Bruce, you make some very good points.

I would like to also suggest some general guidelines for consideration.  For
anyone concerned about a "stock pick" going to zero, and never coming back,
there are two things to consider:

1.  First and foremost, diversification of holdings among different stocks
solves this problem.  Thereby if any one stock were to go to zero, the entire
portfolio is not lost.

2.  Consider to diversify some funds into an ETF (exchange traded fund) which
should not ever go to zero as each is a basket of similar stocks which comprise
the respective fund.

3.  Prior monthly low.  If a stock breaches a prior monthly low, you will want
to find out why / what has changed?  And if AIM us used to sell out of some
shares as the price moves up, as it dictates, consider reviewing fundamentals if
the stock breaks below the prior month low.  This is not a problem if the plan
is to hold it through thick and thin (as part of the overall investment
strategy), but if not, this is a key area to consider rotation out of it if not
already.

For more info on ETF here is a good reference:

http://www.proshares.com

good investing,

Thomas Hutcherson
Austin, TX


--- In positioncostaveraging@yahoogroups.com, "Bruce Bowman" <bruce@...> wrote:
>
> Some thoughts in no partiucular order...
>
> 1- PCA (AIM) works best on a ranging market. You have to adjust
> sensitivity for next buy/sell to certain characteristics of the stocks
> usual movement. For instance if you set parameters to trigger buys/sells
> based on 20% excursions on a stock that only moves 5%, you'll never see
> a trade; similarly if you assume 5% excursions and the stock typically
> moves 25%, AIM will have you chasing the stock with sequential trades
> which will raise your trading costs. The latter example is probably
> preferred if you feel comfortable with 2- below.
>
> 2- Performance can be improved somewhat (but there's no garantees) if
> you time your buys & sells using TA. AIM will tell how much when you
> finally execute the order.
>
> 3- AIM doesn't use an averaging process. The algorithm is quite specific
> and will suggest you to buy or sell only when price has moved the right
> amount from the last sell or buy. It will also adjust how much you buy
> or sell as a function of the price change. An averaging scheme will have
> you buy independent of price movement. Lichello's book includes such a
> scheme which has a little more intelligence built into it for those with
> limited initial resources whi are just starting out.
>
> 4- Fundamentals need to be right for whatever you trade. That's the only
> way to minimize the likelihood of something collapsing and not
> recovering. Note that I said minimize losses... there are no garantees.
> If the fundamentals change, it's best to ride a different horse.
>
> 5- There are no garantees. You can fiddle with AIM parameters till the
> cows come home and the market will still do whatever it wants.
>
> 6- Back testing only tells you what worked over the backtest period and
> may not have anything to do with what you see going forward.
>
> 7- As a guide, choosing stocks with good fundamentals which also have
> very high or very low Beta will usually provide the best candidates as
> they exhibit more price movement than the S&P 500. Also, if you can find
> the data, a positive Alpha will improve results as a positive Alpha
> indicates a security which is generally increasing in price.
>
> Just a few thoughts for using AIM.
>
> Bruce
> Santa Fe, NM
>
> ----- Original Message -----
> From: "rvlv" <rvlv@...>
> To: <positioncostaveraging@yahoogroups.com>
> Sent: Friday, June 05, 2009 4:36 AM
> Subject: [Position Cost Averaging] Weak zones of pca performance
>
>
> > hi
> >
> > PCA is configured based on certain assumptions.
> >
> > 1 It assumes that the scrip you have chosen falls from 10 to 4 and
> > springs up again over a time period.
> > 2.you use a averaging process as price goes down.
> >
> > How do I protect my capital when the stock I chose falls from 10 to 4
> > and never gets up again?
> > What kind of precautions I need to observe while choosing my stocks?
> >
> > pca does not choose scrips.
> > I have to choose them.
> > If I had chosen a scrip that has no fitting characteristics to pca
> > then?
> >
> > Hope I can get some clear answers to these questions.
> > cheers
> > rvlv
> >
> >
> >
> > ------------------------------------
> >
> > Yahoo! Groups Links
> >
> >
> >
> >
>

Once you sell a stock, then you are done with it. PCA is not meant to be a
program that tracks past trades, it's for implementing automatic investment
management (AIM). Once you Delete a stock it is not going to track it anymore.

--- In positioncostaveraging@yahoogroups.com, "nrmoley" <norm3r@...> wrote:
>
> After I sell a stock, get a profit and then delete it how do I keep the amount
of profit made in my PCA program
>

After I sell a stock, get a profit and then delete it how do I keep the amount
of profit made in my PCA program

I am a retired senior citizen and new to PCA and new to stock trading and can
use all the help and advice I can get. If anybody can help I would appreciate
it.

How do I handle dividends in my PCA ?

Some thoughts in no partiucular order...

1- PCA (AIM) works best on a ranging market. You have to adjust
sensitivity for next buy/sell to certain characteristics of the stocks
usual movement. For instance if you set parameters to trigger buys/sells
based on 20% excursions on a stock that only moves 5%, you'll never see
a trade; similarly if you assume 5% excursions and the stock typically
moves 25%, AIM will have you chasing the stock with sequential trades
which will raise your trading costs. The latter example is probably
preferred if you feel comfortable with 2- below.

2- Performance can be improved somewhat (but there's no garantees) if
you time your buys & sells using TA. AIM will tell how much when you
finally execute the order.

3- AIM doesn't use an averaging process. The algorithm is quite specific
and will suggest you to buy or sell only when price has moved the right
amount from the last sell or buy. It will also adjust how much you buy
or sell as a function of the price change. An averaging scheme will have
you buy independent of price movement. Lichello's book includes such a
scheme which has a little more intelligence built into it for those with
limited initial resources whi are just starting out.

4- Fundamentals need to be right for whatever you trade. That's the only
way to minimize the likelihood of something collapsing and not
recovering. Note that I said minimize losses... there are no garantees.
If the fundamentals change, it's best to ride a different horse.

5- There are no garantees. You can fiddle with AIM parameters till the
cows come home and the market will still do whatever it wants.

6- Back testing only tells you what worked over the backtest period and
may not have anything to do with what you see going forward.

7- As a guide, choosing stocks with good fundamentals which also have
very high or very low Beta will usually provide the best candidates as
they exhibit more price movement than the S&P 500. Also, if you can find
the data, a positive Alpha will improve results as a positive Alpha
indicates a security which is generally increasing in price.

Just a few thoughts for using AIM.

Bruce
Santa Fe, NM

----- Original Message -----
From: "rvlv" <rvlv@...>
To: <positioncostaveraging@yahoogroups.com>
Sent: Friday, June 05, 2009 4:36 AM
Subject: [Position Cost Averaging] Weak zones of pca performance


> hi
>
> PCA is configured based on certain assumptions.
>
> 1 It assumes that the scrip you have chosen falls from 10 to 4 and
> springs up again over a time period.
> 2.you use a averaging process as price goes down.
>
> How do I protect my capital when the stock I chose falls from 10 to 4
> and never gets up again?
> What kind of precautions I need to observe while choosing my stocks?
>
> pca does not choose scrips.
> I have to choose them.
> If I had chosen a scrip that has no fitting characteristics to pca
> then?
>
> Hope I can get some clear answers to these questions.
> cheers
> rvlv
>
>
>
> ------------------------------------
>
> Yahoo! Groups Links
>
>
>
>

hi

PCA is configured based on certain assumptions.

1 It assumes that the scrip you have chosen falls from 10 to 4 and springs up
again over a time period.
2.you use a averaging process as price goes down.

How do I protect my capital when the stock I chose falls from 10 to 4 and never
gets up again?
What kind of precautions I need to observe while choosing my stocks?

pca does not choose scrips.
I have to choose them.
If I had chosen a scrip that has no fitting characteristics to pca then?

