A.I.M. Users Bulletin Board

[SFSecurity]

Hi Orcroft, Can Ray and Toofuzzy, Balbrec2, The various responses are the reason I post some, seemingly crazy, ideas on the list. There is almost some new idea or way of looking at the idea.

Okay, Balbrec2, you said "...I thought AIM was supposed to make market timing unnecessary." This is true to an extent but during some periods of the market, and with some positions, AIM does worse than B&H so if one can find a reason to go all cash, for example, then can do much, much better, overall. Imagine that you had decided to go cash, or an equivalent, in October of 2007 and you waited, using Orcroft's method for reentering the market you would have avoided buying on the way down during the bear market of 2008-9 and gotten back in in March or April of 2009, you would have avoided ~54% drop in the positions you held and you would have bought back in at near bottom. Check one of your positions and see what would the results be.

For goofs and grins I ran this on SHY, which we have seen from other posts tends to do better with B&H over some periods of time. B&H of $20,000 invested 9/1/2007 (131 shares) would have a gain of 4.77%/year. Straight AIM would have a gain of 5.42%/year, but to get this you need to hold 50% cash to avoid going into negative cash. Still quite good. However if you pulled your money and put it into a cash equivalent you would have been able to buy back in 4/1/2009 at $87.42, the second up from the bottom of $73.93 per Orcroft's method. Given history and paying attention to what has happened in the past you have studied you could gone in with only 20% cash, never go negative cash and get a gain of 7.41%/year. In actuality one could, if you are up to the risk, could have gone in with 5% cash and gotten 10.19%/year and never hit negative cash. And this doesn't include any monies you might have earned with cash/cash equivalent in the 19 months you sat out of the market.

All, in all, it seems that while following AIM without looking at the market as a whole, bull versus bear or snoozing, won't kill you it is possible to do significantly better.

As to Can Ray's caution about such a high Altman Z-Score, Orcroft told us about another metric to watch, the Beneish M-Score. The combo of the two looks like it would really help qualify the potential position one might be looking at. Add the Piotroski F-Score and we have a third perspective, two of which have no rating for EMMD. A clear signal that EMMD is not likely to be a good risk.

Best,

Allen