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

To: Jack Jagernauth who wrote (14319)	1/12/2001 5:44:50 AM
From: THE FOX	Read Replies (1) \| Respond to of 18928

Good morning Jack, I like the question. That is exactly what I try to do. If a stock I am attempting to AIM goes up 50 to 100 % I usually bail out. I know this is not true aiming however I have found if the overall amount you have available to invest is modest it is a great way to increase your net worth in a more rapid fashion. As I reported at the end of 1999 I had a very good year in the market as most of us did. The year 2000 was a little more challenging. We were fortunate with our ROTH accounts to garner a return of 62% in my wife's and 56 % in my account. I have not finished double checking our return outside the ROTHS but I hope to finish the work this weekend and I will post it. Regards, BOB

To: Jack Jagernauth who wrote (14319)	1/12/2001 7:49:41 AM
From: Bernie Goldberg	Read Replies (1) \| Respond to of 18928

Hi Jack, I will try to answer both Bud's and your question in one post. There are some items of information in Mr. L's book that sometimes get lost in a translation. Mr. L said in the book that he really didn't recommend setting up AIM with just one stock. However he also said that if you really wanted to you could, using an immediate downdraft in that one stock's price as an opportunity to add shares of another stock. This practice would add diversity. I have to say that with the use of the PC, I as well as all of the others here have not always paid attention to his sage advice. I must admit that where I have heeded Mr. L. it has worked out to my financial advantage. A case in point: About two years ago I purchased for a friend of mine some shares of USON (which at the time was called AORI) for about $12 per share. The actually went up and we had one small AIM directed sale. But thereafter the news wasn't so good. In a matter of about two days because of some bad news the price was cut to about $5. I discussed the situation with my friend and came to the conclusion that it would not be such a good idea to put all the Cash reserve into this shaky stock. Instead, we purchased APCC, making 2 purchases at $31 and $28 a share. APCC then began to climb $48, while USON languished at $4. We managed the two stocks not as a "basket" but as what I call a Mini-Fund, combining the two into one NAV. We had two sales in APCC before the bottom dropped out of it in July 2000. We then made another purchase at $25 of APCC which exhausted the cash reserve. Poor little USON didn't do much until about 10 days ago. It has suddenly awakened and moved from $4 to $7. A nice 75% move since the beginning of the year. My friend is not out of the woods yet. Both stocks are severely down from her purchase price, but the two working together with AIM will get her back to profitability much faster than if they had to pull by themselves. You also wrote:Why is that it seems okay for AIMers to consider exiting a loser at the 'bottom' and not consider exiting a winner at the 'top'? IMO nobody knows where the 'top' or 'bottom' are. That's why AIM tells you to sell some of your holdings when a 'top' is reached. With a the exercise of the restraint provided by AIM BTB it is quite probable that you would not have run out of cash reserve so early. By purchasing shares at a lower price you would have possibly 20 or 30% more shares. You would not have so far to go to get back to porfitability. I exited some losers at the bottom this year('00) as I did last year('99). The reason I did it was I was looking to reduce my tax bill. AIM was smart enough to have me selling significant numbers of shares in the first quarter of the year. In my case I sold MSFT at 44 and replaced it with CSCO at 38. I was hoping that MSFT would stay there and CSCO would increase in value during the next 31 days. (A roll of the dice which didn't work out) That's not AIM's fault. I will reiterate what I have said here many times before. AIM works all the time. It is just some of the variations that only work some of the time. Bernie

To: Jack Jagernauth who wrote (14319)	1/12/2001 10:19:48 AM
From: LemonHead	Respond to of 18928

Hi Jack, Why is that it seems okay for AIMers to consider exiting a loser at the 'bottom' and not consider exiting a winner at the 'top'? Now who said that!!! Anyway I got a lot of thoughts on the subject and I will get back with them latter. Bernie's response is excellent as usual. Keith

To: Jack Jagernauth who wrote (14319)	1/13/2001 1:34:19 PM
From: LemonHead	Read Replies (3) \| Respond to of 18928

