A.I.M. Users Bulletin Board

[SFSecurity]

Hi Tom,

I agree that AIM is a great management tool. But, like all tools, it sometimes needs sharpening as knowledge is gained or other conditions change.

I just read a great example that happened to the Germans in WWII. The book, "The Rape of Europa" describes the response of the Polish and how they bent to will of the Germans after being conquered. But the Germans were completely thrown off their stride when they tried to do a much milder version to the Dutch and the Dutch resisted. They just didn't get that the Dutch were from a Germanic heritage but had changed over time and did not think like "orderly" Germans. The Germans weren't flexible enough in their management style to accommodate the Dutch persona. They never were able to completely subdue them.

One of the great tidbits of WWII lore is that the resistance of the Dutch was so total that the vast majority of the police, the lawyers and the judiciary did not cooperate with the Germans. Their resistance frustrated the Germans to the point that they jailed a lot of them for the duration. After the war was over the lawyers and judiciary compared notes and came to the realization that long prison sentences don't work. Now the Dutch have very short sentences and a much lower recidivism rate than we do.

There are two similar, conflicting, examples from American history, Prohibition, and the drug wars. With Prohibition we learned that managing that aspect of personal choice just did not work. With the drug wars it has taken 100 years to finally come to the same realization and it is still an evolving process.

In the same way the Dutch learned about the reality of how prisons actually functioned, and changed their management, we need to be aware of how things actually work and adjust our management to suit our increased understanding of the stock market. It's much like Lichello did when what he was doing got wiped out in '74, he looked at his choices and management of his investments and analyzed other approaches and then adapted and modified what he knew to come up with AIM. But he didn't stand pat, he tinkered with it as he learned more and as the markets changed. Plus he thought about new investors and retirees and their needs to come up with approaches to managing their investments that would better fit their needs.

My point in posting the information about the business cycle was to help me, and hopefully others, understand what is happening in the world around us better. I find that writing about what I have learned makes the information sink in and stick better.

As karw says

Looking at the numbers this weekend, it looks as if we should execute our (delayed) sells.

That's a management decision based on evaluating the data about what is being managed.

As to

Give it a try and attempt to stick with it through a full market cycle and see how you feel about it.

My situation is a bit odd compared to yours, Tom. I'm 71, have a modest pension and a modest Social Security income. (The SS income is more modest than it should be because I took the advice of my CPA 40+ years ago without considering the long term affects of that advice.)

Now, with the death of my mother at age 92, I got handed responsibility for taking care of the inheritance of my mentally disabled brother so he does not spend himself into penury as he would likely do. Plus I now have the responsibility for making sure my daughter uses the money she got for her college education as wisely as possible. On top of those issues, i have to manage what I inherited and my own prior small reserve. So, perhaps you can see why I'm taking things ones step at a time and checking twice.

Warmest Regards,

Allen