Hope I can get some clear answers to these questions.
cheers
rvlv

Norm,
     I will tell you what I like, but please understand it is strictly a
personal opinion, and should not be taken as advice for anyone. People
need to make up their own mind and be responsible to themselves for
their decisions.
After many years of using mutual funds and individual stocks as well as
closed end mutual funds I pretty much have gotten down to using sector
etf's.
As the events have shown this year many unexpected surprises can make
even good companies have issues which are not good for retirement $$$.
I like using indexes, and sectors because they may go down in price
which makes for a buying oportunity but I never heard of an index or
sector going out of business, or being sold to another company after
losing 80% of its value!
I use an Excel spreadsheet (Bill Riedman's http://www.aim-
users.com/aimware.htm) and manually put in the price for each unit.
Bill's spreadsheet is wonderfully simple to use, and if you know a
little about spreadsheets you can do easy testing using Yahoo prices.
You can tune the sensitivity of Mr. Lichellos "Money Machine" for the
particular investment you want to make. This is more work then clicking
a button but the practice of doing it with different investments makes
for valuable experience in using the system and learning little
tricks.
There is a lot of great information on that site (http://www.aim-
users.com/index.html) that allows you to see what can be done with the
system.
The ETF's are better then mutual funds in my opinion because you can
control the trades much closer by using limit orders and intra-day
possibilities as trading oportunities.
You can use the spreadsheet to predict your next buy or sell points and
put in your limit order ahead of time so there is no need to be
watching the market every minute unless you want to. At the end of the
day you can see what orders have been filled, adjust the spreadsheet
and input your next trades. I like Ameritrade, I make my order at least
as large so each comission is equal to 1% or less.
The mutual funds will work also but you are limited to end of the day
and have no control of the next days NAV trade. The shift in the next
days NAV price trade is somewhat self adjusting and will not make or
break you but the overall I find the ETF's superior in performance.
I am leaving a lot of details out but you can read up on the info on
the site, and with practice trades using historical prices from Yahoo
Finance (all free) you can learn the ropes fairly quickly.
The sector funds can be a wild ride that along with Mr Lichello's
system will put a smile on your face. The trick is set up the
sensitivity so you use the cash reserve, but try not to run out!!
Good Luck! :)

                 Carlos

--- In positioncostaveraging@yahoogroups.com, "nrmoley" <norm3r@...>
wrote:
>
> I am a retired senior citizen and new to the PCA program and I would
> like to know where/how to acquire good stocks to trade with the
> software. I am a complete novice in the stock trading industry
>

I am a retired senior citizen and new to the PCA program and I would
like to know where/how to acquire good stocks to trade with the
software. I am a complete novice in the stock trading industry

I am a relatively new user and would like to know if I use end of day
data to buy/sell

Here's msg I received in reply to same basic question.  Some new
videos are there now.  Newest one is pretty interesting.
Nick

--------------------------------------------------------
Hi Nick,

We are making some videos to post on the Help page of the software
right now and the first coaching session will be next week, probably
Thursday.

We will email you a couple days ahead of time and then we will email
you the day of the event so be sure to whitelist my email address.

We want to start off with some help videos so that people can watch
them at their convenience if they are not able to attend the live
sessions. We have been trying to record the live sessions but the file
seems to be too large to work with and crunch into something we can
put up for later viewing.

We will try and record next weeks session "Using the PCA Software" but
I'm not as confident with that as the little help videos we can make
here. I think Doug has a few planned today that will be in the help.

We will email you next week with the exact date and time of the event.


