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

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To: Bernie Goldberg who wrote (7064)	3/13/1999 4:21:00 PM
From: JZGalt	Read Replies (2) of 18928

You're right Bernie. I misapplied some of the concepts and bylaws of AIM with my first time paper trading in the oil service sector in July 1998 after reading Mr L's book once and playing with the Excel spreadsheet. I don't think I've ever tried to hide this and the wonderful thing about SI is you can read all the posts anyone has written going back quite a ways. Just a few points. 1. As I remember you started paper trading with a 25% cash reserve at a time when the IW was recommending 40 to 50%. I also seem to recall that you were trading weekly or even more often than that. Yes I did and I do recall a discussion of trading frequency and cash reserve levels at that time. I thought the sector had bottomed and a cash level lower than the 33% in the book was warranted. exchange2000.com Bruce and Tom were kind enough to warn me about depleting my cash reserves too fast. I was wrong and mistakes were made. exchange2000.com I don't think I implied anywhere in the previous post that you should trade as often as possible or utilize low cash reserves in my post. I did imply that initial cash reserve level was an important factor (amongst others) in maximizing a theoretical return. In this post I talked about the error of my ways. exchange2000.com but we have had this discussion before. exchange2000.com 2. I don't think I implied that the oil service sector was a "bad investment". The only time I used the words "bad investment" in the previous post were with regards to a hypothetical investment in a busted internet high flyer that went far below the point at which the cash reserves were depleted. I never implied that the oil service sector or the oil industry was a bad investment and I never implied that AIM didn't work with oil. Perhaps the irony of this comment was lost on you. After my experience paper trading the oil service sector, the ability to deplete the cash reserves at the exact bottom is harder to do than you might think. ;-) I thought I was rather straightforward that is was my application of the principles of AIM and depleting my cash reserves too early that got me into trouble there. My warning that AIM "grinds to a screeching halt" once your cash reserves are depleted was reasonable was not meant to imply AIM would not eventually work assuming the stock recovers. 2. If you read the Q&A that starts on page 175 of the book you will see where this is explained by Mr. L. I'm a reasonably bright fellow and I didn't understand the implication of this warning when I read the book the first time. Experience drove that point home as the ODB AIM portfolio hit a huge downdraft. Mea Culpa. I think you can see from the COMS example in my previous post I do understand it better now. Would a warning label on my posts help? ---- Dave [AIM paper trader since July 1998, AIM user since February 1999]

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