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Advantage of Volatility

Posted: Tue Oct 28, 2008 6:56 pm
by mark
There was a book published about twenty years ago, titled "Automatic Investment Management"
It was in paperback when I bought it, but I no longer have it.
I don't remember the author's name.
He had a formula, rather simple, all you need is basic elementary school math skills to follow it.
If you have a number series that goes both directions, you can make money if you move money into and out of the market when you get a signal.
Because it works on numbers and can't be manipulated, he gave many examples in his book of hypothetical stocks going up or down, and as long as they don't go to zero (a big caveat) you can make money if there is volatility.
The point of this is: volatility can by a once in a lifetime chance to make some decent money trading.

Re: Advantage of Volatility

Posted: Wed Oct 29, 2008 8:31 pm
by mark
found a link on the internet

the author was Robert Lichello

It looks like the publish date was 1977

(I thought 20 years ago, but more like 30)

Link:
http://www.aim-users.com/aimbrief.htm

Formula helps you buy low and sell high, as long as the markets don't seize up completely, or other unforseen event.

Re: Advantage of Volatility

Posted: Wed Oct 29, 2008 8:52 pm
by John
mark wrote:found a link on the internet

the author was Robert Lichello

It looks like the publish date was 1977

(I thought 20 years ago, but more like 30)

Link:
http://www.aim-users.com/aimbrief.htm

Formula helps you buy low and sell high, as long as the markets don't seize up completely, or other unforseen event.
Attitudes and behaviors were completely different 1977. There
is almost nothing about how to invest in 1977 that is relevant today.

Sincerely,

John

Re: Advantage of Volatility

Posted: Wed Oct 29, 2008 9:15 pm
by mark
True: I was 27 years old in 1977, and things are different now, for sure.

My point being, if the markets survive, there is an advantage in buying low and selling high, and vice versa. The more volatility, the more chance one could have to do this.

A math algorithm is not necessarily generational.

The discipline to follow it, or the liquidity of the markets, may very well be.

Re: Advantage of Volatility

Posted: Mon Nov 03, 2008 8:13 pm
by mark
The volatility index (VIX) had dropped considerably, after spiking October 24.

The adage "Never short a dull market" is said to apply to bull markets only, according to Charles Dow.

In a bear market, dullness is said to be a prelude to another leg down.

I think the market is getting duller and duller, compared to a week to ten days ago.

Therefore, because we are in a bear market, and because it is dull, I expect another leg down, shortly.

Re: Advantage of Volatility

Posted: Mon Nov 03, 2008 11:23 pm
by ainsleyclare
In the last generational crises (the great depression) the stock market was stable for a while (a few months? a year?) after its great crash, then started falling again- what do you think of our chances to have a little stability before things really go south?