Best Wishes and Good Investing,
Bill McKinley
Investing Systems, Inc.
~~~~~~~~~~~~~~~~~~~~~~
http://www.market-toolbox.com





--- In positioncostaveraging@yahoogroups.com, "Stan Graham"
<asahi3@...> wrote:
>
> Hi
> Don't have much of a problem (or any infact) with PCA-SE v5.1.17
> software but I remember the postings that said something about using
> ETF's with this new version of PCA. Also something about new seminars
> on the web about ETF's and PCA. Has anyone seen these? Have I missed
> them? Welcome any info. on this, thank you.
> Stan Graham
>
>
> --- In positioncostaveraging@yahoogroups.com, "travllr" <travllr@>
> wrote:
> >
> > Correct the email address, it's "stocksystem.com" - they should get
> you
> > up and running.
> >
>

Hi
Don't have much of a problem (or any infact) with PCA-SE v5.1.17
software but I remember the postings that said something about using
ETF's with this new version of PCA. Also something about new seminars
on the web about ETF's and PCA. Has anyone seen these? Have I missed
them? Welcome any info. on this, thank you.
Stan Graham


--- In positioncostaveraging@yahoogroups.com, "travllr" <travllr@...>
wrote:
>
> Correct the email address, it's "stocksystem.com" - they should get
you
> up and running.
>

Correct the email address, it's "stocksystem.com" - they should get you
up and running.

I tried to email support@.... I am (was) using PCA 3.07,
and had to reinstall from the CD from a computer crash. I have not
used the program for quite a while, and now want to use it again, but:

1.       It says my subscription ended 9/1/2007

2.       I have read about it not updating the stock prices, but it
seems to
work for me.

What can I do about the subscription issue?

Thanks, Chris J

Volatility Rocks The Investment Markets

Gets your attention, doesn't it? The unfortunate thing though, is that most
people will react negatively to this intentionally inflammatory, media-ready,
title statement. Has some Wall Street virus attacked our financial experience
memory chip? Bouncing around unpredictably is precisely what the markets have
always done. In the last forty years, there have been no less than ten 20% or
greater corrections followed by rallies that brought the markets to
significantly higher levels. Volatility is not a bad thing--- a non-event, even.

Ironically, it is this routine volatility (caused by hundreds of human,
economic, political, and natural variables) that is the only real certainty
existent in the financial markets. Would anyone be happy with market prices that
didn't change? Should anyone expect market valuations that only go up? So what's
all the anxiety, scrambling, and crying about? As absurd as this may sound at
first blush, you will never become a successful investor until you are able to
embrace market volatility as your dearest and closest friend.

The Wall Street media is also your friend, because it fans investor emotions to
the point where rational thinking becomes impossible for most participants. My
observation the other night at dinner (that the 400 point drop in the DJIA had
provided an opportunity to purchase dozens of IGV stocks at bargain prices) was
met with vacant stares. When I added that nearly half of those stocks had been
sold profitably in recent weeks--- you can imagine the shocked silence that
followed.

Investor perceptions of volatility need to be rearranged. When you allow more
than an up-only smiley face into your understanding of the markets, you will be
able to position yourself to actually take advantage of the volatility while it
is happening. When you realize that the causes of market gyrations are not
nearly as important as the opportunities for bargain hunting and profit taking
that they produce, you'll be able to grow and to protect your portfolios from
your emotional dark side.

Let's talk about reality. There are many different ways that professional
investors and speculators make their fortunes in the financial markets. The key
is to know whether the path you are following is too speculative for the
destination you are seeking. Over the past twenty years or so, the stock market
has provided the best returns for most investors--- yes, even better than
commodities, currencies, and ETFs (which didn't exist even ten years ago). But
balanced investment portfolios, those containing both investment grade value
stocks and income generating securities have probably surpassed all others.

Let's talk about causation. There are far too many variables affecting the
movement of security prices to allow for accurate prediction of either the scope
or duration of short-term gyrations. Every rally produces both a bubble of some
kind and the pin that will eventually do the bursting. Hindsight identifies all
the culprits and promises to regulate them out of the system so that the future
will be different. Don't kid yourself. The next rally will come to the same
bloody end as its predecessors. Volatility Rocks!

But this year we have the opportunity to assure that our economic future will be
better. Much of the current skittishness in the financial markets is caused by
multiple economic concerns and the incredibly naive resolution ideas being
spouted by the presidential candidates. And there are other, somehow out of the
limelight, economic issues that politicians are afraid to even consider. The
primary economic issues (jobs, energy, and economic growth) need to be joined by
Social Security reform, corporate tax reform, and term limitations in congress.

No president, no matter how bold, can bring about meaningful change without a
less self-serving cast of characters in the legislative branch. But this kind of
change can't happen until we replace the current batch of pork barrel
politicians with a new group of change orientated decision makers. Today's
congress legislates mind-numbing regulations that stifle creativity and economic
growth. Investors need to support fewer "taxors" and to elect a whole new group
of economic facilitators. Throw out the incumbents this November.

You just don't create jobs by taxing, regulating, and otherwise strangling the
job creators. In most communities, local governments think of their non-voting
corporate citizens as ratables instead of as job providers. Serious jobs would
be created, and general price reductions produced (good or bad for the GDP?),
through a controlled elimination of all income taxation on legitimate corporate
job providers. Of course it would have to be regulated to assure jobs, price
reductions, and shareholder benefits, and not just more perks for obscenely paid
executives.

Similarly, taxing gasoline production and delivery organizations is not going to
bring down the price per barrel of crude oil. But "taxing" the cartel that fixes
the prices instead of bribing them with protection from their enemies could work
almost as well as tapping into our own abundant supply and adding some
long-needed refining capacity. Eliminating state and federal gasoline taxes and
fees and taxes on interstate truckers would produce many cost/price benefits as
well.

Economic growth, more jobs, and lower prices could be the immediate result of
two relatively simple changes that neither of the Presidential hopefuls have the
courage to even whisper about. Without nearly enough detail: (1) Over a
five-year period, change Social Security to a mandated-contribution, deferred,
individual fixed annuity program managed on a flat fee basis by 15-year
experienced insurance companies. No variable (stock market) benefit plans would
be allowed; all citizens would be eligible to participate, and all employed
persons (Congress included) would be enrolled automatically. Contributions would
be reduced and employer participation eliminated.

(2) Eliminate all taxation on any form of retirement income immediately, and
phase out all taxation on all forms of investment income over a five-year
period. Replace those taxes with a 1% Federal sales tax an all goods and
services except food, shelter, clothing, and health care.

Then, we can start to replace the Internal Revenue Code with something simple,
protect shareholders from unconscionable corporate executive compensation, and
come up with a solution for providing adequate healthcare to everyone.

We have met the enemy and he is us--- Walt Kelly, Pogo


Steve Selengut
http://www.sancoservices.com/
http://www.kiawahgolfinvestmentseminars.com
Professional Portfolio Management since 1979
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



You have received this e-mail because you opted to do so. If you wish to
unsubscribe from this mailing list please click here
http://www.fatcow.com/utils/UnSubscribeMe.bml?Name=moo.sancoserve&List=Yahoo_Gro\
ups&Email=positioncostaveraging@yahoogroups.com .

Zero Overhead Real Estate Investing---Right Now


Real estate investing is not nearly as complicated, financially burdensome, or
time consuming as you might think. In fact, Its easy to add raw land, shopping
centers, apartment complexes, and private homes to your portfolio without
brokers, bankers, attorneys, and handymen on your payroll. Even better, the zero
overhead approach allows you to blend your real estate investments into your
securities portfolio for ease of management, income monitoring, diversification,
and analysis.

I know you think that the entire real estate market is in a shambles, and that
it is far too dangerous to get involved now, what with all the nasty uncertainty
that has decimated property values. But where did the real damage take place,
and why? Without having mega millions to work with, or a line of credit that
goes around the block, you can have positions in various forms of Real Estate
without accumulating debt, paying insurance, or leaving your PC--- and you can
get it done on the cheap!

All of the basic types of real estate are available through CEFs (Closed End
Funds) and REITs (Real Estate Investment Trusts), and both can be purchased in
the same manner as any common stock. Additionally, you can own a piece of the
action without the big commitment of time and resources. Finally, you can take
advantage of changes in the real estate market cycle in precisely the same
manner as you can deal with the volatility and fluctuations in the stock and
fixed income securities markets.

CEFs and REITs are obviously safer investments than outright purchases of
shopping plazas, condominiums, and private homes. They are also considerably
less risky than owning the common stock of individual real estate companies. The
size of the numbers may be less exciting, but the net income and capital gains
potential are comparable on a percentage basis, and the turnover rate can be
much more impressive. Both types of real estate based security belong in your
investment portfolio--- but in which asset allocation bucket?

I've always included REITs and real estate CEFs in the income bucket of my
portfolios because their primary purpose is to generate cash flow. And, as with
any interest rate expectation (IRE) sensitive security, I expect prices to
fluctuate with changing conditions in several areas: IRE, credit market
