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on February 11, 2001
I regret bringing sad news to the A.I.M. Users, but I've learned Robert Lichello passed away last Thursday, February 1, 2001 after illness caused by cancer. Inventor of the Automatic Investment Management method Mr. Lichello first published the formulae in 1977. (Signet Books ISBN 0-451-17453-4, First Printing, Aug., 1977) Born September 12th, 1926, he authored several books on investing, history and biographical subjects during his 74 years.
His A.I.M. book has been constantly reprinted since it first appeared 24 years ago. His work has been inspiration to an entire generation of investors. It has been the advent of personal computing which has made A.I.M. easier to use and the internet as a method for users to share their experience that has popularized A.I.M. with thousands of new and experienced investors.
A.I.M. utilizes a Cash Reserve in conjunction with one's investments and, by formula, shifts the cash over to the equity side during poor market times and rebuilds the reserves when the market is in a bullish phase. It's method works by compounding of LIFO gains over the course of many market cycles.
Where many investment models shun cash and liquidity, A.I.M. makes cash an active part of portfolio management. It also is "automatically" a contrary model, buying shares after price declines and selling off small portions of one's position as prices recover. Years like 1987, 1990, 1994, 1998 and 2000 are where A.I.M. really has shown its strength.
Best regard...
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on June 16, 2004
I've been investing in stocks and mutual funds for about 18 years and I think this investment techique is one of the best I've seen. Basically, Mr Lichellos method has you keeping a cash
reserve of either 50% or 33% (new advanced method) and investing the balance in stocks or stock funds. When the market drops you put a portion of your cash from your reserve into the market according to his investment plan percentages..when the market runs up you are selling stock and moving profits into your cash reserve.
I really dont know of anybody who has done very well with the buy and hold style of investing with the bear market of the magnitude we've seen. I personally use this system for my Roth and 401k and really have been pleased with it...Mr. Lichellos methods have allowed me to consistently take my profits as I make them and put them into my reserve for future purchases at lower prices. If your one of those day traders maybe the book isn't for you, but if your looking for a technique that works in any type of market conditions and doesnt require more than
15 minutes per month to monitor then maybe this approach is for you. One more thing, if your not sure, why not try it for 6 months and see if it works for you. You can always go back to your old buy and hold (hope) strategy if you want but I dont think you will...
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on January 15, 1998
Most Investment Clubs that have existed for some time have accumulated a portfolio that would benefit from management by the A.I.M. method. It would simplify club SELL decisions and also let the club respond more actively during market corrections by using AIM's Cash Reserve for additional buying.
Also, Mr. Lichello's TWINVEST method is a far better approach than the classic Dollar Cost Averaging that almost all investment clubs use. It has the side benefit of letting the club accumulate the stock AND an adequate cash reserve for that stock to fund yet another AIM account as it grows.
I'm surprised that NAIC has never embraced the dual concepts of A.I.M. and TWINVEST!
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on October 2, 2013
I read this book long ago and was intrigued by its strategy. It's been out of print for years. Recently I have been wondering how the strategy might apply to some current situations and couldnt remember the details. The book was easy to find on Amazon and came promptly in the mail at a good price and in good shape. Nowe I wonder if there has been any followup?
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on August 17, 2000
I have read the other reviewers opinions here and I must say it is easy to see those who have not tried the AIM system. It works folks, I have read this book three times, and yes the author is a bit wordy and he could make the book much shorter, but who cares.
The bottom line is this system works. I have gone back and reconstructed different stocks and losses in the dogs are less then someone who invested a lump sum, and profits are higher in those stocks that are winners.
The key to success is to find the stock that is volatile and is rolling. You need to be patient, this system does work.
Those of you who invest try what ever you are comfortable with for me I'll stay with AIM.
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on August 25, 1999
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, oldcat@execpc.com
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on October 25, 2009
I'm always trying to build a better portfolio. Last year I heard that Jim Cramer (CNBC's Mad Money host) was preaching the virtues of trading around a "Core Position."

I wanted to know more about, "Core Position," trading and Googled it. The many citations led me to buy Robert Lichellos' 1977 book, How to make a Million in the Stock Market.

