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

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To: OldAIMGuy who wrote (6495)	12/26/1998 9:55:00 AM
From: JZGalt	Read Replies (1) of 18928

Tom, I think you are now talking about two different concepts. First to get back to my original thought. I'm not sure of the AIM mechanics, but what I had envisioned was that after accumulating a significant percentage of shares at low prices, the best method of using AIM would not be to _immediately_ start to sell into the rebound of the stock even though the cash level might be lower that would be called for by the IW. In other words, when you correctly identified the JBL purchases on the collapse into the $20's, the 20/20 hindsight thing to do would not have been to immediately sell those shares in the low $30's, but to "let your LIFO profits run". Jim's suggestion of using a Sell-Stop eliminated the risk in doing that because you would eventually sell the portion at the sell stop if the market turned down. Once you had pulled one or two skips, a portion of JBL would have been sold in perhaps the high 40's to fill the cash reserve again. Mechanically, I don't know how to codify this. Perhaps two or three buys should be followed by one or two of these "skips" on the way back up, then let AIM go back to normal mode until the cash reaches a level where Vealies could be done. The second part of the discussion seemed to be centered about using the Sell-Stops in a normally functioning position where a Vealie was done. Given your history of having pulled a Vealie, only to watch the position pull back, I think it would be prudent to use the sell stop methodology in the case where a Vealie is pulled simply to protect the underlying AIM mechanism. In both cases we are trying to second guess what AIM should do vs. what it wants to do via the normal mechanics. The sell-stops are there just to prevent this "guess" from becoming a losing proposition. ---- Dave

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