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

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To: Bernie Goldberg who wrote (13342)	10/31/2000 9:31:56 AM
From: Bernie Goldberg	Read Replies (2) of 18928

Hi all, Yesterday was kind of a slow day the only activity I had was in the "Dogs of the Dow" which haven't been very good to me this year, so it was nice to see all of them going up for a change. It also was nice to be able to think about various investment methods that have been mentioned here on SI as well as AIM and how it is implemented. I have to admit that I have been caught up in the rush of emotion that is sometimes displayed here, although I have tried to ignore it most of the time. In thinking about that I decided to check how Mr. L's AIM would have done this year compared to AIM as we know it. All during '98 and '99 we were bombarded with people who criticized AIM for it's larger than necessary cash reserves. It has always been my opinion that AIM was not designed for the kind of market we had in the years just prior to Y2K, but rather more for what has been going on this year. So I decided to do a little comparing between Mr. L's AIM and what I have done this year. If one has either PCA or Automatic Investor it is a very simple exercise which probably wouldn't take more than 30 or 40 minutes for most of us to complete. I took the stocks/funds I was interested in and wrote down on a piece of paper my positions as of the January 1, 2000. Stock Value, Number of shares, Price and Cash reserve. I then went to PCA and down loaded histories using MONTHLY DATA, and used my starting information for the year. I imagine one could use any day of the month that you desired. I found the results very, very interesting. I'm sure that you all have noticed the constant comments here on this thread about people not having any more dry powder. I'm going to exclude Tom from this in most cases because he's been doing this longer, and therefore has larger cash reserves than most of us. I would be interested to hear about how some of the rest of you fared doing this simulation. Here are some of my results: UOPIX: I now have 2.37 times more shares than I started with 1/1/00. Newport tells me I am down 30%, and I have ZERO as my cash reserve. I had 13 Buy transactions and 6 sells for a total of 19 transactions in a 10 month period of time. I believed at the beginning of the year that because of UOPIX's volatility I would get better performance by trading once a week when necessary. Using PCA and once a month transactions: I would have increased the number of shares by a factor of 2.03 PCA tells me that I would be down 17%. This alone would have cut my "losses" for the YTD period by 44%. Oh! i almost forgot. PCA is telling me to Buy 198.6 shares at $49.56 ($9847). GUESS WHAT!!! My cash reserve is at $20,298 and I could afford to buy these 198.6 shares had I totally listened to Mr. L. This would lower my per share price and I would then have more shares than I now have with still more cash left to buy some more if necessary. Other examples were also enlightening. I would heartily recommend that any one who is cash short right now do this exercise. IMO it will do more than anything else to show how AIM works. Bernie

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