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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (2837)	4/18/2002 9:42:00 PM
From: JSLyons	Respond to of 95442

Hello Kirk, I wasn't AIMing during those heady years, so perhaps Tom Veale at the A.I.M. thread could give you a more complete answer. Here are a few thoughts of my own: 1. AIM was developed in the 1970s and 1980s. It grew in part out of the inventor's frustration with his losing investments in the early years and his growing aversion to risk. Mr. Lichello was interested in limiting risk and was working within a choppy market environment. I believe this imparted some of the system's "character." 2. If you explore AIM further you will see that it will generally underperform Mr. Buy-and-Hold in a prolonged bull market (assuming, of course, that the timing of the buy-and-hold investor was optimal or close enough). For example, if AMAT goes from staring low of 26 to a high of 52 over the course of a year with no pullbacks, then Mr. Buy-and-Hold will have doubled his money, while Mr. Aim would have generated a number of SELL signals along the way, ending the same period with a big cash reserve but less stock and less total portfolio value. That is because AIM needs periodic downward movements of sufficient magnitude to trigger BUYS, allowing us to replenish our stock at lower prices for future SALES. In a bull market we are generating lots of SALES and this build-up of cash will retard overall performance, unless we get fresh BUYS. 3. A number of modifications to the standard AIM approach have been developed by veteran users to fit better with the recent bull (or was that "bubble") run. But bear in mind, AIMers would point out that those inferior returns you cited came at much reduced risk. Still, there is no denying AIM needs sufficient price volatility to do its stuff. 4. In my own case, I left too much on the table during the last big semi cycle, and it was the determination not to repeat that led me, by accident, to AIM. However, some of my own semi-equips have seen only SELL orders since I began AIMing them last autumn. Performance in these issues has lagged the basic buy-and-hold approach -- again at higher risk. I hope that helps. Jonathan