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Strategies & Market Trends : AIM Questions and Answers -- Ignore unavailable to you. Want to Upgrade?

To: Skipperr who wrote (65)	10/31/1998 6:38:00 AM
From: Bernie Goldberg	Read Replies (1) \| Respond to of 221

Hi, I can give you my reasons for choosing the investments methods I use. I started investing about 4 1/2 years ago. Like you I decided to to some research. The first sensible book I read was "Beating the Dow" by Michael O'Higgins. My first stock was Merck at 35 7/8, now 136. By the time the first year was over I had come across Mr. L's book. I really consider myself fortunate hitting two home runs out of the first three books I read on investing. O'Higgins claims that his method averages about 18% a year. ( I have done much better than that) Lichello doesn't claim that you will make a million but gives you a hypothetical situation where his system did. ( I haven't made a million yet). To paraphrase our illustrious president, It depends on what your definition of right is. AIM is doesn't claim to be always right, although it is amazing how often it is. Yesterday I sold 100 shares of a stock at the high for the day. After I sold the stock went down about a quarter. It really doesn't make any difference what the stock does Monday or Tuesday or whenever. Two years ago we bought a brand new Jeep Cherokee with the proceeds of AIM and this stock (APCC). 1 1/2 years ago we removed enough cash from this stock to cover our original investment ($10000). We still have almost 4 times our original investment left. More important than whether or not AIM is ever right is one very simple fact. AIM is never wrong!! AIM is very careful not to tell you which stocks to start off with, or as Mr. L. says "what you feed it". Lichello defines very clearly what sort of things AIM will do well with and gives two different plans to use, one more conservative than the other. Tom Veale kicks it up a notch with his Idiot Wave which in the short time that I have been observing it probably should have a book of it's own. I would recommend that you pick one stock. Make sure it's a good one that you don't have to worry about the world not wanting to use it's products tomorrow. Make an investment large enough so that half of it would make a satifactory AIM acct You need to have $10,000 in an AIM acct so that the 5% minimum investment will be $500 or more. Keep track of both Accts and see which one does better. In fairness to AIM the test period should be long enough to go through one buy sell buy sell cycle completely. Using Yahoo's new history site or Microsoft Investor's history download. Tom's done well with VTSS, I've done well with APCC. You could backtest a history on either of those. I would certainly recommend that you stay away from anything under $5. While they are more than volatile enough there are too many of them that go down to $2 and stay there for too long. Hope this helps. Bernie

To: Skipperr who wrote (65)	11/5/1998 12:26:00 PM
From: OldAIMGuy	Read Replies (1) \| Respond to of 221

Hi Skipperr, Bernie has given you some good overall reasons for liking AIM. In my case, I have done short term trading and done it successfully. However, I've been much more consistent in making money with AIM than I ever was with trading strategies. Since I'm in the "retirement mode" I really can't afford lack of consistency. There's no "new cash" to cover short term errors. Everything is generated internally. Short term strategies are almost fool proof in a rising market. It's when something unexpected, like the Gulf War, comes along that traders get caught. Even then it's not too bad if they can wait out the downturn. Another big reason for my using AIM in place of another business plan is that it is reasonably "tax efficient." In any trading strategy, usually it's Buy All - Sell All. If one looks at total return vs inventory turns, and then figures the tax consequences of the trading, you'll see what it is that I am discussing. My usual "inventory turn" for my account using AIM has been between 15% and 25% of the total. I'd guess that my "average" LIFO gain on any sale is more than 20%. So my overall tax burden isn't that bad in any particular year. Another way to view the two different "business plans" for your account is what I term "Return on Capital at Risk" (RCR). If I'm making 15% on my overall account and it's only 67% invested, my RCR is actually 22%. After all, the Money Market Fund isn't really at much risk at all and is yielding about 5% itself. If I'm making 15% on my account and it's near a market peak, I'll be at about 50% Cash Reserve. Then my RCR rises to 30% AND I have the comfort of all that lovely cash. I hope this helps give you some new ways of analyzing AIM as a business plan. I treat my overall account as an "equity warehouse" and my inventory is my various stocks. I add to inventory when prices are favorable and reduce inventory when demand is high (along with prices). With AIM's SAFE of plus or minus 10%, you are certain to turn LIFO gains of over 20%. This is good for the warehousing business! The biggest difference in short term strategies VS AIM is the selection of equities. Both look for volatile stocks, but AIM wants you to own equities that are going to survive and prosper over the long term. Short term strategies don't even require the investor to know what the product is that is made by the company! Sometimes short term traders play the same issue through many cycles, but rarely do they own it outright for a long period. This leads me to the last reason that I switched from ST trading to AIM. Too many times when I bought a stock and sold out of it Short Term for very nice profits, I missed most of the "action." I'd research a company and "bet" on its stock rising. I'd take my short term profits, only to see the stock continue to rise for a very long time thereafter. VTSS is a perfect example. I NEVER would have stayed around with a rise from $3+ to $32. Short term trading would have had me out of it YEARS ago. Now, I haven't made ALL of that rise, since I've sold off shares along the way, but I doubt if I would have made 600% on it by trading. Please feel free to ask questions as your study progresses. AIM's not for everyone, but it seems to fill a nice void between trading strategies and Buy & Hold. Best regards, Tom