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To: Thean who wrote (1351)	7/28/1998 9:22:00 AM
From: Big Dog	Respond to of 14427

Yea Thean, I marked a few trees hither and yon. Your trades are great! That is what I was doing before I got a job. Not having all the time to do the trading I got sucked into a hold pattern...you know the result. The AIM method will sell portions as the price goes higher...it will not by more. (Unless there are dips.) I have mixed feelings about it, that is why we are just giving it a look and seeing what happens. I think anything that takes emotion out of trading is helpful. This system may keep you from making a killing, but it may also keep you from being killed. big jump.to

To: Thean who wrote (1351)	7/28/1998 10:37:00 AM
From: JZGalt	Read Replies (1) \| Respond to of 14427

Thean wrote: <<<However, if you were to have implemented the AIM system three months ago, or even any time this year, what you would have accomplished is to average down and ended up catching the falling knife at every point of tumble.>>> If we had implemented the AIM system 3 months ago, it would have been with a considerably higher cash level. I was using the level set between 0 and 100% in accordance with securitytrader.com site reading of the percentage of companies within the group trading with positive P&F patterns. The higher the number of P&F patterns, the higher the cash level would have been. 3 months ago that pattern was screaming that the group was too high and the cash level would probably have been around 75%. The 25% cash level was set since the group appeared to be in a basing pattern, yet had not yet bottomed. In any case, you are correct that the losses if we had started the AIM portfolio would have been terrible up to this point, but the buy and hold portfolio would have been significantly worse simply because the large cash position would have cushioned the fall. Now as for averaging down and catching a falling knife. The AIM system is set up to selectively buy and sell according to a fixed discipline. If we had started the portfolio at the very peak, you are correct, the AIM portfolio would have just bought and bought and bought all the way down. If we had started in March however, the AIM system would have actually raised cash into the rally. If we had started in January, it would have bought right thru March, then sold, then would now be in a buying mode again. One of the things that I did when I looked at the Buy SAFE and Sell SAFE points is to tune them to fit the volatility patterns exhibited by the individual stocks. I'm not trying to say this system is perfect or even wise at this point in time. I just wanted to clarify some of the finer points in how the model was initially set up. This system is more subtle than it would appear on the surface. FWIW, I did a study of the 9 of the 10 possible stocks in the Offshore Drilling Bits universe and found these results for a $10k initial investment, 25% initial Cash level and $1000 minimum trade: FGII - 7/22/97 - 7/8/98 AIM - $22,252 vs. B&H - $22,646 EVI - 2/03/97 - 7/8/98 AIM - $15,077 vs. B&H - $12,016 VRC - 2/03/97 - 7/8/98 AIM - $17,853 vs. B&H - $14,178 RIG - 2/03/97 - 7/8/98 AIM - $15,668 vs. B&H - $14,333 RON - 2/03/97 - 7/8/98 AIM - $15,725 vs. B&H - $13,594 CXIPY- 1/29/97 - 7/8/98 AIM - $18,910 vs. B&H - $20,307 MIND - 2/03/97 - 7/8/98 AIM - $17,081 vs. B&H - $11,284 CDG - 4/03/97 - 7/8/98 AIM - $15,133 vs. B&H - $10,625 DO - 2/03/97 - 7/8/98 AIM - $13,617 vs. B&H - $11,404 Now this might not prove much. Anyone who bought an held from 2/3/97 thru early July is either very patient, or not paying attention. As you can see the buy and hold strategy worked better for CXIPY and FGII, but in the more volatile stocks like CDG and MIND, the differences in strategies are significant. In any case this is an academic exercise, what counts is the real money you make or lose. ---- Dave