A.I.M. Users Bulletin Board

[The Grabber]

Hi Ken.

I know you directed your questions and comments to Tom, but..

you thought you might expand the Split SAFE web page to incude stuff about bear markets

First of all, LD-AIM allows for Split Safe from the get-go. Split Safe was Tom's first 'tweak' to AIM, many years ago. At this point in our ever evolving algorithm, it almost goes without saying that the 'Sum of Safes' of Buy and Sell sides is at the discretion of the investor/trader.

I tend not to use Safe at all, but when I do, it is mostly on the Buy side. This is so that consecutive Buys are at significantly lower prices (at least 10-12% lower than previous; most times more). When I do get a Sell, My Buy Safe essentially drops to 0%.

Now before I get trashed out here for suggesting this approach, I am compelled to state that my tactics have evolved this way primarily due to the range bound nature of the current market. I fully understand the implications, but remind folks that all of my AIM activity occurs inside my IRA, so taxes are not an issue. I do not suggest this in taxable accounts.

Bottom line for me is that I feel I 'make it up in volume'. That is to say that even though the incremental $ and percent profit I realize on each trade are smaller than what might seem 'normal' for AIM, the sheer number of trades multiplied by that incremental profit really compounds nicely! My trading costs are also quite acceptable, averaging about 0.5% (1% round trip). In addition, I note that my capital at risk is spread over 19 holdings, moving to a goal of 30 over the next 4-6 months.

If ... we're in a secular, and not a cyclical, bear then I would think that LD AIM is, perhaps, preferable to Classic AIM because long term losses on the buy&hold part of Classic AIM would be avoided whereas the trading part of AIM would still be operable.

Well I don't know if the 'Bear' is going to be Brown or Kodiak, but I couldn't agree more with your statement.

It has been pointed out often here that the biggest potential negative with LD-AIM is that one might 'sell out too soon'. So I guees one would have to weigh that 'risk' with your 'long term losses on the buy & hold part of Classic AIM'. The nice thing about 'selling out to soon' versus 'the long term loss' is that the 'sell out' is profitable. Put in that context, the decision is an easy one for me (at least right now).