conditions, economic cycles, stock market cycles, etc. After a huge rally in any
market, investors need to be more selective than they generally are. Common
sense isn't real common when it comes to investing.

All financial markets, all investment securities, and all economies are
cyclical. Equities, real estate, gold, and pork bellies--- it doesn't matter. If
you buy too high, you will only get lucky if you know how (not when) to sell,
and if you have a plan for doing so. Up side selling disciplines are scarce in
most investment strategies... pity, they work so well with bargain hunting
during crashes.

The income bucket of the investment portfolio is different in both purpose and
content from the equity side. Real estate is an important diversification tool
that may add some pizzazz to an otherwise boring collection of securities. We
don't need to own the real estate to benefit from both the yields and the
cycles. Unlike other fixed income assets (corporate, government, and municipal
contracts), rents generally rise over the course of time. Mortgage interest is
almost always higher than bonds provide, and we don't need to be mortgagors or
landlords to get a piece of the action.

The speculators whose properties became termite infested as the latest real
estate bubble burst were owners of mortgaged properties that could neither be
sold nor afforded. The other losers were lenders to unqualified property
speculators and, of course, the wizards of Wall Street who regulators allowed to
turn simple mortgage debt into multi-tiered financial quagmires. Every bursting
bubble produces two things: pain and opportunity. When the going gets tough, the
smart investor goes shopping.

There are dozens of REITs and managed income CEFs that are worthy of your
confidence and attention. Some detailed analysis will reveal lower than normal
prices for higher than usual yields based on monthly payouts that have not been
reduced throughout the tailspin in the real estate and financial sectors. Read
that again--- monthly payments and higher yields throughout the downturn---
hmmm.

Now don't just run out and buy all of these things you can find, and stay far
away from new issues for all of the usual reasons. Make sure that you look at a
lot of REITs and even more CEFs of various kinds to get a feel for the levels of
income they produce. Most of these securities are "leveraged" to a certain
extent, which simply means that management may choose to borrow some of the
money that they invest.

Leverage is not a four-letter word when used properly, and (in my opinion) it is
more likely to help your results than it is to hurt them. But it's always a good
practice to stay within the normal income range, assuming that there is either a
risk or a management reason for the highest and lowest yields, respectively. Be
careful not to create a poorly diversified income portfolio. Bonds, Preferred
Stocks, Royalty Trusts, etc., all deserve income bucket representation.

The major distinction between the two types of investing needs some re-emphasis.
When purchasing stock in a real estate company (or any other company), your main
objective should be to sell the stock for a reasonable profit as quickly as
possible. You will then select some other stock and repeat the process. When
purchasing a REIT or an income CEF, you are depending on the managers of these
entities to generate income and capital gains that they pass on to you.

You buy these securities for the income, but always recognize that you have the
bonus capability of selling your shares when they rise to an acceptable profit
level. Similarly, be prepared to add to your holdings during market value
downturns, thus increasing your income and reducing your cost per share at the
same time. The benefits of this form of real estate investing vs. ownership of
the properties themselves should be clear. It's a whole lot easier than flipping
properties.

So when it comes to Real Estate, think: no attorneys, no debt, and no
maintenance equal no problem.


Steve Selengut
http://www.sancoservices.com
http://www.kiawahgolfinvestmentseminars.com
Professional Portfolio Management since 1979
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



You have received this e-mail because you opted to do so. If you wish to
unsubscribe from this mailing list please click here
http://www.fatcow.com/utils/UnSubscribeMe.bml?Name=moo.sancoserve&List=Yahoo_Gro\
ups&Email=positioncostaveraging@yahoogroups.com .

Market Cycle Investment Management


	 Whatever happened to the Stock Market Cycle; the Interest Rate Cycle; Baby
Jane? How did Wall Street get away with pushing these facts of financial life
down the basement stairs? Most investors, I'm beginning to believe, and all
financial advisors, media representatives, and market gurus have abandoned these
fascinating curves for the comfort of a straight-edged twelve-month playing
field... simple, yes; realistic, not. I have to wonder if things would be
different with a more investor-friendly tax-code, but that would be far less
lucrative for The Wizards...

	 Investing with a calendar year focus has no basis in the realities of finance,
business, or economics... isn't it obvious that the Stock and Bond Markets are
far more closely related to the Business Cycle than to the Earth's around the
Sun? Investopedia reports that, during the last sixty years, most business
cycles have lasted three to five years from peak-to-peak. The Stock Market Cycle
(in terms of the S & P 500 Average) is the period of time between the two latest
highs of that average which are separated by at least a 15% decline in the
average. The second high needs only to be 15% above the nadir, it doesn't have
to represent a new All Time High (ATH). Interest rates (based on the 10 Year
Treasury Bond), seem to cycle in the two to five year range, and are much more
closely related to Business or Economic cycles than they are to the Stock Market
Cycle. Confused?

	 Well, you should be. Although they are closely intertwined, none of these
financial realities are predictable and, therefore, need to be dealt with as
hindsightful tools in the performance analysis process... a process that needs
to be undertaken using personalized expectations. How many times in the last 20
years do you think that any of these cycles peaked on a December 31st? The "I'll
try this approach for a year or so and then change if it doesn't work out better
than everything else" mentality, combined with a regressive tax code that
rewards losses more than gains, has killed cyclical analysis dead. It's time to
get back on our hogs and try something old. Let's re-cycle peak-to-peak analysis
like we do plastics and paper products. It might just put more "green" in our
retirement programs.  As recently as 1980, Separate Account (the first Mutual
Funds) Investment Managers were reporting fund performance in terms of income
generation and peak-to-peak growth in Market Value.  But that was before
investing became the number-two spectator sport in America.

	 Few investment professionals would argue with the observation that a viable
investment program begins with the development of a realistic plan, and most
would agree that investment planning requires the identification of long-term
personal goals and objectives. Some experts would even agree that the end result
should be a near autopilot, long-term and increasing, retirement income. Asset
Allocation is used to organize and control the structure of the portfolio so
that it operates in a goal directed manner. Is this easy or what! It would be if
the average investor would just let things alone long enough for them to work
out according to the plan. That's the rub. Wall Street, the financial media, and
financial professionals (including CPAs) have no interest in letting things work
out according to plan... even if it's a plan that they designed.

	 Is it clear that calendar year performance evaluation allows an average of just
six months for an equity selection to 'perform'? Is it clear that the change in
Market Value of an income security over the course of a year is meaningless?  Is
it clear that a portfolio containing both types of securities cannot be compared
with an average or index that is comprised of just one or the other?  It is
crystal clear until it's your portfolio that has had the audacity to shrink in
Market Value over the course of the year! Human nature is predictable but not
necessarily rational. Mother Nature's financial twin's twisted sense of humor,
though, is both... and totally unrelated to third rock movements.

	 If the change in a portfolio's Market Value is really so important (the Working
Capital Model would argue that it is not), why not do it over a period of time
that recognizes where we happen to be, cyclically? Interest Rates have cycled
seven or eight times over the past twenty-five years; the stock market has been
nearly twice as volatile. Peak-to-peak analysis, although hindsightful, raises a
type of question that can, at least, be portfolio personalized for analysis:

	 (1) Did my Equity portfolio grow in Market Value between January 2000 and
January of 2002, or between January 2002 and either January 2004 or June of
2006? These were cycles on the DJIA, which at its high in June 2006, was still
below the ATH established in early 2000. These are meaningful time periods that
can be used to study the effectiveness of various equity-only portfolio
strategies. S & P 500 cycles were pretty much the same.

	 (2) Does my Income Portfolio generate more income today than it did the last
time interest rates were at these levels is still the most important question
that should be raised... regardless of Market Value. Sorry.

	 But as important as it may be to determine the answers to such questions, it is
equally important to understand why the results were what they were. Did I
withdraw money from the portfolio, or take losses on investment grade securities
for tax reasons? Did I fail to follow the plan, or lose control of my Asset
Allocation? Did I change variable expenses into fixed expenses or allow tax
considerations to keep me from realizing profits. Were there changes in the
investment markets that would make peak-to-peak analysis less meaningful than in
the past?

	 So by taking away the move-your-money, racetrack, mentality that runs today's
investment performance evaluation methodologies, we create a calmer, more
cerebral, management exercise with which to tweak our investment strategy. We
may have gone backwards because we stayed on the sidelines instead of buying
when prices were low. It may have been the strategy, it may have been the
management, it could have been the diversification formula, or the buy-sell-hold
decision-making rules. It may even have been the fear or greed that influenced
our judgment. By looking at things cyclically, and analytically, instead of
celestially and emotionally, we either allow our strategy to prove itself over a
reasonable period of time or obtain the information needed to change it
constructively.

	 The recent popularity of Index ETFs has detracted from the usefulness of both
the popular market averages and the most useful market statistics. Issue
