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Strategies & Market Trends : A.I.M Users Group Bulletin Board
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To: Bernie Goldberg who wrote (14655)1/29/2001 9:53:18 AM
From: labestul  Read Replies (1) of 18928
 
Bernie wrote:

After all Portfolio Control (the amount of the initial purchase of stock) represents the amount you are willing to initially put at risk in an investment.

This statement probably represents the belief of a lot if not most AIMers. This however is not exactly my belief. The purpose of this post is not to argue with the statement but merely to present a slightly alternative point of view.

I consider that the initial total investment (in this case $10,000) is the amount that I am willing to risk in the investment. The amount of the initial investment (and hence the initial portfolio control value) is simply part of the AIM mechanism. In theory one should choose it to be such that the probability of running out of cash (before the stock price hits its lowest level) is roughly zero.

If, for example, $100,000 were the maximum amount that I were willing to risk in this particular stock then every time the total value of stock and cash exceeded $100,000 I would remove money from the AIM account (i.e. cash, stock value and portfolio control could all be reduced) and start a new account or accounts using other stocks. I would do this even if (as is likely) the actual amount invested in stock were significantly less than $100,000.

The above is simply offered as another viewpoint. I do not not necessarily expect everyone to agree with it. Comments are welcome.

Barry
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