Hi Conrad,
"Reducing risk of losing money in the Casino is achieved by having a few drinks there and observing other people lose their money while keeping your money in your pocket."
I like this! It's sort of AIM-like! We users of the AIM strategies are already participating in a type of diversification - Equity and Cash. The cash doesn't reduce one's risk if one sticks with a losing stock all the way to bankruptcy and blows all the cash, too. However, if the equity doesn't disintigrate but only cycles in price, AIM and the cash can start to make silk purses out of sow's ears.
The old quote about the prognosticator stating that "The markets will fluctuate" is certainly true. That's really all that AIM can hope. AIM addresses the Volatility Capture portion of why we invest. Dividend Capture is yet another reason and finally equity price appreciation is a biggie, but neither are really addressed by AIM. (we can use AIM with high yield equities and with high growth equities, however)
The biggest problem most people have is that they invest for Price Depreciation too often!
:-)
Best regards, Tom
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