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Post# of 47097
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aptus

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aptus

Re: Myst post# 6679

Saturday, 01/04/2003 4:42:21 AM

Saturday, January 04, 2003 4:42:21 AM

Post# of 47097
Rebuttal? What Rebuttal?

Myst wrote,

"...x-dev generates its signals based on a moving average of an equity's price."

Not entirely accurate. X_DEV generates it's [sic] signals based on the deviation of price from a 12 day simple moving average of price midpoints.

(1) What's "not entirely accurate" about this statement? The fact that the signal is based on the deviation of price from a moving average, means that it IS based on that moving average.

It's as if I said a house was built on a foundation and you replied that the statement was “not entirely accurate” because the house was built on a concrete foundation 12 inches deep. That doesn’t refute the fact that the house was built on a foundation.

Your statement just serves to reinforce what I wrote, however you word it to sound like it’s refuting what I said. Perhaps you should take your own advice and “If you look close...that's right, press your nose to the screen...” you will see that your statement corroborates, rather than refutes, mine.

But that doesn’t seem to be your style. Why let simple little things such as logic and facts get in the way of hyperbole?

"...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.

(2) Again, “If you look close...that's right, press your nose to the screen...” you will see that I didn’t say the portfolio value doesn’t form an integral component of the algorithm. Rather I said that x-dev doesn’t have a running total (i.e. a portfolio control). And, as you full well know, it doesn’t.

"...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.

(3) And yet again, “If you look close...that's right, press your nose to the screen...” you’ll notice that I said that Portfolio Value “does come into play.” However it is not taken into account when triggering a recommendation event -- as the equity value is with AIM.

You’ve managed to restate exactly what I said but preface it with, “Again not entirely accurate” in order to make it appear that you’re refuting what I wrote all the while choosing to ignore what I actually said.

Maybe you’re not aware of the meaning of the word “rebuttal.” In my Oxford dictionary it’s defined as, “refute, disprove by argument. Prove falsity or error of. To present opposing evidence or arguments.”

As you can see, your arguments don’t meet any of these definitions – perhaps the word you were looking for was “concur.”

So let’s pause a moment to see what we’ve got (and to give you a chance to clean your screen – I mean that much nose pressing has got to leave smudges).

1. You’ve not actually refuted anything I’ve said. What you have done is confirmed what I wrote but did it in such a way so it appears to the casual reader that you actually had some sort of logical rebuttal.

2. In all three cases, listed above, you’ve managed to say absolutely nothing new – yet it took you 151 words to say it. Perhaps you like to hear yourself speak?

Okay, now that you have a clean screen, let’s continue.

“ Everything is more inter-related than you suggest. Though I think you already know this.”

Nope, everything is NOT inter-related and I certainly know they’re not. Why? Go back and reread my original post and you’ll see why. In fact that’s why I wrote that original post.

x-dev has no Portfolio Control nor does it have anything resembling a Portfolio Control. Portfolio Control is an extremely important component in AIM’s recommendations. Therefore x-dev cannot give similar signals to AIM – no matter what contrived, cherry picked examples you choose to parade in “support” of your “logic” (and I use that term very loosely). Go ahead and reread my original post. I’ll wait.

Back? Good, now that you know what I really said (although somehow I get the feeling that you already knew), you’ll notice that I made one simple point. A point so simple that I believe that the same dart throwing monkey, made famous in all those stock books, could understand it – and yet that simple point appears to have eluded you.

My point was “to show that x-dev is not an AIM derivative -- but a new system altogether.” That’s it. And, your so called "rebuttal" (devoid of any logic or facts), not withstanding, hasn’t refuted any of it. Probably because you know what I wrote is true – and if you don’t, certainly everyone else who’s read it does.

Note that I didn’t say anything about the relative merits of the two systems. However since you’ve brought up the subject I will say that x-dev is a significantly riskier algorithm than AIM, ceteris paribus, because it is a short-term trading strategy rather than a long-term investment strategy.

And it’s based on a Simple Moving Average nonetheless. In essence what you’re saying is that deviations from a 12-day SMA can successfully, and consistently, generate profitable short-term trading signals. And you’re saying those deviations can correctly size a trade (based on what logic?).

You’re further saying that a 12-day SMA carries enough information to consistently work and decrease risk below AIM levels. And, best of all, you don’t need to back this up with proper testing or data. Folks should just take your word for it. Forget about all the other TA indicators out there, a 12-day SMA is the ultimate solution. Wow! Why didn’t I think of that.

Now if we distill everything you’ve said (and eliminate the abundant rhetoric and nattering), what have we got?

Here’s a list:

1. You’ve come to an AIM board (that’s right, this is a board devoted to the AIM method of investing) with a system that is not even closely related to AIM (uh, uh, uh, before you post another “rebuttal,” press your nose to the screen and re-read (1), (2) and (3) above). You’ve claimed this system is related to AIM (on one hand), but is much better (on the other hand) because, in part, it “doesn't need no stinkin ‘portfolio control’” (and apparently doesn’t need no stinkin’ historical tests either).

Now most people who understand AIM and the Portfolio Control would see a blatant contradiction in these two statements, but apparently not you.

Here’s what I think. You play up the AIM connection because you feel there’s a very large AIM market that you can tap if only you can convince people that x-dev is an AIM derivative. Rest assured that x-dev is NOT an AIM derivative. It is a completely new system (and a trading system at that).

2. You’ve taken every opportunity to denigrate AIM and tout x-dev with ABSOLUTELY NO FACTS to back you up.

What you claim to be facts are highly optimized examples designed to show x-dev in the best possible light. And some of your examples are optimized after the fact. Anybody can optimize any system after the fact and cherry pick a few examples to show that system outperforms any other system.

The real proof is, as I’ve said in previous posts, “press your nose…” (well, you know the drill) to test your system over a wide variety of market conditions using statistically-sound blind tests.

I even gave you step-by-step instructions on how to do this in hopes that you’d come back with some meaningful results. Rather you’ve completely ignored this method of testing and chosen instead to spout thinly veiled ridicule at anyone who’s not agreed with what you've said – or anyone who has asked for real proof.

3. You’ve insulted a number of AIMers on this board because they “dared” to question your results.

4. You’ve injected hype, the likes of which I’ve only seen in SPAM email, into a board that was once exclusively the domain of factual discussion and idea exchange. And for what? To sell a piece of software.

You obviously must think AIMers are stupid. Why else would you come to an AIM board, tell AIMers their system sucks compared to your new system (based on a 12 day SMA no less) and then insult long-term AIMers who ask you to validate your claims with facts? Just so you know, AIMers are not stupid, just overwhelmingly polite.

AIM has been properly back-tested for years and people have actually used it to make substantial profits over long periods of time. x-dev? No back tests, no long-term results and it has been in existence for a whopping 7 months. The only “proof” you appear to come up with are outrageous claims that remind me of snake-oil salesmen selling their special cure-all remedies (but at least they had the intelligence to leave town when the facts came out).

In the future try to back up your claims with PROPER tests and data. Refrain from making up “facts” and at least try to provide some value to the AIM board.

“ Happy New Year!”

And a Happy, and smudge free, New Year to you too!



Regards,
Mark

http://www.automaticinvestor.com
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