AIM RE-bal

[AIMster]

Hi, Jibes,

I've been pondering your "free shares" idea..

You wrote:

Lets say you buy:
20% below LKP of $6.25 = $5.00 : $300 at $5.00 = 60 shares
30% below LKP of $6.25 = $4.37 : $500 at $4.37 = 114 shares
40% below LKP of $6.25 = $3.75 : $700 at $4.37 = 187 shares


Shouldn't the price on the 40% line be $700 @ $3.75 rather than repeating the $4.37 from the line above?

Also, in keeping with the "no free lunch" idea, unless your shares are in a tax sheltered account, you don't really end up with any free shares, per se, as they all have a cost basis. And this method works best ideally if you sell the shares on a FIFO basis (selling the most expensive ones first, keeping as "free" the later shares purchased at a lower cost). So whilst you've redeemed your initial investment (and in that sense the shares are "free") if you later sell the remaining "free" shares Uncle Sam will still want his due, though their cost basis may be small indeed. Unless I'm missing something ( or having a "well, duh" kind of moment! ) <grin>. If they are indeed truly free, selling those later shares gives you just 100% profit then, eh?

Interesting idea, though, and thanks for any clarification.

Best,

AIMster