A.I.M. Users Bulletin Board

[OldAIMGuy]

Hi Ken, Re: your thoughts on LD-AIM......
Yes, in a flat or declining market it is a bit more conservative that traditional AIM. Only in high dividend stocks would it be "less" conservative. If the yield from the stock is higher than that of the cash reserve, then LD-AIM would suffer.

In a cyclical bear market or a range bound market, at least LD-AIM would allow for greater diversification of the same asset base than traditional AIM (assuming that it is being applied to individual stocks).
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Re: Pencil and Paper

Last week I spent two days with a guy who wanted to learn AIM but only on paper. Although he liked the pretty graphs the computer made of AIM histories, he's not a computer person as of yet. As we took his brokerage statements and back-tracked his investments for about two years on a monthly basis he began to see that AIM was not "hyperactive." Most months there was no activity at all. He owns a Closed End Fund and two Exchange Traded Funds. Each of the ETFs had triggered just one buy or sell while the CEF had triggered none. The CEF is a bond fund, so that's not surprising. The two ETFs would have performed better had the AIM trades been done when indicated.

So, his own history proved to be "2 for 2" on providing excellent trade points. He was "2 for 3" in getting any trades done at all on these small accounts during the 2 year period. In his case, the minimum order sizes represented over 25% of the stock's value. This proved to be a major inhibition to trading. Even with SAFE reduced to zero this still was nearly too much for any trades.

I described LD-AIM to him, but it ended up being "one thing at a time" as his first choice. I'm not sure he understood the concept and the idea of keeping track of "virtual shares" spooked him. In this case, however, he would probably have been able to create accounts that were more active as trading accounts and therefore wouldn't have missed the couple of buys and sells this idea might have offered.

At least he's up and running now. As he accumulates more in his retirement account I'm hoping that he'll be able to get the min. order size more properly balanced to the size of the holdings.

Best regards, Tom

Best regards,
Tom