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

To: Skipperr who wrote (6333)	12/1/1998 11:52:00 AM
From: OldAIMGuy	Respond to of 18928

Hi SkipperR, Yes, I'm sort of stuck in the AIM rut! I've been using AIM for about half the time Mr. L's book has been available on the market. However, I first read the book in '85 or '86. It wasn't until January of 1988 that I finally adopted it for my business plan. Why did I take so long? AIM looked too good to be true. I had to test drive it before becoming a believer. Testing AIM was tedious before computers. Can we even imaging the hours Mr. L spent developing the model - LONGHAND! I have a feel for it in that I filled in lots of 13 column paper before I was satisfied. I also used my brother (a career stockbroker) as a sounding board for the concept. It was his embracing of the AIM concept that finally pushed me towards its use for my own account. He had started to adopt AIM as a strategy for managing his very conservative clients (mostly retirees - he lived in Florida). It took the comparison of my own results (somewhat AIMlike) to Mr. L's using the same portfolio in each during my "test year" 1987 that convinced me that AIM was superior to my own approach. I was doing something similar to AIM - call it an "ever liquid" account. I maintained a cash reserve for the overall account, but short term traded the majority of the portfolio. I did well, but it consumed ALL of my time. I was glued to the ticker. If I was still pulling in a paycheck, I'd probably soup up AIM a little by keeping a lower level of Cash Reserve. Having the ability to continually add cash would be nice, but it's not proved necessary so far. Every once in a while I think of getting a job, but then I wake up - usually in a cold sweat! AIM has very reasonable technical *efficiency* in its trades as can be seen on the various graphs of examples. AIM's a good risk control device as well. The one part of AIM that's not automatic is the selection of the stocks or funds that we use. I have never seen a problem with averaging down if we stick to stocks that have solid fundamentals that are well documented and substantial. As we've seen recently, many stocks with fundamentals about as substantial as Sea Foam have soared, crashed and soared again. It now appears that yesterday and today that the love affair may finally be cooling off for the internet stocks. AIM would have had a ball with such stocks, but again, AIM didn't pick them, only managed them. Considering your time constraints, you may just have to "live" with AIM and its boring consistency!! I really like the ease of use. I keep a full page of open orders (both buys and sells) at the brokerage all the time. It takes care of itself. When I update the following week, I enter new orders to replace those that have filled and update the companion (opposite order) to its new level at the same time. In theory, I'm done for the week! That's allowed me time for my family, my hobbies and to build this note string and web pages. Now all I need is someone to clean my office and do my filing!! Best regards, Pig Pen Veale!

To: Skipperr who wrote (6333)	12/1/1998 3:08:00 PM
From: JZGalt	Read Replies (1) \| Respond to of 18928

> I guess the thing that bothers me is William O'Neill's advice to > never average down on a stock - but that is the way AIM buys low! O'Neill's advice is geared more opportunity cost vs. anything else. If you average down and it takes time for the stock to recover, then you would have been better off finding the next stock that is going up vs. waiting for the first stock to recover (in most cases). AIM makes the assumption that the stock will recover and that if you buy more a lower prices, you will be ahead in the long run. It is a conservative approach and probably does not maximize the overall profits although this thread has clearly demonstrated that it will work better than the buy and hold method for highly volatile stocks or stocks which trade in a trading range. In comparing O'Neill's approach and AIM, you are really comparing apples and oranges. O'Neill's methodology makes money from moving from one stock to another. AIM is geared more toward maximizing the outcome once you have decided on a stock. These are really different things. I never cared for O'Neill's approach since I had to: a. find the stock b. buy it at the right price c. sell it at the right price d. repeat a,b,c Personally I do find with a and b, and have trouble with c. AIM might solve some of that problem but I haven't yet employed it in a real life situation. > Stock selection is also very important. Probably the most important aspect of AIM and other "trading" methods (see step a. above). A friend of mine is working on a website where he uses various technical and fundamental aspects to select 1-2 stocks per month with the objective of holding them for 1 year or more. Looks good so far when I've done some back testing. Selections might be suitable for AIMing with some variations because they rely on selecting stock which have a 5 year eps growth rate > 25% as one of the base criteria. This suits AIM since the company has a track record and that is good right off the bat. I ran a screen the other night with a beta > 1.5 and you immediately moved for a universe of all stocks right down to 49 stocks to consider. That is manageable. In any case there are many many ways of making money in the stock market. It all depends on what you can tolerate and the time and effort you can spend on the approach. The easiest method for me is to find a few good stocks and hold them for a very very long time coupled with a little bit of technology stocks thrown in to up the averages. Works for me. Your mileage may vary. ----- Dave