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Strategies & Market Trends : A.I.M Users Group Bulletin Board
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To: B. J. Barron who wrote (7566)5/31/1999 9:53:00 AM
From: Bernie Goldberg   of 18928
 
Hi B.J.,
You will get messages from folks about how to change AIM. I would respectfully recommend to you that at least at the outset you ignore them. It is amazing to me how people can read a "how to" book and come away with the idea that it is amazing and should really work. Then they go about changing just about everything that they read.
#1 Read Mr. Lichello's book and decide if AIM is the way you want to go.
#DH is a very good company. I ran a PCA chart for DH over the the last three years. Some of the good folks on this thread would have you believe that it is not a good AIM candidate. Here is the data.
You would have started May 30 1996 with 1900 shares at 16.44 ($31236)
With a stock the quality of DH you could easily have started with 33% Cash reserve ($15618)
Today you would have a profit of $56792. Your cash reserve would have grown to $65572 and your Stock would have grown in value to $39417. You would only have 586 shares left at a cost basis of negative $29.98. This does not include the dividends or the interest you would have received on your cash reserve.
If you had bought and held you would have a profit of $101,538 with no cash reserve. The difference between the two methods is roughly 75%. This does not mean AIM doesn't work. One could only say that
if one was convinced that the Stock Market including DH was NEVER going to decline by more than 20%.
I would say that DH would be an excellent core holding in your portfolio. You don't need 48% cash with a steady growing, dividend paying stock, 33% will do just fine. That will leave you about $15000 to start another AIM program with something a little bit spicier. One could consider that as a bonus from AIM.
Set your minimum transaction at 5% of your total stock value ($1500) as recommended by Mr. Lichello.
Do your updating weekly with Newport but only do your buying and selling biweekly or monthly. ARBML (as recommended by Mr. Lichello)
Leave your safes at 10% (ARBML)
Just remember AIM is a low risk method of investing. That is what makes it work.
You can change the cash when you start your investment to any amount you want in the setup screen.
I hope this helps.
Bernie

P.S. AIM works! That is what impressed you in the first place.
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