To: OldAIMGuy who wrote (14438 ) 1/20/2001 5:11:07 PM From: Bernie Goldberg Read Replies (2) | Respond to Hi,He also cautions against over-diversification. That is very true, but owning two stocks in an AIM program is certainly not over-diversification. You and I keep going back to chapter 13. On page 186 he talks about using a separate AIM program for each one of five or six stocks. Each one will have its own STOCK VALUE, its own CASH reserve, etcetera. He then says that this would be too much handle. We both know know that PCs and Newport weren't around them. If they were Mr. L. would be blessing Bob Norman and whomever else he thought was responsible for the PC.psychological reasons why this is not such a good idea. Later on near the bottom of page 187 is the following by Mr. L.: There might be a middle way. What about using a single AIM program-but buying only one stock for your portfolio in the beginning? This will give you the potential for a wide swing, up or down. If the swing is up, no problem. You take profits as AIM directs and wait to see what happens. If the swing is down don't invest any more money in that stock, because that stock may never come back, but start to take positions in other stocks on the way down. this limits your risk to the actual money you invested in your first stock at the start of your AIM program. If your original STOCK VALUE is $5,000 for example, that is what you're risking. If the stock declines 50 percent you've lost $2,500. But the stock will have performed a valuable service for you. It took down your STOCK VALUE rapidly, compelling you to make other investments in other securities at low prices. And when the market does recover, your portfolio is much more certain to recover along with it than would be the case with a single security. I'm not sure there's many mutual fund companies that set up their accounts with equal weighting in each investment in the portfolio.
