How to Make 1,000,000 Dollars in the Stock Market Automatically (Signet) [Paperback]

Robert Lichello (Author)

Book Description

Publication Date: July 7, 1992 | Series: Signet

In the third edition of this bestselling book--in print since 1977--Lichello provides a revolutionary investment method that overcomes the vagaries and risks of both the market and individual judgement. Automatic Investment Management (AIM) is designed to work in any kind of market with any size investment. Reissue.

Product Details

• Paperback: 288 pages
• Publisher: Signet; 3 Revised edition (July 7, 1992)
• Language: English
• ISBN-10: 0451174534
• ISBN-13: 978-0451174536
• Product Dimensions: 6.8 x 4.1 x 0.8 inches
• Shipping Weight: 5.6 ounces
• Average Customer Review: 3.7 out of 5 stars  See all reviews (72 customer reviews)
• Amazon Best Sellers Rank: #216,018 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

30 of 32 people found the following review helpful:

4.0 out of 5 stars Boy! I guess I stirred the Pot!!, August 25, 1999

By A Customer

This review is from: How to Make 1,000,000 Dollars in the Stock Market Automatically (Signet) (Paperback)

I've done exactly what you have suggested many times in the past. I'll add up all my buys during a downward slide and come up with an average price. I've added up all my sells during a market climb and averaged the price. Guess what, it's always profitable.

It isn't so much that AIM works better than flawless trading, it's just that it rarely loses money for the user. Of last year's 85 taxable events in my own account only 13 were at a loss. Those losses were very minor. Of the 13 losses 7 were short term losses. Most of the gains are long term most years (think about the tax savings). My porfolio turnover rate was about 28% and my AVERAGE capital gain for 1998 was 38% including all losses.

I don't think Mr. Lichello wanted us to be mindless robots working the market. Nor did he indicate that his method couldn't be improved. Over the course of years, I've taken the basic AIM model and "personalized" it. The simple improvements I've made didn't take a massive amount of skull sweat, and were easily verified as effective when tested by computer spreadsheet (over 18 years of data).

Even further improvements are still under way by others with whom I correspond. Such items as making the various parameter adjustments using an Artificial Intelligence override to continually optimize the settings.

Please look again at the AIM model, not as a straight jacket but as an example of what investing is supposed to be - profitable. It is a risk management model. There's always a balance between risk and reward. If AIM reduces risk, guess what, it probably has a reward penalty as well. Some of us just might be retired and want to moderate our risk and be willing to sacrifice a bit of performance.

Most AIM users with whom I correspond have been happy to modify Mr. Lichello's basic model for their own ways of investing. I think Mr. Lichello's model is a licence to use it as we see fit and not a rigid profile that can't be changed. Try splitting SAFE into two separate components. Give each its own weighting relative to the Resistance to buying or selling you want. Try limiting the total level of Cash Reserve to a percentage of the portfolio's value. Quit selling when the Cash Reserve gets too FAT. Bump Portfolio Control up instead. All these things work.

AIM is a closed loop control algorithm with a positive feedback loop. One can also adjust the rate, reset value, and intensity of the feedback to vary the performance of the model.

I'm not sure a two year period is long enough of a test period to show AIM's potential. Mr. Lichello's hypothetical model uses 16 price cycles to take $10,000 to his million dollar goal. That's more cycles than can be expected in a two year period.

AIM needs to have significant downward price events periodically to restock the shelves with certificates. Since 1982 we've only had three events of any size to generate much buying by AIM. I don't think Mr. Lichello anticipated the 1982 to 1999 bull run when he designed AIM. It's been up to the users to modify AIM for use in a bull market.

Remember, just because AIM doesn't fit with your methods doesn't mean that it doesn't work. If there were to be an arguement brought about in analysis of AIM's activity, it might be the "time-value" of AIM trades has cash being spent a bit early. However, since AIM is being paid for maintaining a cash reserve in the form of interest, this is somewhat nullified.

