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Strategies & Market Trends : A.I.M Users Group Bulletin Board

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To: Jack Jagernauth who wrote (5539)	9/3/1998 12:57:00 AM
From: OldAIMGuy	Read Replies (2) of 18928

Hi Jack, I think Jim Battaglia addresses the fund "switching" aspect better than I do. It looks like Julius is also working on such things. One has to take into account the tax aspect of any switching that takes place. Please remember this as you project your potentials. I've been whacked pretty hard in the gold fund that I started over a year ago. It looked as though I'd timed it right at first, but as we've seen, that sector got knocked cold. The Energy funds will recover and advance during the next few years and are a great long term investment. The whole idea of AIM is to sell when our funds are up and buy the funds when they are out of favor. As we buy, we build a larger portfolio for the next ride up. One effect of switching is that we negate the purchasing aspect of AIM. Assuming that you used AIM the whole way on your energy fund, you should own lots more shares now than when you first started. Only if you need to sell out have you treaded water. It may look like you've stood still, but then how did you gain the extra shares in the account? I think the most painful aspect of AIM might be what we've been through this year. We have taken capital gains in an earlier rally. Good news. The bad news is now our accounts are down in value and come tax time, we still owe on earlier capital gains! I've had this happen before. 1995 was a bad one. Tech stock shot for the moon and I owed a pile of taxes on shares sold through September. Then they tanked BIG TIME between Sept. and Dec. I still needed to pay tax on the gains. This falls under the money management aspect of running this investment business. All my exit points are determined by my long term view of the equity involved. If that long term view deteriorates, then I exit. AIM should have limited my risk enough if I've been faithfully selling as prices were rising. I hope this helps a bit. Sector funds have a higher BETA than diversified funds, so we have to expect bigger swings and, if we've selected well, bigger potential gains. Best regards, Tom

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