Hi Jack, back to your question. I will use my wife’s IRA for all examples. Why is that it seems okay for AIMers to consider exiting a loser at the 'bottom' and not consider exiting a winner at the 'top'? The following is strictly my own opinion that has developed from investing over the last five years. I think that one has to have a very big picture in their mind for long term “risk management”. Why I would exit or prune a winner at the top. First as JZGalt would say, Is it a core holding? Or as I believe Tom would say, Is it part of the base of the pyramid? So one must ask them selves, is this an equity that I plan to risk manage with AIM as the principal guide for ten years or more? And also one must take a good look at them selves and ask the question, *Am I speculating or Investing?* If you are truly investing then you have a plan such as AIM or what ever to guide you along. Anything other than that is pure speculation. So first I look at myself and I find that I am half Investor and half Speculator or as Robert Furman on SI stated, I’m An Investolator. Second, which equities are Core holdings and which are not? I only have core holdings in the IRA accounts and not all equities in the IRA’s are core or true investments. These can change with periodic reviews. IE, they can change from core to non-core (investment to speculative) or vice versa. All the equities in my taxable accounts are speculative. This begs the question, Why are there speculative equities in the IRA accounts and what is the proper balance between core and speculative? The speculative equities are there for the purpose of feeding the long-term accumulation of the core. The intention is to ride them up (taking AIM directed sells along the way) and then exiting them at some point that I determine is a top or an over valued situation. Then to plow these earnings into a core holding if so directed by AIM or to once again speculate. What is the proper balance between Core and Speculative? My goal in my wife’s IRA is to have ten core holdings and no more than four speculative at a time for a total of fourteen equities. Upon my last review (10/08/00), seven were core and seven were speculative for a total of fourteen equities. Currently I am somewhat out of balance with seven core and ten speculative. This is only because I have taken advantage of the recent decline in the overall market. This brings me to a question that I expect some sound debate on. Can you AIM a speculative issue over a long period of time by exiting and entering totally? I believe that you can even though it may not be the best path to follow. ZRAN is a good example in my case. My recent entry is the third time to speculate with this equity. The two prior entries were successful and I totally exited when I determined that it was over valued. So am I AIMing this issue or not? I don’t keep a core position, yet I buy on market lows and exit at market tops. I track the issue with AIM every week weather I have a position or not. To conclude, I exit profitable equities for any of the following reasons. 1. It is a speculative holding and I have reached my profit goal. 2. It has been taken over by another company and I’m not comfortable with the new company. Example, Lucent bought out one of my speculators last year, proceeded to move up and I exited. That was somewhere in the upper sixties. GALT, is another example. With its recent buy out, I’ve moved it from core to speculative and will exit totally at some point in the future. 3. AIM has directed me to add to a core holding and I need the cash. Or I feel there is better profit potential with another speculative issue. Example, I exited ADVP and CMNT so I could speculate NVLS, SAWS and SNDK. 4. Something has changed with a Core holding causing me to re classify the equity from core to speculative. I have recently re classified TIFQX from core to speculative because of the new six-month redemption rules. I will exit totally some time in the future. I don’t want my AIM directed buys and sells to be controlled by their policy. As Tom has stated many times, we all have the same franchise. We just manage them slightly different due to our own short and long term financial goals. FWIW Keith

To: Jack Jagernauth who wrote (14319)	1/14/2001 11:55:27 AM
From: labestul	Read Replies (1) \| Respond to of 18928

Hi Jack, This post is in response to your question: Why is that it seems okay for AIMers to consider exiting a loser at the 'bottom' and not consider exiting a winner at the 'top'? Firstly, let me say that I think that Keith's response was excellent. His point about the difference between investment vehicles and speculative vehicles is not only profound but subtle. So subtle in fact that we all have probably been guilty of confusing the two at least occasionally from time to time. In any event my subsequent comments deal with investment type vehicles only and not with speculative ones. In my opinion your question based on a false assumption. It is true, I think, that AIMers do not consider exiting a winner at the top. It is however equally true that AIMers do not consider exiting a loser at the bottom. If this were true, as your question implies, this would indicate a fundamental logical inconsistency. I believe that AIM requires us to stick with a stock even if it is a loser. It is only a loser in the sense that its price per share has decreased significantly. Even if the price never rises very high again we have not lost anything really. As long as the stock remains sufficiently volatile and fundamentally sound we can and, I think, should continue AIMing it. We should however stop AIMing a stock if its volatility characteristics ever change to those of a poor AIM candidate. Another time that we should exit a stock is if its fundamentals weaken to such a point that we no longer deem it to be an appropriate risk. A decline in the stock's price can be an indication that its fundamentals have weakened. Thus it might appear that one exits a stock because it is a loser. However the real reason should be that its fundamentals have changed! The fact that it is a loser is purely a coincidence. In theory one should also exit a winner if its fundamentals have changed. In practice however an opportunity to do so would seldom arise because the market would react to this decline in fundamentals producing a loser. Just my two cents worth ... three cents Canadian ;-) Barry