Thanks for responding to my post. I'm glad to see the critics are up to my challenges! AIM does not violate the principle of Buy Low, Sell High. Most Short Term Traders leave massive amounts of value "on the table" by selling out too soon. I bought VTSS in 1993. As a trader it's offered many opportunities to sell out profitably. However, it's offered very few chances to get back in. Who would have done best? ST Trader? AIMer? Buy&Hold. In that case, Buy & Hold kicks butt. However, I'm still a substantial holder as well. Current profits are about 1300% and I see no reason to end the ride. ST Traders missed most of the ride.

Best regards, [e-mail]

34 of 37 people found the following review helpful:

3.0 out of 5 stars A Few Limitations of AIM, September 3, 2005

By 

A customer (Vancouver, Canada) - See all my reviews

This review is from: How to Make $1,000,000 in the Stock Market Automatically: (4th Edition) (Paperback)

I initially read the book in the library and then bought a copy. After wading thru the book, which is roughly 60% filler, I decided to keep an open mind and test out his ideas.

After I created my own Excel worksheet for using AIM (Automatic Investment Management), and did some back testing, I learned that AIM will NOT help you if your stock/mutual fund/ETF, over many months: (1) moves up [or down] in a straight line, (2) moves up exponentially, or (3) moves in a thin trading range. In order to get an excellent return, the ideal AIM stock/mutual fund/ETF movement seems to be like a high-frequency and, what I call, "violently cyclical" movement (i.e. up 150% or more [from the previous year, for example] on the up move and down 60% or more [from the previous year, for example] on the down move). While I'm not sure that any mutual fund has this kind of past movement, I don't think any ETF currently available has consistently shown this kind of movement and fewer than 2% of the top 3,500 stocks have in the past 10 years. (While these stocks can exist in several industries, the semiconductor industry appears to be a relatively fertile hunting ground.)

I have not come across any high-frequency, violently cyclical stock (or ETF), in back testing so far, from the period January 1991 to August 2005, that would have taken $10,000 and turned it into $1,000,000 or more, even before all costs. So the title of Lichello's book is misleading in that regard.

My back testing also showed that AIM didn't beat the S&P 500 (not counting dividends, taxes, commissions and interest for both investments) from January 1982 to August 2005, or from January 1991 to August 2005. AIM, under the same conditions as mentioned above, also didn't beat the NASDAQ Composite from January 1991 to August 2005. Having said that, I am willing to give it a shot using a small amount of money for a few months on some specific stocks to see how it goes.

Happy Investing!

16 of 17 people found the following review helpful:

4.0 out of 5 stars AIM and the fortune teller, October 7, 2005

By 

Archer15 (San Jose, CA) - See all my reviews

This review is from: How to Make $1,000,000 in the Stock Market Automatically: (4th Edition) (Paperback)

Ever read a disclaimer "past performance is not indicative of future results"?? duhuhh! Obviously!! Don't find many fortune tellers on Wall Street!

Read Mr. Lichello's book 6 years ago, and YES it was wordy and it was a laborious, arduous and painstaking process going through it.. But I'm glad I did coz if my past performance is any indication of the future than I know two fellas up in the sky smiling down at me as I laugh my way to the bank...every month! AIM works! In fact it works brilliantly (I didn't make a million bucks.. I made TWO! and that too in less than 6 years!) THANK YOU MR. LICHELLO may you rest in peace and may God give you special privileges!

The only reason I've given it a 4 ½ stars is coz it doesn't come with software to handle the complex portfolios. Converting the AIM algorithm to spread sheets with all the bells and whistles that I need was even more of a laborious job than reading the book and as some Spread sheet gurus pointed out "couldn't be done coz of Excel's limitations" Well they were right.. some things cant be done in Excel !

Anyway, here's the secret: go for stocks or funds with crazy beta's (that's the key) difficult to find but then you have to work for the million...but not too hard as AIM will do the rest.!