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

To: Larry Grzemkowski who wrote (15471)	4/1/2001 11:49:25 AM
From: OldAIMGuy	Respond to of 18928

Good morning Larry, Thank you for the links to your G&K posts. I see Tekboy's posts here and there. I believe he's also part of the Biotech Contest that I joined. His selections have been top rated there. Your chart showing the tale of woe for those without any purchasing power is dramatic. I've posted a note to you on that thread showing my AIM history since 1990 in stacked bar graph form. I hope the information will be received as an intellectual exercise as it's presented not as a critique of G&K, but rather that AIM could potentially be used as an adjunct to G&K selection processes. The decline of paper profits for the Buy & Hold investor who has been at it a long time must still be somewhat painful. For the new investor that got started a year or so ago, it has to be even more painful. Lacking any way to proactively respond to such a sell-off can't be fun. Many AIMers are lamenting their already spent cash reserves and we did a far better job of conserving previous gains by realizing some! In 1987, I went from being 55% CASH at the market peak in July to being 100% invested by December. As I was not a Lichello AIMer that year, I spent my cash a bit too quickly in the decline that started in September. By October 19th, I'd spent more than 1/4th of the cash I'd had at the peak - *and then the CRASH came!. I had been modeling Lichello's AIM using my same portfolio of stocks during the year. Mr. L never got the cash reserves up to the same level as my peak, but he also didn't spend a dime before the Oct.19th crash! He was a far better purchasing manager than I had been with my "seat of the pants" pseudo-AIM that I'd developed before finding Mr. L's book. Mr. L's portfolio ran out of cash in December, too. However, he'd spent the bulk of his cash at far better prices than I had. Mine had been too soon and too much. People talk about Oct. 19th, 1987 being the crash, but the DOW had already fallen from 2700 to about 2300 before the Crash. That's a huge percentage to ignore! The Crash took it down to something like 1600 briefly if memory serves me right. So, in reality, the decline started in late August and ended in December. There was no need to be in a hurry to use up one's cash reserves! There was plenty of time to do so. Now, here's what's also very interesting - almost every dollar I spent averaging down was returned to the cash reserve pot profitably by 1990.* I was buying the right stocks for the most part, and even my pre-AIM spending habits were eventually rewarded. (there were a few Strewie Stocks in the bunch that eventually became business historical footnotes!) Since then, with AIM assistance each decline where I've used up significant cash has been rewarded in a similar fashion and I'd say more quickly. (the speed of the other recoveries is partially circumstance of the markets at those times but AIM's good management accounts for the early "new highs" in my portfolio) I'm essentially certain that the dollars I've spent in this huge down-cycle will be repaid to me profitably. It might be a while for some, but that doesn't negate my certainty that I'll eventually prosper from AIM's guidance. Your holdings that you show needing huge percentage leaps to start AIM's selling again are going to take some time, too. Along the way, either from your current income stream or from other stocks that more generously recover sooner, you may be able to add to those "deep diver" positions and bring the first AIM Sell in closer as a target. In any case, if you've bought good stocks, the gratification will come. Maybe not instantly, but it will come eventually. Best regards, Tom PS: I'll have to see if my records from 1986 to 1990 are good enough to construct a graph of that period. It seems to me the reason I started in 1990 was because of some missing records, but will have to check.