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

To: JSLyons who wrote (12663)	9/1/2000 11:03:54 AM
From: Gemlaoshi	Respond to of 18929

Hi Jonathan, Welcome to the board...there's no such thing as a dumb question. Here is my read on a couple of your questions. Transaction costs and tax consequences always have to be factored in when considering AIM parameters and minimum size of trade. That's why Tom refers to a "critical mass" before AIM'ing a stock. For example, I am much more aggressive (i.e. trade more often) in my 401k accounts than my taxable accounts. My transaction costs are negligible once a share has been held 180 days, and there are no tax consequences. With taxable accounts, I have a pretty high sell sensitivity for the first year just because I prefer paying LT capital gains taxes vs ST cap gains. On one stock vs. a basket, there is no "right" answer, but there are several considerations. The main one is: the basket of stocks will be less volatile and will trade less often than holding the same stocks individually. Mathematically, in Modern Portfolio Theory (MPT), this is called statistical covariance, as the volatility in one stock tends to partially cancel out the volatility in another stock. This is the basis of why mutual funds (or a well diversified portfolio) are considered to be safer than individual stocks. However, AIM is based on volatility, so a given selection of stocks should do better if AIM'd individually than if held as a single portfolio. This doesn't mean that they can't be held in the same brokerage account. As far as cash balances, I comingle cash balances for AIM accounts within each type, but do keep separate cash accounts by "type" of account (i.e. taxable, IRA, 401k). No AIM magic there...it just seems to lessen my tax headaches! Regards, Dave

To: JSLyons who wrote (12663)	9/1/2000 12:37:09 PM
From: aptus	Respond to of 18929

Hello Jonathan, I use datek (http://www.datek.com/) and am quite happy with them. I haven't used any of the other US brokerages though. Regards, Mark.

To: JSLyons who wrote (12663)	9/1/2000 2:04:52 PM
From: rgammon	Respond to of 18929

Periodicy and Brokerages There are two approaches. Each of us makes a choice between these approaches as best fits our investment philosophy and the time we choose to spend on our investments. 1). Pick some time period, once a week, twice a month, monthly, quarterly. Take a shapshot of prices, calculate your buys/sells in AIM based on those prices, and call your broker or logon to Internet and place a market order. Then forget about it until the next measurement interval. Lichello argued for once a month in the book. Some studies have suggested that with this approach, you capture more of the volatility, buying a lower prices, and selling at higher prices than other approaches, since you allow longer term trends to develop. 2). Limit GTC orders for min acceptable trade size. My studies of TXN showed that this was a superior approach FOR THIS STOCK. However, this is a more time intensive process than option 1, so tread carefully. The time demands CAN produce an addiction response, i.e. the activity levels produce a response similar to gambling, or alcohol addiction. This is a psychological response, not a physical one. If you pick option 1, then look for the deep-discount internet broker that offers the services you require. Datek is a good choice, I can recommend them as well. If you pick option 2, and you are prepared to commit larger sums to AIM, (i.e. over $100K), then the flat fee account offered by the full service firms (ML, MSDW, PW, etc.) may turn out to be the lowest cost option. I moved my accounts to Merrill Lynch's variant (a.k.a. Unlimited Advantage) about 1 year ago. We have executed over 500 trades (not all of them AIM - tho AIM is responsible for the vast majority of the trades) in that time. I have kept track of the price improvements that ML has given me (i.e. 1/8th * 45 shares). When I add these up, and subtract them from the fees that ML has charged me, my net cost is less than $100. Plus, I have redeemed points accrued for use of the ML VISA debit card against the fees charged. So, the net result is that ML is PAYING me a modest amount to be their customer. Not every account will see the same results that I have. I offer it ONLY as an example of what is possible with these flat fee accounts. Almost all of my trading is done on the ML web site (www.newmlol.ml.com). Robert - Mr AIM Aggressive

To: JSLyons who wrote (12663)	9/1/2000 9:55:50 PM
From: OldAIMGuy	Read Replies (1) \| Respond to of 18929

Hi JSL, I devised the math to pre-calculate the next buy and sell points based upon my minimum order sizes in shares and dollars. Mr. Lichello never attempted this. He was content to look at the market when the clock said to. I feel that any inventory in my equity warehouse that's been purchased properly should be sold for the LIFO gain that was considered acceptable when purchased. Therefore, setting GTC orders out there at limit prices that meet those goals is the way I have managed my accounts for more than a decade. (see aim-users.com ) I felt that using the clock was too arbitrary. I don't immediately enter new GTC orders right after the last one filled. I wait from one week to one month depending upon the equity. (no rule here, just seat of the pants) The down-side of the "basket" approach is that if the various equities don't move in harmony, then you could potentially have some up, some down and some unchanged. AIM would be telling you to do nothing, where you should possibly be making some internal changes. Best regards, tom@12yearsandcounting.com PS: I'm using TD Waterhouse as my on-line broker with good success. I'm also AIM trading their stock, TWE.