Breadth, 52-week High and Low, Most Actives, Most Advanced, and Most Declined
figures now include thousands of these hybrid and derivative securities.  A
bigger problem is the artificial demand created for index-included securities, a
demand unrelated to corporate financial statement fundamentals.  Another problem
for Investment Grade Value Stock only investors is the absence of a
well-recognized average or index to use for analysis... the IGVSI and related
Market Stats should help.

	 Analyze this: if the strategy makes sense in the long run, why knock yourself
out in months, quarters, and years? Where have all the cycles gone...


Steve Selengut
http://www.sancoservices.com
http://www.valuestockindex.com
Professional Portfolio Management since 1979
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



You have received this e-mail because you opted to do so. If you wish to
unsubscribe from this mailing list please click here
http://www.fatcow.com/utils/UnSubscribeMe.bml?Name=moo.sancoserve&List=Yahoo_Gro\
ups&Email=positioncostaveraging@yahoogroups.com .

Compound  Stock Earnings Programs - Caveat Investor
The caller  seemed surprised that I had never heard about Compound Stock
Earnings Programs,  or CSEs. "People are earning three to six percent per month
with little or no  risk", she continued, "I'm thinking of attending a seminar".
A wise man once  said: "If it sounds too good to be true, it probably is", but
this sure is a  creative euphemism for what has to be a rather complicated
options  strategy.
The buyer  of a "call" option obtains the right to purchase a specified
quantity of a  security from the seller of the option, at a stated "strike
price",
and at any  time on or before the contract expiration date. When the option
seller owns the  security, it is called a "covered" call. The CSE hucksters
don't deny that their  magic cash flow system is based on selling "covered" call
options, but the "come  on" includes a laundry list of misinformation, partial
truths, and inaccuracies  about the stock market and investing.
Covered  calls have been around forever, but this is the first time I've seen
them touted  as safe investment vehicles. They are certainly the safest of a
complex array of  option strategies, but very few registered, certified, or
well known and  experienced investment gurus would ever use the word safe when
discussing  options--- or recommend them. All options are speculations, no
matter how well  sugar coated and no matter how fail-safe the trading system
appears. The risk is  in there.
Options  are bets about the future price movement of exchange-traded
securities--- it's  just that simple. The prospect of unusually high returns
always
signals  unusually high risk. Caveat emptor, in spades. Here are some things to
consider  before you think about attending that free seminar--- not to mention
the basic  reality that equities are not at all the proper investment vehicle
for an  income-generating portfolio. That's what income securities are all
about.
The pitch  begins with the accurate statement that most investment portfolios
are chock  full of equity mutual funds, and that such funds rarely produce
enough income to  pay the bills. Consequently, principal drainage occurs when
mutual fund shares  have to be sold during market downturns. But no mention is
made of the fact that  really low-risk, monthly-income, and easily traded
alternatives (currently  ranging upward from above 5% tax free and above 7.5%
taxable) are readily  available.
The second  CSE selling point laments the declining dividend yield on NYSE
traded  securities. Again, equities have never willingly accepted a job
description that  includes "provide monthly spending money to shareholders". The
purpose of stock  ownership is growth in the form of capital gains. When income
becomes the  purpose of the investment program, proper advice would be to sell
the stocks and  to buy monthly income producing securities.
Actually,  there has never been a time when common stock dividend yields were
as high as  some of the CSEs report in their propaganda, and historical
growth rates of the  Dow and S & P have always been calculated ex-dividend.
Similarly, the  glossies talk about the low yield on individual bonds and
treasury
securities as  though these were the only alternatives an investor has, which
they obviously  are not. Based on website review alone, it's doubtful that the
CSE marketing  companies are registered with the Securities and Exchange
Commission  (SEC).
Even if we  pretend that an equity portfolio's growth rate can be enhanced
with a covered  call strategy, let's look at the things the investor has to
think about after he  puts the option premium into his pocket. What if someone
drops the ball (or if  something really good happens over night) and the stock
is
actually called away?  Think of the tax consequences of a gain on low
cost-basis holdings, or the  actual capital loss if you are writing the calls on
stocks that have fallen in  price, as you will certainly be doing during
corrections.
Additional  drawbacks of the covered call program are: (a) limiting the
amount of profit on  a rising stock; (b) reducing portfolio liquidity and
flexibility because the  underlying securities cannot be sold unless the option
has
been bought back; (c)  there can be up to four separate commissions paid in one
completed transaction;  (d) higher premiums are generally associated with
higher price volatility and  higher risk levels--- which is as it should be.
Another possibility is that the  call buyer might exercise his option early in
order
to capture the underlying  stock's dividend, or because of take-over rumors.
So as safe  as the CSE promoters want you to believe the process is, there is
a significant  potential for both loss and inconvenience--- enough so that
managed municipal,  corporate, and government CEFs, REITs, preferred stocks,
etc. look better and  better and better for investors who need safe (actually
safe) income.
While you  are thinking about Compound Stock Earnings Programs, consider
this. Why aren't  our dear friends on Wall Street pushing these programs or mass
advertising this  revelation? Why are option specialists the pariahs of most
brokerage firm  offices? Why are special risk acceptance forms required by
brokerage firms to  separately authorize the use of options? Why are options,
commodities, futures,  margin programs, and short selling way up there on most
qualified investment  adviser listings of inherently speculative financial
products?
Certainly,  the CSE promoters have provided adequate documentation,
instructional material,  testimonials, and software to describe the workings of
their
covered call option  programs. But in addition to the in-your-face hype, greed
food, and numerous  pages of disclaimers, can they show you the customer's
yachts?
Steve  Selengut
sanserve  (at) aol.com
800-245-0494
http://www.sancoservices.com
http://www.kiawahgolfinvestmentseminars.com/
Professional Portfolio Management since  1979Author  of: "The Brainwashing of
the American Investor: The Book that Wall Street Does  Not Want YOU to Read",
and "A Millionaire's Secret Investment  Strategy"


*** ***  *** *** ***

The New & Revised Edition of "Brainwashing" is available!
Place your order now at _Amazon.com_
(http://www.amazon.com/Brainwashing-American-Investor-book-Street/dp/1934354031/\
ref=sr_1_2/102-2155978-6914540?ie=UTF8&
s=books&qid=1190981795&sr=8-2) .

Steve  Selengut
sanserve (at) aol.com
800-245-0494
_http://www.sancoservices.com_
(http://www.sancoservices.com/freezineinvestmentarticles.htm)
_http://www.kiawahgolfinvestmentseminars.com/_
(http://www.valuestockbuylistprogram.com/)
_http://www.valuestockindex.com/_ (http://www.valuestockindex.com/)

Professional  Portfolio Management since 1979
Author of: "The Brainwashing of the American  Investor: The Book that Wall
Street Does Not Want YOU to Read", and "A  Millionaire's Secret Investment
Strategy"

Disclaimer Notice: The  information contained in this e-mail transmission is
intended by Sanco Services,  Inc. for the use of the named individual or
entity to which it is directed, and  may contain information that is privileged
or
otherwise confidential. If you  have received this e-mail transmission in
error, please delete it from your  system without copying or forwarding it, and
notify the sender of the error by  reply e-mail, so that the sender's address
records can be corrected.

No  information, ideas, suggestions, or thoughts expressed in any email or
verbal  communication from Sanco Services, Inc. should ever be interpreted as
legal or  tax advice... EVER! Additionally, The Brainwashing of the American
Investor is not the property of Sanco Services, a brochure that describes Sanco
Services, or a promotional piece designed by Sanco Services. The book is the
sole property of author Steve Selengut and is simply a description and
explanation of the methodologies, strategies, and procedures that are used 
within
the Working Capital Model, which is also the exclusive property of  Mr
Selengut.



**************Wondering what's for Dinner Tonight? Get new twists on family
favorites at AOL Food.
(http://food.aol.com/dinner-tonight?NCID=aolfod00030000000001)


[Non-text portions of this message have been removed]

Your  401(k) Investments and the IGVSI
Smack,  right up alongside the head. Your 401(k) investment program
deteriorated rapidly  as the stock market and the economy weakened. Who would
have
thought that there  was so much risk of loss in those mutual funds, and ETFs?
Fortunately, the pain  is most often temporary, but the timing of the recovery
could alter some  participant retirement schedules and benefits--- not to
mention
the hefty  confiscation level retirees can count on from Uncle  Sam.
The  popularity of self-directed 401(k) benefit plans is understandable.
Employees  typically get an instant profit from generous employer matching
contributions, a  variety of investment products to choose from, and portability
between jobs. But  the benefit to employers is far greater--- an easy, low-cost,
employee benefit  plan with virtually no responsibility for the safety of the
investments, and no  lifetime commitment to benefit payments. In some instances
though, employees are  required to invest too large a portion of their
account in company stock--- a  situation that has caused major problems in the
past
(Enron, for  example).
401(k)  plans have virtually replaced the private pension system, and in the
process,  have transferred total investment responsibility from trustee
caliber  professionals to hundreds of millions of investment amateurs. Employees
get
  little professional guidance with regard to selecting an appropriate mix of
investment vehicles from the glossies provided by 401(k) fund providers. Few
Employee Benefit Department counselors have degrees (or hands-on experience)
in  economics, investing, or financial planning, and wind up using the
"unbiased"  counseling services of the funds' salespersons. How convenient for
them.
Interestingly, most salespersons also have no hands-on investment experience
