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

To: The Philosopher who wrote (7056)	3/12/1999 11:44:00 PM
From: Dataminer1	Respond to of 18928

>>I thought AIM worked best when you bought at a high price. This looks like it's pretty close to a low to me!<< This stock has clearly demonstrated the ability to go down a lot. The bottom may not have been reached yet. It works either way. If it starts up from here, I begin taking profits. If it goes down, I buy more. A lot depends on the portfolio size and the initial settings. I am simply keeping with the idea of buy low/sell high. I think the risk-reward is in my favor, but who knows how many more buys I may get? How low is low?

To: The Philosopher who wrote (7056)	3/13/1999 8:58:00 AM
From: Bernie Goldberg	Read Replies (1) \| Respond to of 18928

Hi Chris, The point that I was originally trying to make was not to spend too much effort trying to determine a perfect entry point. I recently bought 3com at 38 it's now 26 and AIM has given me the opportunity to buy twice. I'm not worried. I'm pretty sure that 3COM is a company that will come back. In the experiment that I used I ran a 7 year chart on Mr. Lichello's hypothetical stock started at $5. In seven years $10,000 turned into $600,000. We should all be so lucky!!! Granted it's not as good as 1,000,000. But I think it proves that AIM works no matter where you get in. If one purchased a stock that NEVER changed price you would still be ahead of buy and hold with that stock. The reason for this is your cash reserve would be earning you interest. The only way that AIM loses to Buy and Hold is a stock that you buy at the absolute bottom which goes up continuously and never has a correction. You will still make money with AIM but not as much as Buy and Hold. By the way, if you know of such a stock, please let me know. I will probably still AIM it just in case your information isn't 100% accurate. The only way to lose actual $$ with AIM is to buy a stock which goes down and does not come back. That's why it is so important to check the stability of the companies you purchase. Hope this sheds some light on the subject for you. Bernie

To: The Philosopher who wrote (7056)	3/13/1999 9:42:00 AM
From: JZGalt	Read Replies (1) \| Respond to of 18928

Christopher, If you think about AIM in very simple terms, it would seem like you would want to completely deplete you cash reserve after the initial purchase at the exact point where the stock bottoms and starts turning higher and before you sold a single share. That way you buy the maximum number of shares at the lowest possible price before the eventual sells start to kick in and replenish your reserve. Conceptually I believe that is right. In reality, the actual starting point to buy any particular stock is made more difficult by your: 1. initial commitment level 2. cash reserve settings 3. buy safe level 4. minimum trade requirements Once you determine the these parameters you can easily figure out by trial and error where to start buying a stock assuming you can guess an eventual support level that will hold. In the case of COMS, it is quite clearly nearer the bottom of the chart than the top right now, but if you have selected reasonable levels for initial cash reserve as well as a buy safe point, then even if COMS fell into the very low $20's you would be ok and still have some cash reserve left. What would happen if you guessed wrong about the $20 support level and COMS continued to sink? If you run out of cash, AIM grinds to a screeching halt remember. If you depleted your cash reserves at the $20 level and COMS sank to $10 and then fluctuated from $10 to $15 for the next few years,you wouldn't make a dime even though a new AIM'er who started buying at $15 would make a ton of money on those same fluctuations. After my experience paper trading the oil service sector, the ability to deplete the cash reserves at the exact bottom is harder to do than you might think. ;-) Quite a number of people have speculated what the outcome of AIM would have had on Yahoo! or some of these other high flyers. The flip side of the coin is what if you buy the next high flyer near the top, AIM it until your cash reserves go to zero, only to see it sink another 75% because the wind came out of your high flyer. If you buy a stock and it falls below the point where your cash reserves are depleted, you still have a bad investment. The internet is like biotechnology of 10 years ago with lots of promise, some really big winners, but eventually only a few larger players survive. If you pick a loser, you still go broke. After my experience paper trading AIM in the oil service sector and having this exact phenomena of depleting the cash reserve too soon, I think it is more prudent to buy stocks which have high eps growth and a track record so even if you make a mistake in the initial purchases, the eps growth will eventually bring the stock price back into the range where AIM can start to operate again. That's just a personal preference. ---- Dave