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

To: Bernie Goldberg who wrote (6645)	1/18/1999 9:07:00 AM
From: JZGalt	Read Replies (1) \| Respond to of 18928

It may be an over simplification but stocks that do nothing but go down are not good candidates for AIM. Neither are stocks that do nothing but go up. Excellent point Bernie. I think that most people who are new to AIM and have read the book might think that all stocks that are falling are suitable candidates for AIM. The point that seems to be missed is the stocks must eventually recover for the technique to work. How long eventually is will radically effect your performance. From my point of view, I'd rather select growth stocks with a high degree of volatility for AIM candidates vs. the traditional "cyclical" style stocks. That would be a personal preference. If you notice some of Tom's selections such as ADCT, JBL and VTSS, these stocks are all growth plays, but exhibit wild swings in price. The good news is AIM is superior to the Buy and Hold strategy in these cases, but if someone were to chicken out and not follow the suggested AIM signals, then these sort of growth cyclicals would provide a reasonable return anyway. LH, be very cautious about applying AIM to just any old stock or mutual fund. If you go to: confirmatoryanalysis.com and select "Stock Screening" I think you can easily find some candidates by selecting "any" price/sales on the webpage and then entering a minimum of 1.2 for the beta before hitting the show results button. Why is this a good "screen" to use? Because it only selects companies which have exhibited 1,3 and 5 year eps growth over 25%. The 5 year number is important. If a company has been around for 5 or more years and is showing that sort of growth trend, then it is unlikely to go from $40 to $6 anytime soon. Worst case is you have "dead money" if the company hits a rough patch. Remember this is just a starting point for due diligence. Tom's ADCT is the first stock on the list this month, but there are 95 others to choose from. This is the way I'd start to search for AIM candidates. ---- Dave

To: Bernie Goldberg who wrote (6645)	1/18/1999 11:26:00 AM
From: OldAIMGuy	Respond to of 18928

Hi Bernie, Your point is well taken. Fundamentals and good buying in the first place is still the key to our short term success with AIM. If a stock has done what your BEAM did or what Keith's $40 to $5 or my CGNX ($36 to $9) stock did, maybe it serves a better purpose as a tax loss! It all depends on the future prospects. My CGNX had enough potential that I was willing to use the precious Cash Reserve resources that I had left to continue buying. If I hadn't, the investment would still have recovered, but just not quite as quickly. There's something to be said for buying "industry leaders" and letting AIM work for us there. We need to establish our "investment pyramid" of solid foundation stocks, bonds, etc. and then build on that base. The flightier stocks get less total starting capital in relation to the rest of the pyramid as they are near the very top. We don't want to sacrifice a Granite block from the base of the pyramid to buy a lump of coal for the top. The lump may have the potential to turn into a diamond, but it can also go up in flames! Thanks as always for your input. How do you like the PCA system? It sounds like it's working well as a "teaching aid" for AIM. As you mentioned, AIM does its best work with the massive number of stocks that are just cyclical and not necessarily growth in orientation. I would highly recommend owning and managing a cruise line stock as it will be cyclical by season. Then take the profits each year and spend them on a cruise! This seems to me to be the best way! I did exactly this for years with Club Med when it had a public issue. Besides, I liked looking at their Annual Report!! Best regards, Tom