Q.
Congratulations on your outstanding A.I.M. site, which I just found.
I corresponded with you some a couple of years ago, I think, when I
was on Prodigy and there was a Prodigy discussion group about A.I.M.
You were kind enough to snailmail me a stack of printouts dealing with
your own A.I.M. approach and results.
I mostly just wanted to say hi again. I'll mention also that I still
use A.I.M. for one of my accounts. It's an IRA in three American
Century (formerly 20th Century) funds. Unfortunately, the funds have
seemed stagnant for about two years now. I've managed to turn $10,000
into about $11,000 in that time, which I think would have happened
even without A.I.M. Why _three_ funds? Well, I was following Mr.
Lichello's advice that one set up a portfolio for doing A.I.M. As I
recall, however, you are a proponent of applying A.I.M. to just one
stock or fund at a time. Am I correct? I also think it was you who
was using A.I.M. with the 20th Century (American Century) Ultra fund.
How is that going? Ultra is one of the funds in my account and it has
been flat-flat-flat for some time.
Any advice in a situation like that?
-- Stephen
A.
Hi Stephen,
Yes, it's the same Tom from Wisconsin that blabbered about AIM on Prodigy! I'm glad to hear from you again. As the halls were emptying at Prodigy a year ago, I realized that I had to have a place to move our forum and a new home for the web pages. I first cloned the web site to ExecPc in Milwaukee and then started a serious hunt for a provider of a "bulletin board" type of environment. I kept both web sites going for a time then changed the Prodigy site to a "we've moved" message. In the mean time I came across the Silicon Investor pages. There was a good, active discussion group there dealing with the stocks that seem to work best with AIM, so I declared it HOME!
We've prospered there with about 3300 postings so far since about February. Our web site is now showing over 6000 hits in just under a year. All this is good news for me and other AIMers as the wealth of experience grows. I'm glad you like the pages. I've been busy freshening them just recently and adding some new links. The format of my weekly newsletter has changed very little since the Prodigy days. I still report on the Idiot Wave and the trades that I've made during the week.
If you look at "Tom's Account" you will find the IRA comparison to the NASDAQ is my Ultra Fund account. Note that even though I'm still ahead of the NASDAQ since 1990, I've been loosing ground. I'm beginning to think that I may have to change horses here. Both Ultra and Vista seem to have had their individual troubles. I invested with them because I wanted to use AIM in conjunction with a Momentum strategy. I thought that as Momentum got caught in a similar fashion to 1987, I'd get a chance to buy lots of shares at cheap prices. I've been surprised at the strength of the market as much as anyone. Ultra has offered very few chances to pump cash back into the fund. I'm using a Buy SAFE of 0.0% and a Sell SAFE of 10% and still I'm only getting a buy about once a year.
My Vista account is just about the opposite. It has managed to fall and offer great buys several times, but never seems to advance back to much above previous highs. I ran my cash reserve on Vista down to about 15%-16% this last April and recovered much of that cash in the rise through September, but that was the end of my selling. Now it's back near the trigger point of more buys.
I feel that each stock and fund has its own 'personality'. It is best managed by AIM as a separate entity because of this. You can manage a group of stocks or funds under a common AIM account, but the activity might be thwarted by one equity moving contrary to another. If one fund is up and another is down, AIM will say to do nothing. This can be self-defeating. Since you have a major safety valve in AIM, a second one in using a mutual fund, you don't really need a third of mixing funds together. Remember, AIM needs volatility to work well. Mixing funds in one AIM account reduces volatility.
On of my biggest mistakes with AIM was to let its Selling continue way too long. I didn't realize when I first started with mutual funds that their upward long term bias meant that Cash Reserves would build to levels that would make the portfolio ineffective. If you go to the AIM FAQ's at the web site, you'll find a method affectionately called a 'vealie'! This is sort of a reverse Buy. If your cash gets too fat for the account, you perform a vealie to cap the cash reserve and keep your portfolio in the correct proportion of equity and cash. Right now the Idiot Wave is recommending 34% Cash Reserve for mutual fund accounts. I think this is about the upper limit of cash reserve for all times, but certainly right now there's no need to be heavier in cash. Make sure that you keep your Cash/Equity ratio under control.
I hope this will help you with your thoughts on investing. I think my next mutual fund target will be a "sector fund". I've had good luck with closed end funds but haven't tried a sector fund yet. Please keep in touch and drop by the Silicon Investor Mutual Fund AIM pages as well.
Best regards, Tom |
