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

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To: OldAIMGuy who wrote (8325)	8/28/1999 12:10:00 PM
From: JZGalt	Read Replies (3) of 18928

Tom, There is a single flaw that really sticks with me and prevents me from AIM'ing my stocks. First of all, I tend to select stocks that I feel have potential for 200-400% gains over 5 years. Big broad areas of development is where I tend to select stocks with a superior long term gains. In these cases, I tend to find stocks a bit earlier than most people and AIM would have me selling my shares too early while they were still "cheap". Taking a 20% profit in a month only to see the same shares double in 3 months is not something I like to see. This is primarily a result (I believe) from AIM carrying that requirement to try to get back to a large cash level as fast as possible. Jiggering the Buy Safe and Sell Safes to account for my style of higher flyers seems to be bending the system to it's limits. Does it make sense to run a stock with a 10% buy and sell safe if it grows earnings 30-40% per year? I don't think so. If you take a look at three stocks that have done well that I have talked about here (AMKR, PMCS and GALT), I loaded up at low prices and haven't sold a single share because they are not overvalued. Once GALT gets overvalued I'll start selling and redeploying the capital into other under appreciated assets. Last time I ran the GALT numbers Mr Buy and Hold is still $25k ahead of AIM on an $80k initial stake even though I cheated and put the reserve at 25% (0/20 on buy/sell safe). For my taste, I'd rather be sure of the companies I'd buy, lower the cash reserve to 25% or lower and margin when AIM ran out of cash. If I combined this with not selling until fair value was met, then I think I can pull better returns than AIM. 40% return risking 100% of capital is a better solution for me than 20% return on capital because I'm sitting on 50% cash. Just an opinion. ----- Dave

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