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Strategies & Market Trends : AIM Questions and Answers

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To: OldAIMGuy who started this subject	4/27/2001 5:25:32 PM
From: OldAIMGuy	of 221

Q......... Tom, I was looking at a stock screening site and wondered if you could give me some direction on parameters that might be good for AIM stock selection. hoovers.com Thanks for your help, Don ------------------------------------------- A........ Hi Don, I've attempted to use a variety of automated stock screening methods over the years and have had only moderate success. Instead I abandoned that and went instead to a "top down" approach. Starting with a macroeconomic view of the world I attempt to guess at the very long term trends in the world economy. From there I could stop and select 3-5 high quality sector funds that represent those long term trends and be done. If I want to go deeper, I could take those sectors and then look at the major players and where they are in their own business cycles. Are the biggest still the best? Are they tiring and there's new characters that will eat up their market share? Once I get to that point I start to pick a few companies from each sector and then try to determine which one I'll go with as an investment. I might use some "technical analysis" type thinking to decide between two otherwise equal candidates. To summarize, 1) macroeconomic long term guess 2) identify sectors for long term growth 3) identify the best companies in those sectors 4) select from among the best for their "fit" with AIM using technical analysis tools Value Line Investment Survey is still my primary source of information. Their regular (1700 stocks) and expanded (5000 stocks) editions are in most public libraries. I depend less on the commentary and more on the specific data. Here I look at BETA, Stock Price Stability, Stock Ownership by Officers and Directors, Insider Decisions, historical Book Value Growth Rate, historical Sales Growth Rate, projected growth rates for both Book Value and Sales and Capital Structure. Here's what I like to find: - BETA > 1.3 - Stock Price Stability < 25 - Stock Ownership by O & D - the larger the better. - Insider Decisions - Periodic buying with selling only related to Options - Historical BV Growth Rate > 14%/year - Historical Sales Growth Rate > 14%/year - Projected 3-5 year growth rates for BV and Sales > 14% - Capital Structure - Debt < 25% of capitalization Please let me know if this helps. We'll be doing lots of discussion on this in Vegas. Jeff Weber writes a newsletter that goes about selection from a completely different approach of buying "out of favor" stocks. This is more like my PIC list. Best regards, Tom

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