Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: B. J. Barron who wrote (7610)	6/3/1999 4:19:00 PM
From: OldAIMGuy	Read Replies (2) \| Respond to of 18928

Hi BJ, I prefer Value Line's BETA calculation. It's consistent throughout their data base and is a longer term calculation than many others. There are those here that will tell you that AIM doesn't need to buy at a price cycle bottom to work - or even work best. Bernie Goldberg has done historical testing on this and has shown that many times AIM does just fine buying in near cyclical highs. Remember, if we start at a cyclical low with a fat cash reserve, it might be a very long time before we use up the reserves to buy more shares. In a bull market, we're better off to be 100% invested. So if AIM starts near a market top and buys cheap shares in the following decline, it gets to that 100% invested posture sooner. Each time AIM recycles the cash it earns handsomely. Jeff Weber's analysis concentrates on buying "efficiently" and then managing that new holding with AIM. This has generally been my practice over the years, too. Having said that, it is also quite apparent that I don't do everything right, since I don't own any Microsoft or Intel!!! Those stocks were always too "expensive" for me! So, don't get hung up on starting prices. Jeff's lists are only a starting point for due diligence. It's helpful to note on Jeff's lists how many stocks are from a certain sector. This can be helpful in identifying a Sector that's out of favor currently. From that knowledge, you can then pick the BEST company in that sector and place your investment "bet" that way. I use Value Line's Best/Worst Performers List (page 33 of the index) for similar things. Most recently that list called the Energy sector over-sold (back in Feb.). At that point there were more than 25% of the list's Worst Performers involved in the energy sector. I use another measure from Value Line to confirm volatility. In the lower right hand corner of the page you'll find "Stock Price Stability" as a rating. The lower the value, the more volatile the issue. Extremely high BETA stocks will usually have very low "SPS." However, note that countercyclicals sometimes have very low BETAs and still have low SPS. What I look for is projections of Book Value growth and Revenue growth. I want to see 3-5 year doubling of these items. It's my opinion that eventually earnings will follow (even if it's under new management!) I would recommend against too much diversification. Keep the portfolio as small as you can stand - otherwise buy a great mutual fund. Also, plan on owning your AIM holdings a very long time compared to other investors. If you've guessed right about the long term prospects of the company, you may own it 5, 10, or even more years. In Thomas Phelps' book 100 TO 1 IN THE STOCK MARKET he says that "selling out of a stock position is admitting that you didn't do your homework correctly." That's true of my IDTI position that I just sold yesterday. I made money on it, but it never lived up to my overall expectations. Hope some of this helps, Tom