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

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To: Bernie Goldberg who wrote (6645)	1/18/1999 9:07:00 AM
From: JZGalt	Read Replies (1) of 18928

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. Excellent point Bernie. I think that most people who are new to AIM and have read the book might think that all stocks that are falling are suitable candidates for AIM. The point that seems to be missed is the stocks must eventually recover for the technique to work. How long eventually is will radically effect your performance. From my point of view, I'd rather select growth stocks with a high degree of volatility for AIM candidates vs. the traditional "cyclical" style stocks. That would be a personal preference. If you notice some of Tom's selections such as ADCT, JBL and VTSS, these stocks are all growth plays, but exhibit wild swings in price. The good news is AIM is superior to the Buy and Hold strategy in these cases, but if someone were to chicken out and not follow the suggested AIM signals, then these sort of growth cyclicals would provide a reasonable return anyway. LH, be very cautious about applying AIM to just any old stock or mutual fund. If you go to: confirmatoryanalysis.com and select "Stock Screening" I think you can easily find some candidates by selecting "any" price/sales on the webpage and then entering a minimum of 1.2 for the beta before hitting the show results button. Why is this a good "screen" to use? Because it only selects companies which have exhibited 1,3 and 5 year eps growth over 25%. The 5 year number is important. If a company has been around for 5 or more years and is showing that sort of growth trend, then it is unlikely to go from $40 to $6 anytime soon. Worst case is you have "dead money" if the company hits a rough patch. Remember this is just a starting point for due diligence. Tom's ADCT is the first stock on the list this month, but there are 95 others to choose from. This is the way I'd start to search for AIM candidates. ---- Dave

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