How to Make a 1,000,000 in the Stock Market Automatically!

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Summary: This won't work and I'll tell you why
Review: I quickly glanced at this in the bookstore, and here's what I noticed. All examples which back up the author's claim are for stocks that fluctuate perfectly between two fixed prices (10 down to 4, up to 10, down to 4, etc.) The problem is that if a stock were to actually go up over time (which historically is much more common), you'll get better better returns using a simple dollar cost averaging technique and never selling what you've previously bought. There's no way to know in advance which stocks will exhibit this perfectly cyclical nature over the long term, and the fact that all examples depend on this pattern should be pretty revealing!

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Summary: It really does
Review: I use three methods to buy and sell stocks. 1.Common Sense 2.Robert Lichello and 3.Ted Warren. Mr. Robert Lichello's A.I.M formula really works. How do I know? Because I use the formula with real money. You will make money using the A.I.M formula. You will make even more money if you use the formula in combination with the Buy and sell signals taught by Ted Warren. This is not a get rich quick scheme. If you are the type of persons who likes to buy stocks today and sell to tomorrow or next month seek another method. If you are a long term investor looking for gains of 300% or more in two to three years this your book.

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Summary: Most valuable book on my bookshelf
Review: I used A.I.M. and doubled a $5K portfolio within 2-years.

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Summary: Tried many investing techniques...this one is pretty good
Review: 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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Summary: Its a shame more people don't know about this book........
Review: Its a shame about the title, it sounds like a book you'd find
in the Supermarket right next to the TV Guide. (No offense TV guide!). But don't let the title put you off, its a very entertaining and informative book about trading.

There are alot of trading techniques around - Alexander Elder's "Elderay", William Dunningham's "One Way Formula" and so on. The technique Lichello designed is called AIM.
(Automatic Investment Management).

Despite the title of the book, AIM is not a 'get rich quick scheme', its a 'get rich slow scheme'
Its really very simple, obvious, and pure genius.
And it 'will' make you money in the long term, in a bear market, a bull market and especially in a choppy volatile market.

Basically AIM is a system that DOES NOT try to predict the future
or BUY at the TOP, and SELL at the BOTTOM. If the price goes up
relative to your original investment you sell. If it goes down, you buy. (Its tweaked with some basic arithmetic to time when
the buy and sell signals come.)

Unlike other systems, AIM doesn't require to gamble ALL of@your readies.....you only spend 'some' of your money on stocks, and keep the rest in your pocket.

If you read any other book on trading for example by Elder, Turner or Engell, you'll find in the introductory chapter, that you have to read a "library of other books" on trading. Books on the basics, books on fundamental analysis, books on technical analysis. Very dry...YADAYADAYADA.......... NO THANKS!!!!!!!!!!

Lichello's book is self contained, its a read it and do it book, and its very entertaining and FUN to read!!!! Because AIM itself is so simple, there's lots of room in the book for exmaples and stories..you'll enjoy reading it, and find yourself nodding in agreement with some of the truisms about money, work, life and investment..........

You know its only $6, do me a favour and read it! You won't be
disappointed!

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Summary: Beta-Blocker Dampens Volatility & Returns . . .
Review: Lichello starts out with an anecdotal review of efficient market theory, without mentioning the term, pointing out that "financial breakthrough books are obsolete by the time you read them" because when lots of people start using the system, it quits working. He then claims his book is different without saying why (but I will tell you).

That much is right on. A lot of the book is story telling, which would be harmless except that Lichello mixes in observations that are correct with some that are not. For example, he observes that individual stocks give more volatility than mutual funds. Actually, economists have been surprised to find fund volatility is nearly as high as stocks. Search for and download Cochrane's readable paper "New Facts in Finance" for the antidote to Lichello's mixed bag. Accuracy aside, it's mildly entertaining reading.

Lichello doesn't address how to pick the stocks in your portfolio, just how to manage a fixed sum of money invested in them. The catchy title has no particular basis. You can make a million with a savings account if you are patient, and also with AIM, including the patience.

Lichello's AIM is a method of rebalancing a fixed portfolio (not necessary to add new funds) between an allocation to stock and a cash reserve. Instead of rebalancing all at once annually or semi-annually, AIM uses a differential formula - what amounts to a digital filter - to gradually rebalance when applied monthly. In theory, this should allow AIM to profit from moves other rebalance methods would miss, and to not be fooled by sudden moves that might skew an all at once rebalance method.

