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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 (14371)	1/15/2001 10:34:07 AM
From: Bernie Goldberg	Read Replies (2) \| Respond to of 18928

Hi Keith, Jack annd Mark, I'd like to interject my thoughts into this conversation. If one purchases WXYZ company because he considers it to be a good candidate for AIM, he has probably made that consideration because he has examined the company and come to some conclusions about, namely. #1 It is now or about to become a profitable company. #2 It is going to be or has been fairly or extremely volatile in the past. #3 Its price will probably double or better in the next 3 to 5 years. It may be oversimplifying things, but IMO those things at least must be present in an AIM candidate. Numbers 1 and three we can never be totally sure of. Number 2 however is something that can be seen by looking at price histories of the company over different time frames. I may be wrong, but volatility does not mean that the stock goes up all the time. My definition of volatility is large swings in both directions. The very reason for the Cash Reserve in AIM is the recognition of the possibility that the chosen stock can go down. As Mark so aptly put, it gives one the opportunity to purchase more shares at bargain prices. Many people look at investing as a repeatable one shot deal sort of like Roulette or Craps. I liken it more to something like buying staples, like toilet paper for example. This is something we use every day. We even can go as far as to say we know we will be using it 3 to 5 years from now. Let us suppose we go to buy some. We find it on sale for 50 cents a roll. We think that this is a very good price and buy a case. Two weeks later we are in a store and see the same brand for sale at 35 cents a roll. We can look at that a couple of different ways. We can think that we made a mistake two weeks ago, or we can say WOW! this is a bargain, and buy some more. To steal from Tom, what we are doing is stocking our equity warehouse with the intention of selling this stock when someone else wants it more than do today. When we get rid of a stock that is a "loser", I assume the intention is to replace it with a "winner". To my way of thinking a "winner" is a stock that has gone up or is going up. The problem with that sort of thinking is thatwhat you would be doing is chasing hot stocks. A perfect example of this is QCOM which was the best stock of all in '99, but lost more than half its value in 2000. Many people chase PALM up to over $100 only to see it lose 60-70% of its value. This kind of investing/speculating has no place in AIM at all. As a matter of fact it is precisely the kind of insanity that AIM attempts to replace. I would recommend to anyone who doesn't know whether or not to continue holding a stock. To examine the reasons it was purchased at the outset, and to remember our slogan:BUY FROM THE SCARED AND SELL TO THE GREEDY. IMO that's as easy as it gets. Bernie