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

To: Gary who wrote (5246)	8/1/1998 8:43:00 AM
From: OldAIMGuy	Read Replies (1) \| Respond to of 18928

Hi Gary, Mr. L's comments were that once a month or maybe bi-monthly was often enough to maintain an AIM account. He infers that one should only buy or sell just that often. However, his main reason for limiting the activity was the work load. In the age of computers and easy maintenance of AIM accounts, there's still a pragmatic reason for limiting one's trading. It has its roots in "momentum" or possibly pendulum action. I find that when a stock makes a serious move up or down, about one trade per week seems about right. If we trade more frequently than that, many times we are just exhausting our cash reserves too quickly or selling off shares below what we might get next week. There's no science to back this up, just my personal experience. Some stocks might benefit from more frequent trades, however, I find that the Fear and Greed thing still takes some time to soak into the general populous. On the fear side, there seems to be what is termed a "dead cat bounce" and if we exhaust our cash on the first bounce, if nothing else, we spent earlier than needed. The true bottom will arrive on the next bounce. So, from a "time-value" point of view, waiting an extra week is slightly to our advantage. The same is true on the Greed side. A stock will shoot up, only to have the first round of profit takers come in and slow the upward rise. Then the rally will proceed. These "resistance points" are well documented. Again, why sell before the next uptick? If it's to be a sustained rally, we can certainly wait another week. These are just rules of thumb. Hope they make some sense. The market has been particularly unkind to many stocks the last few weeks. I can't account for all the reasons it's in a "bad mood", but conserving cash by extending one's buying a little bit seems to be justifiable right now. Best regards, Tom