A.I.M. Users Bulletin Board

[SFSecurity]

Hi Toofuzzy,

With AIM you do not need to concern yourself with where we are in the business cycle. It will automatically have you selling what everyone else is buying at the wrong time, and buying what everyone else is selling at the wrong time.

You are totally correct, but it does not seem to make to me to do an initial buy into a sector that is at the very top in a given part of the business cycle or at the bottom of the cycle.

Either one could lead to an unwanted effect; too many buy signals so you run out of cash and take a relatively long time to recover, or too much cash and therefore reducing your percentage of investment that is in the market.

In the case of a market top, delaying buying is good in that you buy at a lower price, sort of dollar cost averaging, but still had one waited one could have gained the same position at a lower cost by starting later.

Almost the same, but the reverse, is true buying in at the bottom, except that if you re-balance you get cash for another position and lock in profits.

From what I'm seeing so far that no single approach works best for all time. Railroad were a great market at one point, then they fell out of favor but are now on an upswing because fuel cost per ton mile is ~20 times better than trucking. This is why trend analysis is weak, there is no understanding of the underlying factors that go into making value and therefore perceived worthiness to buy or sell.

The trick is to stay disciplined and follow whatever "rules" one has chosen and not change tactics very often. Then, when you do change, write it down, analyze your changes and make sure they make sense given the changes in the market and other conditions in the world, i.e., the price of fuel and the delivery of bulk goods. Once you have done that, follow your own rules long enough to really see what effect they have and avoid "gut" reactions.

Look at the differences in the stock market between when Lichello created AIM and now. Very different worlds, both in the stock market and in the world.

Warmest regards,

Allen