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Strategies & Market Trends : A.I.M Users Group Bulletin Board
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To: budweeder who wrote (16981)10/2/2001 12:51:42 AM
From: Jack Jagernauth  Read Replies (1) of 18929
 
Hi Bud,

Here is something that might help. It's an excerpt from one of Tom's earlier posts regarding stock selection:

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

A top-down approach. Then the special items from Value Line to refine the search.

- 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

There's a lot of flexibility in the statistical end of things depending upon where in the "investment pyramid" the equity belongs.

A stock selected by this method would do well with an effective 50% cash reserve starting point (and later peak), 10/10 SAFE (or some other combination that adds up to 20% or higher) and let 'er rip.

Another approach, as someone else mentioned, is to look at any respectable mutual fund and pick one or two excellent stocks from there, and AIM them. You will very likely do better than the mutual fund you picked the stock(s) from.

Regards,
Jack
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