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

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To: Jack Jagernauth who wrote (14319)	1/12/2001 7:49:41 AM
From: Bernie Goldberg	Read Replies (1) of 18928

Hi Jack, I will try to answer both Bud's and your question in one post. There are some items of information in Mr. L's book that sometimes get lost in a translation. Mr. L said in the book that he really didn't recommend setting up AIM with just one stock. However he also said that if you really wanted to you could, using an immediate downdraft in that one stock's price as an opportunity to add shares of another stock. This practice would add diversity. I have to say that with the use of the PC, I as well as all of the others here have not always paid attention to his sage advice. I must admit that where I have heeded Mr. L. it has worked out to my financial advantage. A case in point: About two years ago I purchased for a friend of mine some shares of USON (which at the time was called AORI) for about $12 per share. The actually went up and we had one small AIM directed sale. But thereafter the news wasn't so good. In a matter of about two days because of some bad news the price was cut to about $5. I discussed the situation with my friend and came to the conclusion that it would not be such a good idea to put all the Cash reserve into this shaky stock. Instead, we purchased APCC, making 2 purchases at $31 and $28 a share. APCC then began to climb $48, while USON languished at $4. We managed the two stocks not as a "basket" but as what I call a Mini-Fund, combining the two into one NAV. We had two sales in APCC before the bottom dropped out of it in July 2000. We then made another purchase at $25 of APCC which exhausted the cash reserve. Poor little USON didn't do much until about 10 days ago. It has suddenly awakened and moved from $4 to $7. A nice 75% move since the beginning of the year. My friend is not out of the woods yet. Both stocks are severely down from her purchase price, but the two working together with AIM will get her back to profitability much faster than if they had to pull by themselves. You also wrote:Why is that it seems okay for AIMers to consider exiting a loser at the 'bottom' and not consider exiting a winner at the 'top'? IMO nobody knows where the 'top' or 'bottom' are. That's why AIM tells you to sell some of your holdings when a 'top' is reached. With a the exercise of the restraint provided by AIM BTB it is quite probable that you would not have run out of cash reserve so early. By purchasing shares at a lower price you would have possibly 20 or 30% more shares. You would not have so far to go to get back to porfitability. I exited some losers at the bottom this year('00) as I did last year('99). The reason I did it was I was looking to reduce my tax bill. AIM was smart enough to have me selling significant numbers of shares in the first quarter of the year. In my case I sold MSFT at 44 and replaced it with CSCO at 38. I was hoping that MSFT would stay there and CSCO would increase in value during the next 31 days. (A roll of the dice which didn't work out) That's not AIM's fault. I will reiterate what I have said here many times before. AIM works all the time. It is just some of the variations that only work some of the time. Bernie

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