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

To: OldAIMGuy who wrote (6495)	12/26/1998 9:55:00 AM
From: JZGalt	Read Replies (1) \| Respond to of 18928

Tom, I think you are now talking about two different concepts. First to get back to my original thought. I'm not sure of the AIM mechanics, but what I had envisioned was that after accumulating a significant percentage of shares at low prices, the best method of using AIM would not be to _immediately_ start to sell into the rebound of the stock even though the cash level might be lower that would be called for by the IW. In other words, when you correctly identified the JBL purchases on the collapse into the $20's, the 20/20 hindsight thing to do would not have been to immediately sell those shares in the low $30's, but to "let your LIFO profits run". Jim's suggestion of using a Sell-Stop eliminated the risk in doing that because you would eventually sell the portion at the sell stop if the market turned down. Once you had pulled one or two skips, a portion of JBL would have been sold in perhaps the high 40's to fill the cash reserve again. Mechanically, I don't know how to codify this. Perhaps two or three buys should be followed by one or two of these "skips" on the way back up, then let AIM go back to normal mode until the cash reaches a level where Vealies could be done. The second part of the discussion seemed to be centered about using the Sell-Stops in a normally functioning position where a Vealie was done. Given your history of having pulled a Vealie, only to watch the position pull back, I think it would be prudent to use the sell stop methodology in the case where a Vealie is pulled simply to protect the underlying AIM mechanism. In both cases we are trying to second guess what AIM should do vs. what it wants to do via the normal mechanics. The sell-stops are there just to prevent this "guess" from becoming a losing proposition. ---- Dave

To: OldAIMGuy who wrote (6495)	12/26/1998 1:27:00 PM
From: Jim Battaglia	Read Replies (1) \| Respond to of 18928

Tom to answer your questions: Hi Jim, With the bumpy road we've traveled this year as investors maybe even AIM's shock absorbing qualities could use a "bump stop" in the suspension! Are you and Dave suggesting this from extremely low cash reserve levels or just when your cash is in surplus?" Tom I think I will use it AFTER I reach my surplus. However, you can use it on a new stock investment also. This week for example I purchased Charles Schwab @45 with no cash. It moved up this week to 62 area. AIM gave a sell, but I will place a stop below that in case it continues to go up. If it doesn't, then AIM will sell. I just adjust the control and AIM gives me a new BUY SELL point. You will need to make a note in your notebook about what you did. If I understand what you are suggesting, you would do a "vealie" when an AIM order to sell was indicated. Then, just to back up the decision, you would also place a Sell-Stop order for the same amount at a price just below the indicated "vealie." If AIM had called for selling $1000 you then bump the Portfolio Control by 500. Next you call your broker and place a Sell-Stop order for $1000. Is this how you envision it? Yes It certainly would make the graphs look nice to have that last sell at or very near the top of each mini-cycle high! It would also add that extra bit of Cash Reserve needed to fend off the Lemmings when they decide to leap. It also would, as with this week's JBL example, have let the entire amount grow nicely as long as the indicated upward trend continued uninterrupted. Just to fill out the concept, as this continues, do you cancel the lowest Sell-Stop when the next one is placed? Or do you let multiple Sell-Stops sit on the books? Let them stack up, so to speak? Yes, I would cancel the lower sell stop. Obviously you don't want a Sell-Stop to trigger just when AIM is going to start asking you to buy! You'd be hit with a taxable event and then have to make a purchase as well. Or do you use this strategy only as an adjunct when you are pretty fully funded on Cash Reserve? Either way!! Only in experiment stages now! Has possibilities. I have to admit that Bob Norman and I have noticed we have a tendency after pulling a "vealie" to look back later, if the market has gone down, and say "Gee, I guess that one would have been better as a Sell!" If you used this concept only once your cash levels are back to optimum, you would get the benefit of the "vealie" strategy along with that satisfying "last sale" before a dip. We all know that Sell-Stop orders are activated "at or below the price" indicated. It's always been the "or below" part that scared me! However, if we already had a fat enough cash reserve, if we didn't get every penny we were expecting, it would hardly matter. I'm going to stew about this and maybe drag out my old Dos 123 AIM template one more time for some testing! Thanks to you and Dave for bring up the idea. If it can be accomplished without adding extra burden to how we run our AIM accounts, I'm all for it. Remember, I'm very lazy and don't really like to work! Best regards, Tom Thanks Tom for looking into it. You know over the years I have always been looking at Optimising AIM. First with TVR then Technicals Analysis, and now at keeping profits. However I need to be sure I do not want to change the way the system works...BUY LOW SELL HIGH...and now KEEP PROFITS.