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

To: JZGalt who wrote (6480)	12/24/1998 3:52:00 AM
From: Jim Battaglia	Read Replies (1) \| Respond to of 18928

That is a good thought! One would have to place however a stop at the original vealie point to salvage your AIM profit and avoid not having any cash if the stock reverses. You have added a neat twist to AIM. Thanks for the idea! Perhaps we can call it a (VIP) Vealie Instant Profit position.

To: JZGalt who wrote (6480)	12/24/1998 7:14:00 AM
From: OldAIMGuy	Read Replies (2) \| Respond to of 18928

Hi Dave, I've always been tempted by the siren song of higher profits. In fact, this year is the first time I've started "vealies" this early in a stock's recovery. It was because the Idiot Wave was confirming a lower risk scenario that I allowed it. Even so, since I was starting from a very low cash position in many stocks, it was important to sell a bit just to get the cash back to the IW's values. I don't have the data here at home, but the LIFO returns on even those early sales was quite good. It is part of the "business plan" that I make the sells when AIM has assured me that I've reached a healthy LIFO gain. The only thing I'll let prevent that is if there's already too much cash accumulated. This is the first time I've been able use the vealie or faithfully follow the Idiot Wave from a relatively low market risk level. Although the basics of the Idiot Wave were around in 1990 (the market's previous low risk period) I didn't create the vealie until we were well along in the recovery from the Gulf War lows. So, I'm still in the learning phase of this whole thing. The stocks that will "suffer" this time aren't the ones that rose first. It's the ones that are still just approaching their selling points. A few weeks ago, I'd have started vealies with them at 28% cash and now I'll have to continue selling all the way to 36% before starting vealies. The Idiot Wave is a moving target at which we AIM! What's so different about AIM investing for me is that now after more than a decade of it, it's rare that I have any "losses" any more. AIM, as Linda Kaplan pointed out some time ago, will sometimes sell shares at a FIFO loss (initial purchase followed by a severe drop in price will do this on the recovery) but never on a LIFO basis. Since AIM also returns to us these LIFO gains of 20% (minimum), this satisfies much of our "short term trading" instincts. Each purchase and sale becomes it's own "business deal!" If every "deal" we make in our equity warehouse business represents a minimum 20% gross profit, we don't have to struggle to make one deal that much better than another to make up for losses that only rarely occur. Since cleaning house of companies that weren't appropriate for AIM many years ago, I've rarely participated in the annual ritual of Tax Loss Selling. What a shame!! :-) It's just hard work to come up with any decent losses any more!! (my last total loser was CRAY Computer) AIM's primary goal after a severe drop in prices is to recover our "buying power" as quickly as possible. It doesn't know how to judge the future, only how to prepare for it. This is a great feature in the traditional "dead cat bounce" type of pattern. As long as the bounce is big enough to trigger a sell or two, there will be some buying power if the price "tests recent lows" as we see so often. For those stocks that don't retreat that much, the vealie starts working right away. Let's say we are fully funded on a stock with Cash Reserve at 50% near the peak of the market. This is right in line with what the Idiot Wave is suggesting. Then the poop hits the fan and the markets drop in unison. Since our stock is a stalwart of Industry, it only spends its cash down to 35%. However, the Idiot Wave drops to 25%. In this case, we can do "vealies" during the recovery for the time period while the IW remains below 35%. Only then will we start to sell off a few shares. This actually has happened to me in a few cases in '98. Mostly in mutual funds. I had the suggested 35% Cash Reserve back last summer and spent it down to the low 20% range when the IW was suggesting 18%. Well, I got to do a couple of vealies before I took up selling again. Very pleasant! So, yes it is a great idea, but I still let each stock's activity and the Idiot Wave override my emotional desires. I know, I'm just an old bore!! AIM and I are just a couple of machines!! All the emotions or Scrooge and Marley!! Seriously, it's been running my investments like a business that has allowed me to remain "unemployed" since 1986. AIM has been a great business plan on which to base Veale's Intl. Equity Warehouse! Best regards, Tom