Tuesday, December 31, 2002 10:29:01 PM
rebuttal Sir Aptus
"...x-dev generates its signals based on a moving average of an equity's price."
Not entirely accurate. X_DEV generates it's signals based on the deviation of price from a 12 day simple moving average of price midpoints.
"...There is absolutely no unique portfolio history recorded so a "running total" does not exist.
Not so. The portfolio value is an integral component of the algorithm.
"...Therefore recommendations are given based on price alone. Only when a recommendation event occurs does the portfolio value come into play -- and it is used solely to size the trade. It doesn't take part in triggering the recommendation event."
Again not entirely accurate. The recommendations are indeed given based on the deviation of price....but.....successful recommendations increase the portfolio value. As you have noted, trades are sized based on the portfolio value, so the PV does come into play. As the PV grows the recommendation sizes also grow. Everything is more inter-related than you suggest. Though I think you already know this.
Also, I feel this is an important advantage over AIM. This is the main reason why one gets "stuck" with deep divers in AIM. AIM will not allow you to sell a stock that has dipped too far because the low stock value has to climb all the way back up and get over the portfolio control figure to signal a sell. As many Aimer's have seen, in a bear market AIM will have you keep buying shares until you've exhausted your cash and then will sit there on that huge pile
of shares until that depressed stock value gets over that big portfolio control that kept growing as your stock value declined.
X_DEV, on the other hand, doesn't need no stinkin "portfolio control" to tell it what it can do and what it can't do. It only needs price to fluctuate enough to reach its "average extreme high" to trigger a sale, even if it's a lower price than what it bought at in the past. By turning shares over at opportune times, X_DEV works the play to a profit even in a downtrend........as AIM sits and waits with the hapless buy and holder.
"....This is also a significant difference because AIM sizes trades based, again, on the running total (i.e. Portfolio Control) while x-dev doesn't."
True, again to X_DEV's advantage. Portfolio control acts like a "governor" on an engine. As a kid I remember ripping the governor off my mini-bike so the damn thing would go faster. Had the fastest mini-bike in the hood after that!
"....I'd be quite surprised if AIM signals and x-dev signals were the same in most cases. Even if we ignore the fact that x-dev signals are shorter-term in nature while the AIM signals' term is longer, the fact that a recommendation event is triggered by such different underlying conditions leads me to believe that in most cases the signals cannot be the same. It just doesn't make sense."
Well here is one example among many. A comparison of QLGC using X_DEV and AIM. If you look close.....that's right, press your nose to the screen.....you will see that many of the signals are similar. The big difference is what happens when QLGC takes a dip after the last X_DEV sell in July (where it timed a perfect selling opportunity and went to all cash). What did AIM do? Sat on all it's shares as it does till this day waiting for that stock value to trudge it's way back over that nasty Portfolio Control. Notice X_DEV bought the dip on it's way down and sold for a lower price in October. Then bought again just recently.
The results in case you were wondering:
Buy & Hold = (-22%)
AIM = (-10%)
X_DEV = +132%
I guess size does matter.
Happy New Year!
~Myst~
"...x-dev generates its signals based on a moving average of an equity's price."
Not entirely accurate. X_DEV generates it's signals based on the deviation of price from a 12 day simple moving average of price midpoints.
"...There is absolutely no unique portfolio history recorded so a "running total" does not exist.
Not so. The portfolio value is an integral component of the algorithm.
"...Therefore recommendations are given based on price alone. Only when a recommendation event occurs does the portfolio value come into play -- and it is used solely to size the trade. It doesn't take part in triggering the recommendation event."
Again not entirely accurate. The recommendations are indeed given based on the deviation of price....but.....successful recommendations increase the portfolio value. As you have noted, trades are sized based on the portfolio value, so the PV does come into play. As the PV grows the recommendation sizes also grow. Everything is more inter-related than you suggest. Though I think you already know this.
Also, I feel this is an important advantage over AIM. This is the main reason why one gets "stuck" with deep divers in AIM. AIM will not allow you to sell a stock that has dipped too far because the low stock value has to climb all the way back up and get over the portfolio control figure to signal a sell. As many Aimer's have seen, in a bear market AIM will have you keep buying shares until you've exhausted your cash and then will sit there on that huge pile
of shares until that depressed stock value gets over that big portfolio control that kept growing as your stock value declined.
X_DEV, on the other hand, doesn't need no stinkin "portfolio control" to tell it what it can do and what it can't do. It only needs price to fluctuate enough to reach its "average extreme high" to trigger a sale, even if it's a lower price than what it bought at in the past. By turning shares over at opportune times, X_DEV works the play to a profit even in a downtrend........as AIM sits and waits with the hapless buy and holder.
"....This is also a significant difference because AIM sizes trades based, again, on the running total (i.e. Portfolio Control) while x-dev doesn't."
True, again to X_DEV's advantage. Portfolio control acts like a "governor" on an engine. As a kid I remember ripping the governor off my mini-bike so the damn thing would go faster. Had the fastest mini-bike in the hood after that!
"....I'd be quite surprised if AIM signals and x-dev signals were the same in most cases. Even if we ignore the fact that x-dev signals are shorter-term in nature while the AIM signals' term is longer, the fact that a recommendation event is triggered by such different underlying conditions leads me to believe that in most cases the signals cannot be the same. It just doesn't make sense."
Well here is one example among many. A comparison of QLGC using X_DEV and AIM. If you look close.....that's right, press your nose to the screen.....you will see that many of the signals are similar. The big difference is what happens when QLGC takes a dip after the last X_DEV sell in July (where it timed a perfect selling opportunity and went to all cash). What did AIM do? Sat on all it's shares as it does till this day waiting for that stock value to trudge it's way back over that nasty Portfolio Control. Notice X_DEV bought the dip on it's way down and sold for a lower price in October. Then bought again just recently.
The results in case you were wondering:
Buy & Hold = (-22%)
AIM = (-10%)
X_DEV = +132%
I guess size does matter.
Happy New Year!
~Myst~
~Mystic One~
http://stockwerld.com
(What matters)
http://www.investorshub.com/boards/board.asp?board_id=2543
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