either--- go figure.
Similarly,  the financial planning and accounting communities seem to have
little concern  about such basic investment tenets as QDI (quality,
diversification, and  income). If they did, there would never be instances where
individual investors  lose everything in their one fund, one stock, or
one-property
investment  programs. QDI is the fire insurance policy of the investment plan,
but few  401(k) participants hear about anything beyond: past market value
performance  numbers, future performance projections, and the like. They are not
generally  aware of the risks inherent in their investment  programs.
This is  where an understanding of investment grade value stock (IGVS)
investing, the  IGVSI and related market statistics becomes important to 401(k)
participants,  company benefit departments, accountants and other financial
professionals. IGVS  investing is just perfect for long-term,
regular-deposit-commitment investment  programs.
Somehow,  we've got to get 401(k) investors to understand the framework of an
  investment/retirement program and, then, we have to get participants and/or
their professional advisors to look inside the products being offered. As
much  as I hate the idea of one-size-fits-all investment products, they are
generally  accepted as the best way to deal with larger employer 401(k)
programs---
most  employers don't even know that more personalized approaches  exist.
Only when  some form of company, sector, or economy melt down occurs, does
the head  scratching (and the investigating) begin. 401(k) participants need to
understand  that they are not immune to the vagaries of market, economic, and
interest rate  cycles. Along with their employee benefit plan comes total
responsibility for  the long-term performance of the investment/retirement
program. Are you in good  hands?
Historically, IGV stocks fluctuate enough (both in general  and by sector) to
allow for mutual fund and ETF investors to select the less  risky offerings
from among the 401(k) product menu at the most advantageous  times--- but all
individual investors need to learn how to identify the risks  and to learn how
to deal with them. Typically, 401(k) participants buy the  higher priced,
last-year-best-performing, and hot sector offerings while they  sell or avoid
the
various products they feel have "under performed" the market.
Nowhere  else in their lives do they adopt such a perverse strategy. And
nowhere else in  their thinking would they blindly accept the premise that any
one
number  represents what is, or should be, going on in their personal
investment  portfolios. Risk minimization begins with quality, is enhanced
through
diversification, and is compounded with realized  income.
The first  two steps require research, greed control, and discipline. The
income part just  requires discipline, so it should be much easier to manage. If
you cannot  identify and understand the individual securities within an
investment product,  and assess the overall quality (economic viability and risk
protection), don't  invest in it. If you have more than 5% of your portfolio in
any one individual  security, or 15% in any one sector (industrial,
geographical, social, political,  etc.), make some changes.
Since  401(k) plans are almost exclusively mutual fund shopping malls, it is
difficult  to assess the income or cash flow component of the risk
minimization function.  Product descriptions, or your benefits representative,
should
provide the  answers. You can stay away from products that refuse to share the
income with  you, but the best way to benefit from a fund based benefit plan is
to establish  selling targets for the products you select. If your Blind Faith
Fund Unit Value  rises 10%, sell all or part of it and move the proceeds to
another opportunity  that is down 20%. Profit taking is the ultimate risk
minimizer.
So long as  we are in an environment where retirement plan income (and
principal in the case  of all private plans) is subject to income taxation,
401(k)
participants would  be wise to establish an after tax income portfolio invested
in tax exempt  securities--- or to vote more selfishly.
Steve  Selengut
sanserve  (at) aol.com
800-245-0494
http://www.sancoservices.com
http://www.kiawahgolfinvestmentseminars.com/
Professional Portfolio Management since  1979Author  of: "The Brainwashing of
the American Investor: The Book that Wall Street Does  Not Want YOU to Read",
and "A Millionaire's Secret Investment  Strategy"


*** ***  *** *** ***

The New & Revised Edition of "Brainwashing" is available!
Place your order now at _Amazon.com_
(http://www.amazon.com/Brainwashing-American-Investor-book-Street/dp/1934354031/\
ref=sr_1_2/102-2155978-6914540?ie=UTF8&
s=books&qid=1190981795&sr=8-2) .

Steve  Selengut
sanserve (at) aol.com
800-245-0494
_http://www.sancoservices.com_
(http://www.sancoservices.com/freezineinvestmentarticles.htm)
_http://www.kiawahgolfinvestmentseminars.com/_
(http://www.valuestockbuylistprogram.com/)
_http://www.valuestockindex.com/_ (http://www.valuestockindex.com/)

Professional  Portfolio Management since 1979
Author of: "The Brainwashing of the American  Investor: The Book that Wall
Street Does Not Want YOU to Read", and "A  Millionaire's Secret Investment
Strategy"

Disclaimer Notice: The  information contained in this e-mail transmission is
intended by Sanco Services,  Inc. for the use of the named individual or
entity to which it is directed, and  may contain information that is privileged
or
otherwise confidential. If you  have received this e-mail transmission in
error, please delete it from your  system without copying or forwarding it, and
notify the sender of the error by  reply e-mail, so that the sender's address
records can be corrected.

No  information, ideas, suggestions, or thoughts expressed in any email or
verbal  communication from Sanco Services, Inc. should ever be interpreted as
legal or  tax advice... EVER! Additionally, The Brainwashing of the American
Investor is not the property of Sanco Services, a brochure that describes Sanco
Services, or a promotional piece designed by Sanco Services. The book is the
sole property of author Steve Selengut and is simply a description and
explanation of the methodologies, strategies, and procedures that are used 
within
the Working Capital Model, which is also the exclusive property of  Mr
Selengut.



**************Wondering what's for Dinner Tonight? Get new twists on family
favorites at AOL Food.
(http://food.aol.com/dinner-tonight?NCID=aolfod00030000000001)


[Non-text portions of this message have been removed]

From the Foundation for the Study of Cycles:

http://online.barrons.com/article/SB120829364826017219.html

Glad to be of help...

Bruce


> Bruce,
> Thats sort of how i was approaching it, filter a large group of good
> quality stocks that move in such a way that you can "churn" them using
> PCA. The output is a 'candidate list'.  I need to qualify these
> identifying those with big but consistent swings.. ( i think there are
> not very many stocks like this).  So I am trying to build a scan that
> will 'count' the zig zags for each stock in the candidate list.... so
> the stocks with the highest number of turns within a given period
> appear at the top of the list.  Not sure what buy safe is... I have
> not finished his book !
>
>
> I have been tracking down some of the people and things you mentioned
> and it has lead to some very interesting reading.  Like most of
> life... the more you dig the more you find. Thanks-Jim
>

Bruce,
Thats sort of how i was approaching it, filter a large group of good quality
stocks that move in such a way that you can "churn" them using PCA. The output
is a 'candidate list'.  I need to qualify these identifying those with big but
consistent swings.. ( i think there are not very many stocks like this).  So I
am trying to build a scan that will 'count' the zig zags for each stock in the
candidate list.... so the stocks with the highest number of turns within a given
period appear at the top of the list.  Not sure what buy safe is... I have not
finished his book !


I have been tracking down some of the people and things you mentioned and it has
lead to some very interesting reading.  Like most of life... the more you dig
the more you find. Thanks-Jim




----- Original Message ----
From: Bruce Bowman <bruce@...>
To: positioncostaveraging@yahoogroups.com
Sent: Monday, April 7, 2008 3:24:58 AM
Subject: Re: [Position Cost Averaging] Ideal process for starting with new
account from scratch

                 Hi Jim-

Just want to make sure we understand the same thing... the Zig-Zag is a
graphic depiction of trading activity or volatility that is useful for
determining trading range, i.e. setting BUY SAFE/SELL SAFE (resistance) .
*Prior* to using the Z-Z, and as part of the selection process, I
include Beta greater than 1.4 as one of the elements along with P/E,
Price/Book ratio and a few other things Tom has told me about (I'm
terrible at Fundamental Analysis, so I copy what others have told me
works for them). To my mind, there's no point in doing the analysis with
the Zig-Zag if it doesn't first meet the beta criteria.

Besides giving you a graphic idea what activity the stock has shown in
the past (remember that this is no garantee of what the future holds),
the Z-Z is really useful for adjusting the BUY/SELL SAFE values. If you
use the 5% trade size criteria that Lichello suggests, then the move
from the most recent sell to the first buy would be 5% + BUY SAFE + SELL
SAFE + 5%. If BUY SAFE = SELL SAFE = 10%, then the trading range must be
5% + 10% + 10% + 5% = 30% or more (I think I misstated this in the last
note, leaving off one of the 5% values). That's a pretty big swing and
some cyclical stocks might do a complete sysle in a year. More likely
you'll see a narrower range and that would require smaller SAFE
(resistance) values or even smaller values of both SAFE & trade size.

The goal with trade size is to keep commissions to less than 1% of the
trade. If you have chosen a trade size of $1000, for instance, and you
pay $10 in commission, then you would meet the criteria. If 5% of stock
value is $500, now that $10 commission is starting to look bigger at 2%
of the trade cost. Sometimes you can't avoid it and you just have to
live with the expense till the account value increases, diminishing
trading expense. My accounts are at Schwab and I pay $9 for most trades.
In a new account (a single stock), I'll end up paying close to 2% which
eats into returns.

Before setting GTC trades you have to open the position. If I'm happy
with what the current chart looks like (this part is very subjective),
then I'll open the position for the full amount with a market order.
I've been told I'm nuts for doing that and that I should average in
during a pull-back. I find watching the train leave the station without
me on board too frustrating, so I just go for it. You have to do what
works for you.

With the position in hand, make your entries into PCA (set your
Preferences, create the new Holding, enter the first trade, adjust
