Replies to post #40701 on A.I.M. Users Bulletin Board (AIMUSERS)

[OldAIMGuy]

Hi Ray, Re: AIM and investment management vs "timing"..........

Always remember that AIM's going to do its best with the investment you assign to it - whether it was purchased in a "timely" fashion or not. AIM thinks very Long Term hence initial timing might cause some initial grief. But if the selection was fundamentally sound AIM will accumulate shares at a discount to that early timing incident and give you a better and lower average Price/Share.

AIM after a purchase then looks to profitably take $$$ off the table relative to the last and lowest purchase price. Several cycles might occur with no breakout to the upside from the initial timing incident but each cycle should allow some modest profit capture.

Three goals of all investing....... 
 * Price Appreciation over time 
 * Dividend Capture over time 
 * Profitable volatility capture over time

Selection of investments could concentrate on any or all of these three goals. AIM is a method of accomplishing the 3rd but can be applied to any stocks or funds that satisfy either the 1st and/or the 2nd.

AIM can't fix a bad company (and its stock) so good selection is important. AIM takes time so selecting for the long term is important to AIM's overall success.

Hope this helps,

[JDerb]

Hi Ray..

Bill Miller (of Legg Mason fame) in answer to the question, "You've often said the guy with the lowest average cost wins. What do you mean?"

"Most people are not wired to sell what's going up and buy what's going down. It hurts. But your profit is the difference between your average purchase price and your average selling price. Bernard Baruch (a great investor in the 1920's) said nobody buys at the bottom and sells at the top except liars. Your stock will go down after you buy it, and it will go up after you sell it. Being willing to lower your average cost (by buying more when a stock drops) is a great strategy. But it's difficult."


One of the reasons this board has been so successful is the support demonstrated by Tom and all the other contributors to help newbies with the 'difficult' part of the AIM strategy. Buying when others are scared and selling when others are greedy. It's like treating your own feelings as reverse indicators. And AIM acts as confirmation.

Hope this helps.

Jon