Q.
Tom,
I hate to bother you, but I have a few questions. I have read Robert
Lichello's book and I am not quite sure how you determine the buy and
sell price ranges. I am right now just checking my mutual funds once a month and plugging them into the formula. Based on the FAQs in the back of his book there were a few different ways to determine what the
ceiling and basement amounts are for selling and buying but how about
for your price ranges? Also once you had a list of recommended mutual
funds that met certain criteria of Lichellos on your webpage. Do you
have a place where these are updated still or not? Thanks for your
time. You are helping laymen like me out a ton.
John
A.
Dear John and Julie,
The minimums for trading are set many times by the mutual funds themselves. If they don't have a pre-set minimum for buying and selling, then use about 5% of the value of the mutual fund's value in your account (just the equity fund, not the cash reserve). I guess I'd use as a secondary rule no less than $250 per trade. It wouldn't be worth the tax accounting to trade much less than that.
It's a bit complicated to pre-calculate the next buy and sell prices. If you continue to do AIM longhand, you just enter No Trade where AIM's asking you to buy or sell less than your minimum. Bob Norman's Newport Programs has the ability to do these calculations for you and the computer screen presents them to you each week when you update your prices. I'd advise something like this as your next step along the AIM path.
I was asked to take the mutual fund report off the bottom of the weekly newsletter. The reason was that people like to print out the newsletter and didn't want to reprint that over and over again. I can't remember where I moved it to! I was in the process of updating the list about a month ago and got sidetracked. Inow have finished it as a separate AIM page. ( execpc.com )
The intent of the list was to have a good source of names that fit well with AIM for very long term holdings. As an alternative, Jim Battaglia is constantly reviewing mutual funds for good AIM candidates. However, his list is usually for people that want to periodically switch funds. If you contact Jim, tell him that you would like some mutuals for AIM for a 3 to 5 year period and see what he says. His email address is in the FAQ section of my web site.
The two biggest things I look for in AIM mutual funds are:
1) Forbes ratings of A+ or A in bull markets and D or F in bear markets.
2) History of beating the S&P 500 over long periods of time.
This should give you the volatility that you need for AIM and the long term growth that we all desire. It takes AIM several market cycles to get ahead of Buy & Hold, but once it does, there's no looking back.
I also feel very strongly about the two basic improvements that I've made to AIM. The split SAFE values for buying and selling and the use of a cash reserve maximum percentage. These are described more fully in the FAQ page.
Please don't hesitate to ask questions. If I didn't want to help, I'd never have built the web site or left my email address there!!! Mr. Lichello did a marvelous job creating a tool for risk management. His view was from the '70s during a time of a stalled market that didn't seem to have future growth as a major potential. What I've done is to help make AIM usable in a roaring bull market. The biggest single problem I had with AIM when I started using it 10 years ago was that it was too conservative and raised cash levels to too high a level. I was good enough at picking good stocks and funds that AIM was always selling and never did enough buying. Hope this helps!
Best regards,
Tom Veale |
