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

To: RFH who wrote (5676)	9/19/1998 9:16:00 AM
From: OldAIMGuy	Respond to of 18928

Hi Rob, Good points, thanks. I think I assumed that since Larry had already started margin accounts for his investing that he was probably through the "Buy" stage. However, your point is well taken. I coached a young man several years ago regarding AIM. He was just out of college and had a very nice paying job. What he didn't have was much cash. When he started his AIM accounts he started with $0.00 Cash Reserve and used margin for his purchasing power. I cautioned him on the "holding cost" of the margin in an extended bear market, but it worked out for him. I'd have to check, but I don't believe he uses margin any more because he can now "afford" the cash reserves he has generated. I guess my caution is similar to Mr. Lichello's. He says "It's easier to pry a Bull Terrier off a person's ankle than it is to get that person to sell a stock that's just gone up 50%!" Some new AIMers tend to want to ignore the Sell side for fear that they'll be letting shares go too soon. This attitude is seen in the note written to me recently over on the AIM In Depth Thread. Message 5774518 AIM takes cash that earns about 5% and periodically invests it for a minimum LIFO gain of about 20% before sidelining it again. If one is using margin then it costs money while we wait for the 20+% LIFO gain. However, it's necessary to TAKE the gains that the business plan demands and not wait to see if we can squeeze another percent or five out of it. There'll be more shares to sell if the price continues to climb. Your story gave me a bit of comfort as I plunked down more cash for my own Yellow Gold fund this week. I, too, hesitated two weeks ago in making a bigger buy at a better price, but that's because I wasn't sure there were funds still available. I'd been buying so much stock so quickly that I'd lost track of whether there was any Purchasing Power left! A bunch of my AIM accounts are "over-drawn" as I borrowed money from various accounts that were still relatively liquid to keep on buying. Part of my decision was also based upon where I thought the money would be best spent for the quickest recovery. This part was arbitrary and my gold fund was low on that list. Speaking of quick returns, I had a SELL in the JBL account that I tend this week. In two weeks, it turned a +40% LIFO gain from its last purchase and brought this relatively new investment back nicely into the black. Now that makes me smile!!! Best regards, Tom