Lichello is an interesting author and provides us with a narrative of how stock investing was accomplished in the 1970's. So, it's a history book. But, it's also a book about a new trading system. In his book Lichello outlines his "AIM" method of buying low and selling high. It's basically a risk management method to be applied to your portfolio. In the book, Robert's new "AIM" system is loving and methodically described by the author. Robert says that using this system can make you a million in the stock market. Well that may be oversell. Authors are good at overstatement.

Still, is a fact that Jim Cramer uses this system in managing the profit and loss mitigation in his portfolio. Yes, he has modified the system to work his own way, but the basis of his system has its origins' in Robert Lichellos' work.

I see Robert Lichello as an original thinker and ahead of his time. I appreciate the effort Robert took to build and test his system. I recommend this book.
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on September 7, 2008
When I first heard of this book, I thought it might just be another one of those overly hyped books. When I started to read it, within a few pages I realized this book contained some very valuable information. The more I read, the more impressed I was with the information that the author provided. The book provides a glimpse into what you need to do to become aware of your own investments. Sometimes it may come as a shock, which helps as that will provide the impetus to do something about your money. The author has a truly unique approach to how to buy and sell. It us not your usual method, but a very interesting and different methodology. One cannot help but be thankful for having purchased and/or read this book. This is, in my opinion a very important book for anyone and everyone investing their money in the stock markets and mutual funds. You will be glad you got this gem.
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on July 29, 1999
I find it interesting in the reviews here at Amazon that the most severe criticisim comes from those that haven't used AIM! Most don't like Mr. Lichello's "style" of writing.
One critic mentions that Mr. Lichello "admits" he hadn't made a million dollars yet (page 181). However, the critic forgot to mention that the quote was from 1980 - just three years after the book was first published. Gosh, I wish the critic could teach me how to make $1MM in just three years!
Yes, the book has been IN PRINT for over 20 years - that says quite a bit about its relative success as a publication. How many other investment books have continually been reprinted and updated for that long?
"Why hasn't he even reviewed his own book here?" Well, he's now in his Seventies and probably doesn't care to.
"If his technique was worth anything, why are you getting it for under 6 bucks here?" Well, I personally have corresponded with many Registered Investment Advisors, Stock Brokers and financial planners that use Mr. Lichello's methods for their customers. Believe me, their customers are paying a fatter fee than just $6 for having their money managed for them.
I would like to suggest after reviewing the fact that most mutual fund managers don't even manage to keep up with the broad market averages, year after year, that maybe they'd be better off letting "a few high school students run billion dollar portfolios with AIM."
In short, please realize that with nearly 12 years successful experience with AIM, I have a completely different opinion than others here have offered WHO HAVEN'T EVEN TRIED IT FOR A MONTH!
Anyone who suggests that successful investing doesn't require "work" is a fool or has been just plain lucky. AIM requires effort on the part of the user (athough new computerized AIM programs make it much easier than Mr. Lichello's longhand method). AIM requires that we invest rationally while picking quality stocks with great long term potential. AIM requires an attention span longer than the basic kindergartener. Value Line provides a source of consistent information on BETA (price volatility) and Stock Price Stability which help in the selection process. However, there's also mutual funds such as Profunds Ultra OTC (UOPIX) that provide all the volatility and potential that a successful AIM account needs.
So, SKIM Mr. Lichello's book if you don't like his style, but please grasp the concept. After you tire of the Momentum Game of musical chair investing, pay your current SHORT TERM tax bill, and figure your total return, go back and re-read the important parts of the book. I think you'll find more there that first meets the eye.
More users can be found by entering "Lichello" in a good search engine. There's plenty of us.
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on January 2, 2007
The formulas set forth in the book are very helpful and the book is easy to read. It is a good value for the money. I think the formulas would work well for a very conservative investor. The book also includes a formula for making periodic investments in mutual funds. I backtested the book's approach over the last ten years using the mutual funds in my 401(k) which are offered by American Funds. For most periods, the results were better for the book's approach than simple dollar cost averaging. Because the market is presently up significantly, the dollar cost average approach is currently ahead but the book's approach will be better if the market turns down.
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