Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Dave Johnson who wrote (7814)	6/29/1999 12:36:00 AM
From: LemonHead	Read Replies (1) \| Respond to of 18928

My 2cents We appreciate your views and hope that you keep them coming. I for one am having a hard time with the selection process for AIM. I was very unsure about pulling the trigger with on-line trading. Right out of the gate I lost my purpose and now must regroup to qualify as a true AIMer. I think you hit the nail on the head when you mentioned averaging down, I have lost consistently at that strategy. But at the time I knew nothing of the principles of AIM, oh how we rationalize. But then again I didn't buy low and sell high either. But a snails pace I have, and for better or worse I'm better off since I found this BB and the great people that reside here. Is ASANTI a white or red wine?<ggg> Keith

To: Dave Johnson who wrote (7814)	6/29/1999 1:16:00 AM
From: RFH	Read Replies (1) \| Respond to of 18928

Hi, Dave. I couldn't agree more with you on every point you made. Tom has made mention of stock certificates he has hanging on his wall which are now worthless. I hope that every AIMer examines his or her holdings and makes darn sure that the company is sound and will be around in the time frame that it takes AIM to mature. I was very tempted to AIM a stock called Enamelon, which makes a toothpaste that I believe, as a dentist, is very beneficial. In fact, I recommend it regularly to my patients. However, if you look at the chart of ENML, quote.yahoo.com it looks like the company will not be around for much longer. I'm sure I would have been buying faithfully all the way down, and having trouble sleeping at night as a result. Sincerely, RFH

To: Dave Johnson who wrote (7814)	6/29/1999 8:22:00 AM
From: OldAIMGuy	Respond to of 18928

Hi Dave, There's ways to make mutual funds work well with AIM, but it's much harder to catch Mr. Buynhold for the very reasons you mentioned. The recent "sector fund" evolution of the mutuals has offered us a new area for AIMing that has great diversity and still has reasonable volatility. The problem there is that some sector funds are rather "expensive" relative to their annual expense ratio. There are key phrases in mutual fund prospectuses for which I look. Such as "volatility should be expected" or "We attempt to remain as close to 100% invested at all times as practical." These are clues that the managers don't cut and run when the going gets rough. It also seems that these funds have the best AIM personalities. People use diversification as a method of risk reduction. People use AIM as a method of risk reduction. There is a point at which we can have so much risk reduction that we've also reduced our potential rewards as well. The Risk/Reward relationship is nearly a law of physics. I've been guilty of letting my portfolio get too many stocks in it. Periodically I weed out the bunch and try to make it more concise. The same would be true of holding several diversified mutual funds. What's the point? For a nominal annual cost, however, one can take a modest portfolio and, using sector mutual funds, divide it up into technology, energy and health, for instance. It relieves the AIMer of the decision making of choosing the stocks and if the funds have small enough minimums for trading, allows him/her to select areas of interest or performance. I suggest that most AIMers use only 2/3s as much cash reserve for mutuals as for individual stocks. It might be difficult for some to divide the same size portfolio up among three stocks and get similar results. It's almost a "stage of life" decision. A good "electronic friend" of mine with whom I've corresponded for about 6 or 7 years recently told me he's looking for a value oriented mutual fund. He's now in his '70s and has been a very successful investor all his life. However, he's now looking for a lower level of personal involvement in the investments he has. Much of his portfolio has been converted to bonds for income and the remainder will go towards growth. However, he said he's not interested in a fund that has too much diversity or happens to own all of the S&P100 stocks. He feels there's too much fat there right now and wants a contrary fund that hunts for value. He said it's less important for having really fat growth years than to know there's somewhat limited down-side. Like I said, it seems to depend on one's point of perspective. Thanks for the thoughts on stock and fund selection. Yes, there's no way to save an investment in an intrinsically bad company or one that's too far over the end of the "mature industry" cycle - not even AIM. I'm very glad to have learned from my early bad investment ideas as it's made life with AIM much better. I could probably think of at least 5 companies that no longer exist in which I had investments and lost all (if I wanted to)!!! AIM's Cash Reserve and methodology allow it to reduce risk and benefit from adverse market psychology. As I mentioned in a previous post, I seem to hold my AIM accounts a very long time, so picking companies that can survive economic calamity and prosper during good times is very important. AIM also allows us to invest in stocks when we decide they are good investments, not when the "timing" is right. AIM seems to save us from our initial "timing" errors! Best regards, Tom

To: Dave Johnson who wrote (7814)	6/29/1999 10:06:00 PM
From: Dataminer1	Read Replies (1) \| Respond to of 18928

Hi Dave, Very interesting post about AIM stock selection. I would like just to add a comment about using mutual funds in AIM. On the other hand I believe AIM should only be used for stocks and not Mutual funds. How about a closed-end or sector fund? It seems that under certain circumstances, such as a very long time horizon, these vehicles could be perfect to drive AIM. After all, what are the possibilities of a sector-fund or country fund going to 0? To boot, some of them pay a "fat" dividend. Imagine earning more than the long-bond on your"cash reserve". Some of the AIMer's I think have had a nice move in the Asian funds lately. Then there's the UOPIX gang.. I believe if you are going to invest and AVERAGE DOWN as AIM does, you better be DARN sure you are throwing money into a company that will be around for a long time. I agree completely, unless your AIMing some hot IPO for the next 6 months. I see a bunch of charts here where AIM would have crushed the buy/holder. Hey, then you can simply sell out! AIM is what you make it. You have a lot of flexibility in the way you manage each particular holding. As long as you stick to the basic rules : buy low and sell high, you can pretty much control the rest. I agree with you that AIM works best with stocks, however, I don't we should limit the possibilities. I wish I could AIM my 401k...hmm.. Regards, D1