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Technology Stocks : Vitesse Semiconductor -- Ignore unavailable to you. Want to Upgrade?

To: Robert G. Harrell who wrote (3098)	11/11/1999 8:19:00 AM
From: SJS	Read Replies (2) \| Respond to of 4710

MERILL upgrades VTSS price targets (among others) this morning in a big call by Joe Osha: -------------------------- techstocks.com

To: Robert G. Harrell who wrote (3098)	11/12/1999 7:23:00 PM
From: OldAIMGuy	Read Replies (1) \| Respond to of 4710

Hi RG, The AIM method doesn't look at fundamentals. That's up to the user. It basically is a proportional control device that allows the price to float around in a "Hold Zone" with no trades, but if the price exceeds that range by going either lower or higher, it "reacts" with the appropriate action. It acts in a rising market to limit the risk envelope to a relatively constant dollar value. Let's assume you bought VTSS at $18 at the price bottom last Fall. Let's also say that you invested $10,000 total at that price. Today, you'd still have approximately $10,000 at risk in the market, but far fewer shares and much more cash. It would have been selling off shares as the price rose. Going the other way, as the price falls, you act as a good purchasing agent as it lets you accumulate shares. Remember, it's proportional. Small drop in price, small buy. Big drop, BIG BUY! Also, as you buy, it advances the Risk Envelope slightly to let you benefit from being a good purchasing agent during the next price recovery. Let's assume the price dropped enough for you to buy an additional 100 shares at $40. You would add 2000 to the risk envelope (one half of the purchase value) So, if you were willing to risk $10,000 to begin, now you'd risk $12,000 before even thinking of selling. The more price cycles, the better. Value Line seems to think VTSS is pretty "fully priced" at its current level. That means there's probably going to be some hunting around for a proper price over the next 3 to 6 months. If so, maybe AIM will trip a buy or sell of a small portion of my holding. AIM is an incremental trading device that trades around your core "risk envelope" of value. When I started my AIM account, I only put $20,000 at risk. Since then I've expanded the risk envelope many times with purchases (at or near market lows) and also with an enhancement that I created that limits the buildup of cash reserved for the stock. Dollars at risk in this stock now are over $200,000. (cash reserved currently is about $100,000 for this stock) Yes, I get a bit nervous when VTSS's value ratios are calculated. It's one of my largest single holdings! Price/Sales, Price/Book, P/E and all. However, I also have a significant portion of my account committed to plain old Cash so that I can buy more shares when they are discounted from current levels. It's that purchasing power that is the insurance policy for my holding. The cash was generated by selling off small quantities of VTSS's shares over the years. No, AIM will never have you sell out of an issue. It will, however, limit your risk in a rising market and let you benefit from crisis price break-downs when they occur. You still have to decide when the ride is over, however. Here's a page that will add a bit more to the very basics of how AIM works: execpc.com If you need more info, then buy and skim Mr. Lichello's book on AIM. If still interested, then re-read chapter 6 and a couple of others. Then the rest of the pages at that web site will start to make sense (I hope!). Please feel free to PM me with any questions that come up. I'll be happy to help. Best regards, Tom