starting cash if need be) for each stock or fund you're going to AIM. At
this point you already have some idea what the resistance values should
be (and probably you've confirmed them with the Optimizer). The hard
part is over and you now sit back for the ride... however bumpy
(hopefully!) that might be.

re: starting cash reserve... Tom's Idiot Wave was a very useful tool in
that it evaluated market risk and suggested a starting cash reserve as a
% of account value. That's no longer available, but there is something
that comes close if you have access to Value Line. In the Index section,
look up their "Price
Appreciation Potential". Subtract this from 1 and the resulting number
is a possible starting cash reserve. The creators over on iHub call it
the Value-Wave. Right now this "PAP" value is about 0.75, so the
suggested starting cash reserve would be 1-0.75 = 0.25 * 100% = 25% vs.
the one-size-fits- all value of 50% (2/3 of that or 33% for mutual funds)
that Lichello suggests. Something for you to consider depending on
whether or not you think the market has put in a bottom. I have no idea
if it has or not since the market gets to do whatever the market wants
to do. Here's what the Value-Wave looks like:

http://investorshub .advfn.com/ boards/read_ msg.asp?message_ id=27880797

You may have to register to see this note but I don't believe you have
to pay to just read on the site.

re: volatility.. . in addition to beta greater than 1.4, it's also
possible to use beta less than 0.75. In this case the equity tends to
move *opposite* the S&P 500. I've never traded stocks of this type so I
can only guess this might reverse the starting cash reserve recommended
by the V-Wave.

re: trade size... PCA uses a fixed $ amount for trade size (or # of
shares), but Lichello suggests a % of equity value (shares *
price/share) . That means trade size will change as you buy/sell. At one
point I used a % of portfolio control to keep trade size more constant,
but PCA doesn't disclose what PC is. You can adjust PC up or down, but
unless you look at the files in an editor like Notepad, I haven't found
a way to display the current PC.

There's really a whole bunch more that you can do to vary the operating
parameters of AIM to make it work for you. PCA is only a tool and you
have to operate it in a way that suits both you and the equities you're
trading. Possibly the most important thing to remember is that, while
AIM emphatically works, you have to have deep pockets to handle the
buying. Nerves of steel help too! :) AIM is not a get rich quick
approach but more like get rich slow.

Bruce

> Bruce,
> Thanks for the great info. Here is the plan I am working now:
> I have a list of 100 or so good fundamental quality stocks I got from
> a
> "value investor" type book's website as the start point.  Then I
> remove
> the highest P/E stocks from that list.(which should take in lots of
> tom's
> tips (low P/E, Dept, etc.).    I was trying a bunch of different
> volatility
> indicators but the Zig-Zag looks best (knew I'd get to use zig-zags
> someday :)).  Set ZZ % to 25 in my chart package, yet i still keep PCA
> "Resistance" setting at the default 10.... I think the ZZ @ 25 and
> Resistance 10 are the key messages, right?
>
> So I take the top 10 ZZ'ers or from the list and place a GTC order in
> the
> quantity specified (TBD).
> Now to change my "share allocation" to 20K, this is updated in the
> Portfolio>Equity Manager>Position Management Setting's "Beginning
> Cash"
> box , correct?
> Thanks
> Jim
>










      
________________________________________________________________________________\
____
You rock. That's why Blockbuster's offering you one month of Blockbuster Total
Access, No Cost.
http://tc.deals.yahoo.com/tc/blockbuster/text5.com

[Non-text portions of this message have been removed]

You need to ask the s/w publishers directly.

Bruce


> Can I use PCA for Indian stocks?
> How do I go about setting up the symbols and price data?
> Does PCA accept Metastock format EOD and RT data?
>
> Thanks for your response.
>
>

Can I use PCA for Indian stocks?
How do I go about setting up the symbols and price data?
Does PCA accept Metastock format EOD and RT data?

Thanks for your response.

Hi Jim-

Just want to make sure we understand the same thing... the Zig-Zag is a
graphic depiction of trading activity or volatility that is useful for
determining trading range, i.e. setting BUY SAFE/SELL SAFE (resistance).
*Prior* to using the Z-Z, and as part of the selection process, I
include Beta greater than 1.4 as one of the elements along with P/E,
Price/Book ratio and a few other things Tom has told me about (I'm
terrible at Fundamental Analysis, so I copy what others have told me
works for them). To my mind, there's no point in doing the analysis with
the Zig-Zag if it doesn't first meet the beta criteria.

Besides giving you a graphic idea what activity the stock has shown in
the past (remember that this is no garantee of what the future holds),
the Z-Z is really useful for adjusting the BUY/SELL SAFE values. If you
use the 5% trade size criteria that Lichello suggests, then the move
from the most recent sell to the first buy would be 5% + BUY SAFE + SELL
SAFE + 5%. If BUY SAFE = SELL SAFE = 10%, then the trading range must be
5% + 10% + 10% + 5% = 30% or more (I think I misstated this in the last
note, leaving off one of the 5% values). That's a pretty big swing and
some cyclical stocks might do a complete sysle in a year. More likely
you'll see a narrower range and that would require smaller SAFE
(resistance) values or even smaller values of both SAFE & trade size.

The goal with trade size is to keep commissions to less than 1% of the
trade. If you have chosen a trade size of $1000, for instance, and you
pay $10 in commission, then you would meet the criteria. If 5% of stock
value is $500, now that $10 commission is starting to look bigger at 2%
of the trade cost. Sometimes you can't avoid it and you just have to
live with the expense till the account value increases, diminishing
trading expense. My accounts are at Schwab and I pay $9 for most trades.
In a new account (a single stock), I'll end up paying close to 2% which
eats into returns.

Before setting GTC trades you have to open the position. If I'm happy
with what the current chart looks like (this part is very subjective),
then I'll open the position for the full amount with a market order.
I've been told I'm nuts for doing that and that I should average in
during a pull-back. I find watching the train leave the station without
me on board too frustrating, so I just go for it. You have to do what
works for you.

With the position in hand, make your entries into PCA (set your
Preferences, create the new Holding, enter the first trade, adjust
starting cash if need be) for each stock or fund you're going to AIM. At
this point you already have some idea what the resistance values should
be (and probably you've confirmed them with the Optimizer). The hard
part is over and you now sit back for the ride... however bumpy
(hopefully!) that might be.

re: starting cash reserve... Tom's Idiot Wave was a very useful tool in
that it evaluated market risk and suggested a starting cash reserve as a
% of account value. That's no longer available, but there is something
that comes close if you have access to Value Line. In the Index section,
look up their "Price
Appreciation Potential". Subtract this from 1 and the resulting number
is a possible starting cash reserve. The creators over on iHub call it
the Value-Wave. Right now this "PAP" value is about 0.75, so the
suggested starting cash reserve would be 1-0.75 = 0.25 * 100% = 25% vs.
the one-size-fits-all value of 50% (2/3 of that or 33% for mutual funds)
that Lichello suggests. Something for you to consider depending on
whether or not you think the market has put in a bottom. I have no idea
if it has or not since the market gets to do whatever the market wants
to do. Here's what the Value-Wave looks like:

http://investorshub.advfn.com/boards/read_msg.asp?message_id=27880797

You may have to register to see this note but I don't believe you have
to pay to just read on the site.

re: volatility... in addition to beta greater than 1.4, it's also
possible to use beta less than 0.75. In this case the equity tends to
move *opposite* the S&P 500. I've never traded stocks of this type so I
can only guess this might reverse the starting cash reserve recommended
by the V-Wave.

re: trade size... PCA uses a fixed $ amount for trade size (or # of
shares), but Lichello suggests a % of equity value (shares *
price/share). That means trade size will change as you buy/sell. At one
point I used a % of portfolio control to keep trade size more constant,
but PCA doesn't disclose what PC is. You can adjust PC up or down, but
unless you look at the files in an editor like Notepad, I haven't found
a way to display the current PC.

There's really a whole bunch more that you can do to vary the operating
parameters of AIM to make it work for you. PCA is only a tool and you
have to operate it in a way that suits both you and the equities you're
trading. Possibly the most important thing to remember is that, while
AIM emphatically works, you have to have deep pockets to handle the
buying. Nerves of steel help too! :) AIM is not a get rich quick
approach but more like get rich slow.

Bruce


> Bruce,
> Thanks for the great info. Here is the plan I am working now:
> I have a list of 100 or so good fundamental quality stocks I got from
> a
> "value investor" type book's website as the start point.  Then I
> remove
> the highest P/E stocks from that list.(which should take in lots of
> tom's
> tips (low P/E, Dept, etc.).    I was trying a bunch of different
> volatility
> indicators but the Zig-Zag looks best (knew I'd get to use zig-zags
> someday :)).  Set ZZ % to 25 in my chart package, yet i still keep PCA
> "Resistance" setting at the default 10.... I think the ZZ @ 25 and
> Resistance 10 are the key messages, right?
>
> So I take the top 10 ZZ'ers or from the list and place a GTC order in
> the
> quantity specified (TBD).
> Now to change my "share allocation" to 20K, this is updated in the
> Portfolio>Equity Manager>Position Management Setting's "Beginning
> Cash"
> box , correct?
> Thanks
> Jim
>

Bruce,
Thanks for the great info. Here is the plan I am working now:
I have a list of 100 or so good fundamental quality stocks I got from a "value
investor" type book's website as the start point.  Then I remove the highest P/E
stocks from that list.(which should take in lots of tom's tips (low P/E, Dept,
etc.).    I was trying a bunch of different volatility indicators but the
Zig-Zag looks best (knew I'd get to use zig-zags someday :)).  Set ZZ % to 25 in
my chart package, yet i still keep PCA "Resistance" setting at the default
10.... I think the ZZ @ 25 and Resistance 10 are the key messages, right?

So I take the top 10 ZZ'ers or from the list and place a GTC order in the
quantity specified (TBD).
Now to change my "share allocation" to 20K, this is updated in the
Portfolio>Equity Manager>Position Management Setting's "Beginning Cash" box ,
