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Strategies & Market Trends : A.I.M Users Group Bulletin Board

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To: budweeder who wrote (14685)	1/31/2001 4:23:17 PM
From: OldAIMGuy	Read Replies (1) of 18928

Hi Bud, I plan on using my Idiot Wave's High Risk signal as the time to go on Defense. My thoughts are to switch to a 1X NDX fund for as long as is necessary to have the Idiot Wave fall back to a lower risk profile. I haven't picked a target value for the IW yet for when I'll switch back to the 2X fund. In a taxable account there's going to be some peculiar actions. Some of this switching will be short term trading. It might be that one would be switching out of the 1X fund at a loss. I'm not sure I can stomach that! This is going to take some fiddling. Maybe I'll end up switching to CASH for the ride back down. This is my next area of experimentation. It would soften the "landing" to be in a 1X fund and also cut down the annual costs of holding it. (the 1X funds have to be cheaper to own than the 2X funds) AIM could have handled QQQ, for instance with a cash reserve of about 50% at the peak and periodic buying with SAFE set at 10% on both sides. However, even with SAFE higher on the Buy side and plenty of cash, AIM couldn't handle the 85% drop in UOPIX's price and still buy all the way to the bottom. Normally I don't shift my SAFE settings once they are in place. But Y2K was such an unusual year that I felt I had to make adjustments. If you go back to the year-end summary from the weekly Newsletter (http://www.aim-users.com/oldbbs.htm week of 12/25/2000), you'll see that I mentioned early on that I was making such adjustments and that AIMers might want to consider the same. My stock histories all show what their current settings are. Again, we don't want to handicap AIM with too many control adjustments. It just might not perform very well in 95% of the market. I don't know if we can carry the burden of defense around 95% of the time and expect the 5% utility to be properly compensated. I've not yet looked at a hedge into the "bear" 2X fund. It certainly would have helped at the peak, as it would have conserved much of the previous gain. However, it would also have meant kicking in a serious amount of new money to establish that bear fund position. Add to that the need for exquisite timing and I'm not sure I'll follow that course. Hope this helps. I'll be working on this subject for a while. Maybe it will be my "topic" for AIM 2001! Best regards, Tom

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