Q)
I do plan to get ETFs for AIMING. My father (around Tom's age) was burnt back in the 80s when some of the AIMED stock went into bankruptcy.
My question was- Do you identify those with less than stellar returns and drop them(perhaps trading within bands for a very long time e.g. a year)? What are the Rule of Thumbs that worked for you.
Cheers
CK
A)
Hi C, Re: Stock Picking and Purging for the longer term (necessary for healthy AIM)
If you feel compelled to buy individual company stocks then picking healthy companies is very important. ETFs help reduce "single stock risk" to a manageable level, but AIM still likes the greater frequency and amplitude of price movement from single stocks.
CanRay mentioned one source. There's also the four portfolios offered each week in Value Line. These have a benefit of being pruned and replenished within the guidelines of their stated goals. There are 20 companies in each portfolio strategy. Look in their "Selection and Opinion" each week and you'll find a few pages into it their four portfolio strategies. The Portf #III looks like a good place to find potential AIM stocks (lower turnover, 3-5 year time horizon). Portfolios II and IV also look like they are lower turnover and have the benefit of being oriented toward stability and income.
Remember that AIM is only one ingredient in a healthy portfolio design with the following goals:
1) Price appreciation over time
2) Dividend capture over time
3) Profitable volatility capture over time
AIM is a method of accomplishing #3 but isn't exclusive of the other two. If you want to tilt your portfolio toward growth, you could choose stocks from Portf III, if you want to tilt it toward income, you could choose from Portf VI. Portf II is somewhere in between.
Value Line is available at most larger public libraries.
Portf I:To qualify for purchase in the above portfolio, a stock must have a Timeliness Rank of 1 or 2 and a Financial Strength Rating of at least B+. If a stock’s Timeliness rank falls to 3, or lower, it will be automatically removed. Stocks in the above portfolio are selected and monitored by Michael F. Napoli, Senior Analyst.
Portf II:To qualify for purchase in the above portfolio, a stock must have a yield that is in the top half of the Value Line universe and a Safety Rank of 3 or better. Stocks are selected and monitored by Craig Sirois, Editorial Analyst.
Portf III: To qualify for purchase in the above portfolio, a stock must have above-average 3- to 5-year price-appreciation potential. As the price of a stock in this
Portfolio rises, the computed appreciation potential may fall; it may still be held. This portfolio is most appropriate for investors focused on long-term
capital gains. Stocks in the above portfolio are selected and monitored by Justin Hellman, Editorial Analyst.
Portf IV:To qualify for purchase in the above portfolio, a stock must have a yield that is at least 1% above the median for the Value Line universe, and a Financial
Strength Rating of at least B+. Stocks are selected and monitored by Adam Rosner, Editorial Analyst.
Happy hunting.
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