Any rebalance method reduces total returns in exchange for lower volatility, by means of the cash reserve. AIM and AIM-HI are no exception. Assuming investment in a stock or fund with an average annual gain of 10.2% with a standard deviation (risk/volatility) of 28.2%, and assuming no transaction costs and no interest on the cash balance (or assuming the interest just covers the transaction costs), AIM reduces the average gain to 5.1% and the risk/volatility to 15%. AIM-HI gets the gain back up to 8%, but risk/volatility also rises to 22.7%.

So it does about the same thing as ordinary asset allocation systems - which are already widely used, therefore the publication of Lichello's book hasn't changed their effectiveness. There are two reasons you might want to use Lichello's method instead of all at once rebalancing. One is for the possible advantage of his clever filter. The other is because this system, by its very obscurity, will leave you less tempted to make manual deviations, which are often ruinous. The reasons you might NOT want to use AIM are high transaction costs, and the current low interest rates on the cash reserve. It works best in times of high interest (it was developed in the 1970's) and with at least $10,000 per security, which limits risk reduction via diversification.

There are better methods of rebalancing which don't require the cash reserve, and thus don't give up returns for the reduced risk, but they are more complex, and for a description of them you'll have to await my own book, currently in progress.

If you enjoyed this review, go to mc1soft.com and drop me a note and I'll send you a copy of the spreadsheet I used to analyze AIM and AIM-HI. Happy investing!

Rating:
Summary: Million dollar idea for only $7
Review: Lichello's book is a million-dollar idea for only $7. I first heard of Lichello's AIM book and bought it in the late 1970s. It worked then. I was doing nicely, but I had to cash out to live (my so-called "career" went down the tubes in the 1980s).

Some years later I again accumulated a little cash and so have been able to give it another go. It's working again. Two for two.

However, and this is the reason I actually give it "only" 4-1/2 stars instead of 5 stars, there are some potential pitfalls. Some of these are addressed to some extent in Lichello's book. Some are addressed by myself and others on various websites. You do need to be aware of them.

Buy the book, learn it, but do not plunge blindly. Look my site up by Google-ing "Core Position Trading" and/or Google-ing "AIM Anomalies". You will find more AIM information and reference to a computer program that does the AIM calculations for you. The program accounts for commissions, the effects of which are very important to small investors, since AIM profits depend on actual (after commission) prices, not just "transaction" prices/quotes.

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Summary: Great Way To Lose Big Bucks!
Review: Please listen to somebody who read this book, gave it too much attention, and managed to go on to lose 100%. What this book does not give credence to is the fact that people are often irrational and emotional. I firmly believe this was a parting gift to the securities industry, as payback to give the average Joe the illusion that there is some fullproof system or method for becoming a millionaire. What usually happens is small investors become obsessed with a stock, say the heck with the system, and go on to lose everything. STICK TO MUTUAL FUNDS FOR STOCK INVESTING. Note:it's investing NOT trading!

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Summary: Don't let the title mislead you
Review: There are two trading methods described in this book: AIM (Automatic Investment Management) and Twinvest. Long story short, AIM involves buying your favorite security on the way down and selling it on the way up. Twinvest puts a twist on dollar-cost averaging by increasing the amounts you contribute on the way down and decreasing them on the way up. Either way, it's what I call "putting good money after bad." The author even admits in the book that he has not made anywhere near $1,000,000 from the stock market.

AIM and Twinvest are intended for investors with a long-term horizon, not short-term traders. And the existence of methods such as AIM does not excuse you from carefully choosing your investment vehicles. AIM works best on volatility, but you need to choose an investment that's unlikely to plummet to zero. If you had used AIM on a typical internet stock a few years ago, for example, most of your working capital would now be history. With all the corporate scandals and market uncertainty, it's imperative to stay as diversified as you can.

Rating:
Summary: Don't let the title mislead you
Review: Well, for what it worth - I've backtested AIM strategy for several Dow Jones stocks on a time period from 1995 to 2002. It beats buy & hold in most of the tests. I guess to make a million you will need to apply it consistently for 20+ years, but it just might perform better than your 401k :)