correct?
Thanks
Jim

----- Original Message ----
From: Bruce Bowman <bruce@...>
To: positioncostaveraging@yahoogroups.com
Sent: Sunday, April 6, 2008 7:39:11 PM
Subject: Re: [Position Cost Averaging] Ideal process for starting with new
account from scratch

                 Your 5% allocation may be a limiting problem. While it gives you
diversification, it comes at a cost of requiring very small trade size
which in turn increases the impact of trading cost. Alternately, if you
increase trade size, now you have to see a very large market move to
trigger a trade.

I try to use a minimum investment of $10,000 in the equity which
produces a better trading environment. Plus cash, of course. If you're
using 50%/50% allocation, that means you have $20,000 tied up in each
investment or 5 equities.

That said, the current market valuation (taken in a long term
perspective) is very oversold at the moment, so 50% cash may be
overkill. Cash reserve is necessary to be able to buy all the way to the
bottom, but having $$$ left over when selling starts reduces your yield.
Ideally you want Cash = $0 at the bottom which will give you the best
return on your captial at risk.

If you are still accumulating investment capital and you don't like
being limited to only 5 equities, you can consider using the TwinVest
strategy that Lichello talks about.

Don't forget to consider using ETFs for AIM. These are usually in the
form of closed-end funds that specialize in a certain market sector. For
instance IJS uses the S&P Small Cap equities and tends to be very
volatile. On the other hand, IYH (healthcare) tends to be way less
volatile and will require a great deal of patience. AIM works with
volatility; beta > 1.4 or more is a pretty good measure.

Tom Veale has a very helpful site ($0) for understanding AIM and also
some improvements to gain better yields. Unfortunately Tom has signed an
agreement with an investment group that requires he not display his
Idiot Wave any longer (it's part of the intellectual property and is
Tom's creation) which had been an excellent guide for establishing the
starting cash reserve.

Bruce

----- Original Message -----
From: "jbratton33" <jbratton33@yahoo. com>
To: <positioncostaveragi ng@yahoogroups. com>
Sent: Sunday, April 06, 2008 3:32 PM
Subject: [Position Cost Averaging] Ideal process for starting with new
account from scratch

> Lets say I start with a brokerage account of $100K in cash.  I have
> allocated 5% max($5,000)per symbol.  I also have selected some stocks
> I want to invest in.
>
> Now what is the OPTIMUM process to then take advantage of all PCA has
> to offer?
>
>
> ------------ --------- --------- ------
>
> Yahoo! Groups Links
>
>
>
>




<!--

#ygrp-mkp{
border:1px solid #d8d8d8;font-family:Arial;margin:14px 0px;padding:0px 14px;}
#ygrp-mkp hr{
border:1px solid #d8d8d8;}
#ygrp-mkp #hd{
color:#628c2a;font-size:85%;font-weight:bold;line-height:122%;margin:10px 0px;}
#ygrp-mkp #ads{
margin-bottom:10px;}
#ygrp-mkp .ad{
padding:0 0;}
#ygrp-mkp .ad a{
color:#0000ff;text-decoration:none;}
-->

<!--

#ygrp-sponsor #ygrp-lc{
font-family:Arial;}
#ygrp-sponsor #ygrp-lc #hd{
margin:10px 0px;font-weight:bold;font-size:78%;line-height:122%;}
#ygrp-sponsor #ygrp-lc .ad{
margin-bottom:10px;padding:0 0;}
-->

<!--

	 #ygrp-mlmsg {font-size:13px;font-family:arial, helvetica, clean, sans-serif;}
#ygrp-mlmsg table {font-size:inherit;font:100%;}
#ygrp-mlmsg select, input, textarea {font:99% arial, helvetica, clean,
sans-serif;}
#ygrp-mlmsg pre, code {font:115% monospace;}
#ygrp-mlmsg * {line-height:1.22em;}
#ygrp-text{
font-family:Georgia;
}
#ygrp-text p{
margin:0 0 1em 0;}
#ygrp-tpmsgs{
font-family:Arial;
clear:both;}
#ygrp-vitnav{
padding-top:10px;font-family:Verdana;font-size:77%;margin:0;}
#ygrp-vitnav a{
padding:0 1px;}
#ygrp-actbar{
clear:both;margin:25px 0;white-space:nowrap;color:#666;text-align:right;}
#ygrp-actbar .left{
float:left;white-space:nowrap;}
.bld{font-weight:bold;}
#ygrp-grft{
font-family:Verdana;font-size:77%;padding:15px 0;}
#ygrp-ft{
font-family:verdana;font-size:77%;border-top:1px solid #666;
padding:5px 0;
}
#ygrp-mlmsg #logo{
padding-bottom:10px;}

#ygrp-reco {
margin-bottom:20px;padding:0px;}
#ygrp-reco #reco-head {
font-weight:bold;color:#ff7900;}

#reco-grpname{
font-weight:bold;margin-top:10px;}
#reco-category{
font-size:77%;}
#reco-desc{
font-size:77%;}

#ygrp-vital{
background-color:#e0ecee;margin-bottom:20px;padding:2px 0 8px 8px;}
#ygrp-vital #vithd{
font-size:77%;font-family:Verdana;font-weight:bold;color:#333;text-transform:upp\
ercase;}
#ygrp-vital ul{
padding:0;margin:2px 0;}
#ygrp-vital ul li{
list-style-type:none;clear:both;border:1px solid #e0ecee;
}
#ygrp-vital ul li .ct{
font-weight:bold;color:#ff7900;float:right;width:2em;text-align:right;padding-ri\
ght:.5em;}
#ygrp-vital ul li .cat{
font-weight:bold;}
#ygrp-vital a{
text-decoration:none;}

#ygrp-vital a:hover{
text-decoration:underline;}

#ygrp-sponsor #hd{
color:#999;font-size:77%;}
#ygrp-sponsor #ov{
padding:6px 13px;background-color:#e0ecee;margin-bottom:20px;}
#ygrp-sponsor #ov ul{
padding:0 0 0 8px;margin:0;}
#ygrp-sponsor #ov li{
list-style-type:square;padding:6px 0;font-size:77%;}
#ygrp-sponsor #ov li a{
text-decoration:none;font-size:130%;}
#ygrp-sponsor #nc{
background-color:#eee;margin-bottom:20px;padding:0 8px;}
#ygrp-sponsor .ad{
padding:8px 0;}
#ygrp-sponsor .ad #hd1{
font-family:Arial;font-weight:bold;color:#628c2a;font-size:100%;line-height:122%\
;}
#ygrp-sponsor .ad a{
text-decoration:none;}
#ygrp-sponsor .ad a:hover{
text-decoration:underline;}
#ygrp-sponsor .ad p{
margin:0;}
o{font-size:0;}
.MsoNormal{
margin:0 0 0 0;}
#ygrp-text tt{
font-size:120%;}
blockquote{margin:0 0 0 4px;}
.replbq{margin:4;}
-->






      
________________________________________________________________________________\
____
You rock. That's why Blockbuster's offering you one month of Blockbuster Total
Access, No Cost.
http://tc.deals.yahoo.com/tc/blockbuster/text5.com

[Non-text portions of this message have been removed]

I guess if I'm going to mention a web site it would be helpful to
include the url. Mea culpa!

http://www.aim-users.com/

Bruce

>
> Tom Veale has a very helpful site ($0) for understanding AIM and also
> some improvements to gain better yields. Unfortunately Tom has signed
> an agreement with an investment group that requires he not display his
> Idiot Wave any longer (it's part of the intellectual property and is
> Tom's creation) which had been an excellent guide for establishing the
> starting cash reserve.

Your 5% allocation may be a limiting problem. While it gives you
diversification, it comes at a cost of requiring very small trade size
which in turn increases the impact of trading cost. Alternately, if you
increase trade size, now you have to see a very large market move to
trigger a trade.

I try to use a minimum investment of $10,000 in the equity which
produces a better trading environment. Plus cash, of course. If you're
using 50%/50% allocation, that means you have $20,000 tied up in each
investment or 5 equities.

That said, the current market valuation (taken in a long term
perspective) is very oversold at the moment, so 50% cash may be
overkill. Cash reserve is necessary to be able to buy all the way to the
bottom, but having $$$ left over when selling starts reduces your yield.
Ideally you want Cash = $0 at the bottom which will give you the best
return on your captial at risk.

If you are still accumulating investment capital and you don't like
being limited to only 5 equities, you can consider using the TwinVest
strategy that Lichello talks about.

Don't forget to consider using ETFs for AIM. These are usually in the
form of closed-end funds that specialize in a certain market sector. For
instance IJS uses the S&P Small Cap equities and tends to be very
volatile. On the other hand, IYH (healthcare) tends to be way less
volatile and will require a great deal of patience. AIM works with
volatility; beta > 1.4 or more is a pretty good measure.

Tom Veale has a very helpful site ($0) for understanding AIM and also
some improvements to gain better yields. Unfortunately Tom has signed an
agreement with an investment group that requires he not display his
Idiot Wave any longer (it's part of the intellectual property and is
Tom's creation) which had been an excellent guide for establishing the
starting cash reserve.

Bruce

----- Original Message -----
From: "jbratton33" <jbratton33@...>
To: <positioncostaveraging@yahoogroups.com>
Sent: Sunday, April 06, 2008 3:32 PM
Subject: [Position Cost Averaging] Ideal process for starting with new
account from scratch


> Lets say I start with a brokerage account of $100K in cash.  I have
> allocated 5% max($5,000)per symbol.  I also have selected some stocks
> I want to invest in.
>
> Now what is the OPTIMUM process to then take advantage of all PCA has
> to offer?
>
>
> ------------------------------------
>
> Yahoo! Groups Links
>
>
>
>

re: changed parameters... it was a wild guess. Glad it got you going!

re: Optimization... Watch out that you don't over optimize. Any single
investment will show you many 'different faces' depending on market
conditions.

Something I've found useful tools for screening equities is to use
StockCharts.com. In the free area they have a charting facility that
allows you to set parameters for the Zig-Zag function. By changing the
parameter (entered as a percent) you can see the range of Hi/Lo values
that might be reached and the time period involved. For instance if you
set the Z-Z parameter to 20, this will display a Z-Z overlaid on a chart
history. Every time the data reverses by 20% or more, it starts a new
line. If you see several reversals in a year, representing a BUY/SELL
SAFE of 10% each, that's a stock that would have worked well for AIM in
the past.

Having a lot of reversals gives AIM the best chance to work, but doesn't
say anything about the underlying value of the stock. You have to dig
out those fundamentals via other means, e.g. using Value Line data. Your
local library may have a copy or be willing to subscribe if you can
convince them of a broad interest. I'm not sure a subscription for an
individual is cost effective (it's pricey) since you don't change horses
very often in AIM.

Btw, the example above indicates a combined BUY/SELL SAFE of 20% which
is an over-simplification. You need to include an allowance for minimum
buy amount. I think I recall that Lichello said something about 5%, so
that would mean setting combined BUY/SELL SAFE to 20% would require the
Z-Z to be set to 25% (10% BUY + 10% SELL + 5% min buy or sell).

Bruce


> Bruce,
> This was from running the PCA optimizer's "find best value" buttons..
> And now I've changed the parameters, the problem disappears. I think
> this program has great potential to "system manage" a portfolio.  I am
> like a kid in a candy store with this.
>
> Regards,
> Jim Bratton
>

Lets say I start with a brokerage account of $100K in cash.  I have
allocated 5% max($5,000)per symbol.  I also have selected some stocks
I want to invest in.

Now what is the OPTIMUM process to then take advantage of all PCA has
to offer?