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

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To: LemonHead who wrote (6643)	1/18/1999 7:49:00 AM
From: Bernie Goldberg	Read Replies (2) of 18928

Hi, The most important criteria for an AIM stock is it's cyclical nature. It may be an over simplification but stocks that do nothing but go down are not good candidates for AIM. Neither are stocks that do nothing but go up. However with upwardly mobile stocks with AIM while you won't make as much as you would with buy and hold, you won't go broke. Over the weekend I ran a 3 yr history on BEAM with PCA. BEAM was 30.8 in January 96 when the history started and rapidly dropped from there. It now is bouncing between 4 and 6.( I bought it at 5.06. Using AIM from 1/96 one would have increased the number of shares by about 50% before running out of money. I decided to see what would happen if I increase the amount of cash. I had originally started my simulation with 66% stock and 33% cash. In January 1999 the AIM investor would have lost $7243 while the Buy and Hold investor was down $5526. This was run with a $10,000 initial investment. Changing the cash to $6667 brought the AIM investor's losses to $9989. Just for grins I kept adding more and more dollars to the AIM program. At $60000 one would have had enough cash to ride out the long bottom on this stock and only have a loss of $57. Starting with $6667 in stock and $70,000 in cash in January of 1998 one would have a profit of $2677. I AM IN NO WAY SUGGESTING THAT ONE SHOULD START AN AIM PROGRAM WITH $6667 IN STOCK AND $70000 IN CASH. If a person had been smart enough to not buy BEAM until August of 96 after it had completed the bulk of its precipitous drop he would today have profit of $18 and 1853 shares rather than the 965 he started with. The buy and hold investor would be down about $1800. Mr. Lichello in his book certainly does not recommend throwing more money at a stock that has behaved badly. Being one of the more conservative AIM investors on this thread I concur with Mr. L. in this. The only time I have lost money with AIM was when I bought some share at $24 and AIMed all the way down to $4. I watched it piddle around for a while before I realized that this was a stock that was not going to come back. I sold it at $4 and watched go down to between $ 1 and $2 before it disappeared into the sunset. That experience taught me a lot. It is interesting to see what would happen with the infusion of $65000 to an AIM program with a stock that has been a dud ( but has not disappeared into the sunset). Ain't 20/20 hindsight grand! I was lucky enough to purchase BEAM 12/13/98 at $5. Last week I sold about 6% of my shares and presently have an 8% profit in one month. Annualized that's about 96%. AIM works. If you read the book it will tell you who to set the gauges. You could start with a 10% buy safe and a 10% sell safe and patience. Hope this helps. Bernie

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