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

To: aptus who wrote (14245)	1/6/2001 7:21:27 AM
From: Bernie Goldberg	Read Replies (1) \| Respond to of 18939

Hi, Thanks for the diligent research. IMO it isn't possible yet to compute returns on issues such as UOPIX and MSFT since they haven't turned the corner yet. There is no way to calculate the value of the shares that were not purchased because of cash deficit that was caused by too frequent trading since they haven't appreciated yet. I believe that Mr. L. had years like 2000 in mind when he started writing his book. It first appeared in print s short period of time after the '73, 74 debacle. Back then as now there were probably lots of people thinking they would have been better off with CDs. My parents were that way. they had lost some money in the market and had many friends who had done like wise. Regarding the following: AC, CEI, HR, HRP. These are all stocks that pay very high dividends. They were purchased to provide us with income. AC particularly was purchased late '99 at the price of $25 paying about about 8.5% dividend at the time. It wasn't AIMed at all until August of 2000. It had reached $54 and some change which represented a 118% return not counting the dividend. The dividend had increased to a little over $3.00 but the stock was no longer paying the 8.5% it had been purchased for. It also represented a larger percentage of my portfolio than I was comfortable having in one stock. I sold 30% of my holdings in September '00 which returned to me 75% of my original investment and left me with 40% more invested than I had originally started with. I also made the decision at that time that even with AIM it was beneficial to have significant dividends reinvested. Since these issues are purchased in my situaion primarily for income I set my safes at Buy=10/Sell=20. IMO one of the trends that makes AIM work profitably is an upwards trend. By reinvesting the dividends one gets an ever increasing number of shares which with only a modest increase in price prompts AIM to get rid of some. FLC is a horse of a different color. I've owned that since '97. If I remember correctly it was about that time when Tom came up with the Vealie concept. I was pretty excited about Vealies and did them whenever I could, not paying attention to the fact that I was not increasing my Cash reserve as much as I should have been. I also was blinded by the fact that Reading @ Bates was buying Falcon and I was going to get extra shares for FREE. When the bottom dropped out of the oil market AIM told me to start buying shares of FLC. At the time I was purchasing weekly as Newport recommended. Because of my lack of wisdom in applying Vealies and too frequent purchases, I ran out of cash reserve way to early. To make an already too long story shorter it wasn't until this year that I was able to generate some cash reserve from FLC. AIM saved my butt, but my stupidity in the past made it take a little longer. I can say without doing any research on it that if AIM had been applied BTB the difference in my FLC holdings today would probably be somewheres in the vicinity of 100%-200% richer than they are. I personally don't use Automatic Investor. Mostly because I started using Newport and PCA before it became available. I bought PCA in order to do histories, but I really prefer doing them with Newport. While they take significantly longer to do, it allows me to better see and understand how AIM works over an extended period of time. It also allows for the application of cash dividends or reinvested dividends. I quite often read here how with the use of high powered computers that exist today, it is now easy to update prices weekly, or daily, or even three or four times a day. Mr. Lichello didn't have these back when he wrote his book. He also wrote that he didn't worry about dividends because they were too much trouble to track down when it came to tax-time. He also didn't have programs like Quicken or MSMoney which make tracking dividends childs play. You wrote:Here are the results: AC daily: 34% weekly: 31% monthly: 19% CEI: 17% 15% 17% FLC: 43% 41% 39% MRK: 22% 17% 14% HR: 23% 19% 16% HRP: -1% -3% -4% XLF: 15% 15% 14% UOPIX: -68% -58% -51% Bear with me please. Forget about the first two columns which I think you said represented daily and weekly results. Add about $3,000 to HR, AC and HRP for dividends. I think had a pretty damn good year! AIM works especially in conjunction with diversification. Sorry for going on so long. Bernie

To: aptus who wrote (14245)	1/6/2001 9:24:58 AM
From: OldAIMGuy	Read Replies (1) \| Respond to of 18939

Hi Mark and Bernie, The period of trading is one of those areas that will remain subjective, I'm afraid. With nearly 8000 stocks available between NASDAQ and NYSE and about 11,000 mutual funds trying to get your attention, there's no set rule that's going to be right for all cases. In my 13 years of AIMing, I've found that certain stocks, industries and sectors act differently from others. When Bob Norman asked me what period of updates would be right for his Newport software I told him once every two weeks. That was back in '91 or '92, I believe. I was trading my various stocks on a bi-weekly and monthly basis as I "interpreted" their need. It was when I added a 26 week moving average to the line graphs in my ancient Lotus 123 DOS AIM template that I saw that some stocks needed more attention than others. Once I began to think about lots of potential users of a software trying to AIM and keep their interest up, I had to agree with Bob that weekly updates kept the investor focused much better than bi weekly or monthly. Heck with Short Term Memory Loss, even weekly might be too long!! :-) It was then up to the user to decide how often to actually implement trades. At least he/she was paying close enough attention to see that some AIM action was being recommended. Here's a general rule for you to consider: Look at very long term charts of the stocks in which you are interested (ten year charts recommended, or Value Line's). If there appears to be a cyclical pattern, attempt to guess what the period of that cycle is. Adjust your frequency of trading to that cycle. Short cycle stocks deserve a more frequent trading period, long cycle stocks should be traded in a more relaxed fashion. Take a high income producer like ACG (long term bond fund). The interest rate cycle is VERY long. No use hurrying it on the buy or sell side as the trends last a very long time. In this case, as Bernie suggested, it would have long term harmful effects to burn up all one's cash in the first three months of a two year decline by trading too frequently. At the other extreme is something like a DotCom. There frequent trading on the up side of the curve is HIGHLY recommended as those "no revenues, no earnings, lousy business model" stocks deserved to never be anything but speculations. I guess one could modify one's thinking about such stocks as IPO's and say that one would AIM them to the peak and then just never buy back shares! My investment in capital equipment companies had led me to feel that knowing the business cycle of the sector is the way to judge the frequency of actual execution of AIM trades. The Energy sector is another long cycle industry where too frequent trades is counter productive. UOPIX was a new creature. AIM can handle it, but it's radioactive and must be handled with care. If everything was already known about investing, it would become much less interesting. UOPIX has only been around for one large cycle. That's hardly enough time to have all the answers. This is why I recommend using very long histories when using simulation software. Long histories give flavor and texture to what AIM's going to do. Unfortunately, even though I was familiar with the Nasdaq 100 Index, I never thought to construct a 2X model of its price movements going back many years. I figured my "experience" as an AIMer was enough. Had I constructed a 10 year history maybe I would have seen frequent periods of 100% investment reached before the price cycle had bottomed. I still think that UOPIX (and other 2X funds) is a great potential investment. I still know the AIM strategy is the proper one for management. I'm still contemplating what the changes in tactics will be for AIMing it. It may be something similar to what Mark suggests in using the IW as a guide to frequency of trading, SAFE levels and or switching to the more conservative QQQ for the ride down and buying cycle. I don't know yet. I've even though about using AIM's buy market order size as a signal for UOPIX buying. Let's say that after March 2000 the price of UOPIX is in decline. We don't make any buys as long as our weekly updates with AIM show ever larger suggested market orders. Then, when we see the market order start to decrease in size, we make our first buy. Again, I've not yet modeled such a thing, but I'm sure that the cash would have lasted longer with such a concept. It's not AIM BTB, but it's still AIM. Just massaged a bit. It's the difference between Strategy and Tactics. The rest of my family sleeps later than I do on Saturdays! I have a nice quiet house in which to compose this COMPOST!!!! Best regards, Tom