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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 (6799)	2/8/1999 8:14:00 AM
From: JZGalt	Respond to of 18928

Bernie, I haven't AIM'ed a single stock yet. I'm still working on figuring out what stocks would be viable and how to apply the AIM methodology within the framework that I operate. My first paper trading with AIM was in the oil service area. That was not a good first start. AIM ran out of paper money and would be sitting with considerable losses at this point in time. I gave up after 6 months of trying in that sector because I had misapplied the AIM principles of using conservative cash levels to start and also to not trade as often when the stocks went into a freefall. The second paper trading was in some of these high tech stocks with high betas. In this case I gave up on AIM short term because it just got smoked by the buy and hold methodology. The one stock I considered trying it with was TXCC which I had accumulated at $11. AIM would have had me sell small portions of the stock as it progressed higher. I sold the entire portion when it reached $30 and the stock is now hovering in the high $30's. I haven't done the math, but I would assume that AIM might be slightly behind me on this one. I also am considering converting some of my stocks that jump around to AIM (DLGC, LEVL, GALTF), but haven't done enough paperwork to see if they would justify the change. One of the problems I see in applying the AIM pricniples to high tech stocks is they might not survive the next severe downtrend. When Keith was looking at the screens in Confirmatory Analysis, that is one of the reasons we look at a 5 year earnings growth of 25% or more. By establishing a successful track record of 5 years (which should be long enough to encompass an entire business cycle), you have some feeling that the management and their product is going to survive. Quite a few of these stocks do not have 5 year records, because they are IPO's from last year or the year before. Enough time to get some historical data, but surely not enough time to test their management. If you look at my three candidates of DLGC, LEVL and GALTF, the management test is less than obvious. In fact GALTF hit a bad product transition last year and went from the high $30's to $8. You have to either have an extreme amount of faith in AIM or understand that this tailspin was temporary to sit with that sort of a drop and continue to accumulate. I did not AIM GALTF, but I did buy at $25, $15, $10, and $8 on the way down in increasing $$$ amounts. I haven't sold a single share yeat because I believe the value of GALTF is $30+. All in all, I am convinced AIM is a good methodology, but I am not quite sure how to apply it with the various parameters you have the ability to adjust. I am also not convinced that after a long series of buys, you should immediately start selling if the stock starts to recover. So my real money experience in AIM is zip. I think I can now identify some good AIM candidates particularly in the high tech area, but the actual application eludes me. ---- Dave