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: Dataminer1 who wrote (8371)	8/30/1999 7:27:00 PM
From: Bernie Goldberg	Read Replies (1) \| Respond to of 18928

Utah has lots of those places. Bernie

To: Dataminer1 who wrote (8371)	8/31/1999 8:15:00 AM
From: OldAIMGuy	Respond to of 18928

Hi Bill, There's another aspect of AIM's proportionality that is "automatic" as well. You hinted at it when you said, "The stubborn AIM trader, after getting his first sell, could refuse to part with say 50 more shares at 30, but would be be happy to sell 75 shares at 36." Let's assume that you're the proud owner of 1000 shares of stock. Let's also assume that for whatever reason, you've chosen to trade 50 shares as your minimum size order. Your first Sell is just 5% of your position. This requires not only the rise in price of the SAFE value but a rise that also corresponds to that 5%. Several orders later, your 50 share order is now 10% of your position! Guess what? You still need to satisfy the SAFE requirement but now you have to add on for the 10% Trade size. Carried to an extreme, when you get to 100 shares left, you then need the SAFE threshold plus a DOUBLE of the price to sell the next 50 shares. Beyond that the price goes to infinity and I can't count that high!! So, if we stick to a minimum order size in "shares" the trade range gets fatter and fatter. The reality of the situation is that normally we have stock splits along the way that refresh our total number of shares. If this didn't occur, the beginning of an AIM account would be the "active" time and the end would be when AIM's trade range became so large as to be impractical. Bernie will tell you (rightly) that AIM's trade minimums should be based upon a minimum dollar value and that Mr. L said that about 5% seemed right. However, except for mutual funds, I trade round lots. The reason is that I'm lazy and at tax time it can be a pain in the neck (or even lower in the anatomy) to reconcile one's account and trades. What can happen is partial sales on multiple purchases. It gets UGLY!!! Some brokerage statements do this automatically. Many don't. With the "Average Cost" tax basis for mutual funds, round lots don't matter - we're always selling "average" shares. AIM was designed with a cyclical price pattern in mind. The reality of the '80s and '90s is that there's very little cyclicality to the market overall. The GTC 0rders pick up small change when your favorite stock is in a "consolidation phase" like my Chiron was for the last three years. GTC's pick off a buy near the cyclical bottoms and an occasional sell near the cyclical tops. All this occurs automatically with the GTC orders. Why do we wait through one of these consolidation periods? Because we believe that there's still good potential yet to be realized with the stock in question. The GTC orders "pay the rent" while we wait for the next leg up. Most consolidations don't take as long as Chiron's, btw! But, using Chiron's stock as an example, I didn't have many times with two orders in a row on the same side. Most of the time they alternated buys and sells. How convenient! When the long term trends do start, we have plenty of time to wait out our next trade. (in three years with CHIR, I had about 10 buys and 10 sells - not exactly hyperactive!!) Hope this helps, Tom