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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: OldAIMGuy who wrote (7640)	6/9/1999 8:35:00 PM
From: LemonHead	Respond to of 18928

Hi Shorty, can you give us an example with a run down on the numbers. It's obvious that your scratch pad must be near by. Long term gains start after a year of holding onto a stock. If we are to sell shares during the first 12 months, we are taxed at a rate that's nearly 50% higher than if we waited a full year before selling. It might be both tax efficient and prudent to wait for that one year clock to run out before commencing FULL AIM. I see two ways to go. If you are building your equity warehouse, and you have large up front expenses you may need to pay the taxes in order to insure that the investment can grow. If your warehouse is fully operational and all the equipment is in good shape then it might be better to wait for the annual depreciation before you commit to new equipment (taxes). Got my helmet on, so fire away. Keith

To: OldAIMGuy who wrote (7640)	6/9/1999 8:49:00 PM
From: Bernie Goldberg	Read Replies (1) \| Respond to of 18928

Hi, I don't know if most of the other AIMers would find that easy to swallow. RFH for example enjoys trading weekly. There are some here who pay no attention at all to taxes. I kind of think that this is what I will be doing with BEAM. It isn't often that I buy a stock that rockets up like this one. What I have done in the 6 months that I have owned it is to complete enough AIM directed sells to cover my initial investment and the taxes due on the sales. Now I am planning on doing no more selling until December when the year is up. I will ve doing Vealies or Portfolio COntrol adjustments between now and then. Of course now I have very large Cash Reserve to do some buying when AIM calls for it plus approximately 500 shares of stock to sell next year if the situation arises. I agree that AIM takes care of things after a year. I've seen that with APCC and MRK. Mr. L was living in a much less volatile world which made things a little bit simpler. IMO the overwhelming majority of the folks here use AIM not because of its conservatism but because of its promised action. Many seem to be disappointed if they don't get two or more trades in a week. Over on the APCC thread I read a post from a girl who had done some kind of options thing in February or March. She was really disappointed to only make 100% in 3 months. I just owned the stock itself and was happy to see it go up 45% in the same period of time. They say "perception is reality". So I guess we can all have our slightly different realities. I assume you have some physical therapy tricks that you have to do. If you're doing them congratulations, if not get cracking Bernie

To: OldAIMGuy who wrote (7640)	6/10/1999 7:08:00 AM
From: joe wiles	Read Replies (1) \| Respond to of 18928

Hi Tom, An old friend of yours has started to show up on a favorite value screen of mine - OMQP. Are you still in this one or been by the old shed lately?? Regards, Joe

To: OldAIMGuy who wrote (7640)	6/10/1999 7:26:00 AM
From: JZGalt	Read Replies (1) \| Respond to of 18928

Let me know what you think about the "tax efficiency" idea. Tom, Like most of the other responses you have received so far, I think that it depends on your outlook for the individual stock, if the stock being AIM'ed is in a taxable or non-taxable account or what the amount of volatility of the stock is. For instance if you were AIM'ing MRK in a taxable account, what you suggested would work quite well. Any sales suggested within the first 12 months could easily be ignored simply because MRK tends to always go up eventually and really is not that volatile. In this case you are just deferring the pleasure of receiving the benefits and gaining the increased tax efficiency. There would be times when this would not be the optimum outcome, but I doubt you would be unhappy with the outcome. But what about the traditional cyclical stock which has wide swings in price over years but has a defined "cycle"? Although these seem to have faded into the economic background with p/e inflation, they are still viable AIM stocks. In this case your outcome would vary wildly depending on what part of the cycle you started with. If your 12 month period ended at the near term stock peak, you'd be screwed. Having loaded up while the stock was rising with vealies and buying on pullbacks, you would let AIM start running right when the only thing you should be doing is starting to buy as the stock falls. You might be locked into a situation like your Mexican stock ICA?? where the only prudent thing to do is to borrow money and move into negative area as the buy orders come in. The goal of deploying reserves and getting close to Mr. BuyandHold would have been achieved, but Mr. BuyandHold has a poor record on traditional cyclical stocks. <grin> I think if you want to be tax efficient, then you might consider something that I have suggested before. Make part of the initial purchase in a tax sheltered account and any sales within the first 12 months could come from there while the rest of the initial purchase and subsequent purchase are made in a taxable account. Eventually the stock held in the tax sheltered account would be depleted by sales and the stock in the taxable account would have had time to age sufficiently to lower the tax bite. The other suggestion in you tax efficient part of the webpage is to get your cash reserve deployed as fast as possible and get closer to Mr. BuyandHold in those first 12 months. I think we have discussed this before, but if you used a mental stop loss instead of a vealie on the first few sales, you would have the safety of the AIM method as well as the oomph! provided by a vealie. This would also help in the situation where you have selected a cyclical stock and your timing is bad. Instead of being fully loaded at the top and buying more as the stock sank, you would be selling that stock which is hitting the mental stops and increasing the cash reserve as it start to fall. If I get some time I'll run through the numbers on some theoretical examples. ---- Dave