient cash available at the time to fund it. To get around this, you simply increase the Beginning Cash, and the system will continue to advise buys.
The formulas in our system have become quite complicated, and we will have to do quite a bit of "testing" before we incorporate the Vealie© into it. We also want to be sure that newcomers to AIM do not sell themselves short by fooling with the PC and interjecting the additional subjectivity into the system.
AIM is truly a fascinating tool, and is quite flexible in the way it can be applied by the investor.
More to follow.
Stay warm,
Bill
"Vealie©" is a copyright of Veale's International Equity Warehouse |
