Replies to post #8914 on A.I.M. Users Bulletin Board (AIMUSERS)

[OldAIMGuy]

Hi Linda, I managed an addition of 12% to my account in GNSS at $10.89.

The only reason to substitute a different high yield bond fund for ACG would be if you feel you can buy the "new" one at a deeper discount or higher yield than ACG's.

The "industry" will all be suffering from the same problems of maturing LT paper in their portfolios and lack of quality replacement paper. So, there's not much advantage in changing rides at this point. For me there's even less incentive since I'd have to pay a capital gain tax just to make the change.

Because the markets always over-react to almost everything, the cycle will play out as usual from its recent peak in bond fund prices to deep discounts some time in the future. That's when I'll be very happy to order up another healthy serving of High Yield to supplement my living expenses.

There's several good choices around at about the 10% yield levels. Again, one has to be fully aware of the short term probability that we'll see a drop in Face Value (price per share) as the FED starts to swing interest rates back toward more normal levels. I see a drop of 30% to 40% in some fund's price per share as being possible.

So, as good planners and AIMers, we need to have enough cash available to be able to add to our positions to the expected lows I am predicting. If one has 25% to 35% cash available in their AIM Bond Fund Account, then one should be able to participate all the way to the bottom. I must also remind everyone that we need to be very patient about any AIM purchases in this area of the market. There's no use hurrying the buying. It will take several quarters or maybe even YEARS to make it to the bottom. So, day trading something like ACG would be inappropriate. Assume it will be in decline for two years and plan the use of the cash accordingly. We want to buy the most shares nearest the lowest price.

I have three accounts that have surplus cash available right now. That cash has been setting there since the beginning of this year waiting for the bond bubble to start to leak down. I'm actually excited to see it start to happen. We'll begin our AIM accounts when the discount gets a bit deeper.

Best regards, Tom

[smilin]

Linda,

You mentioned several times that you do short term trades. Would you mind explaining your strategy? I also do a combination of short term trades and AIM. I tend to do most of my short term trading when the market is trading "sideways." Now is a great example. Up some days, down some days but no significant movement in either direction. The problem with AIM in this kind of environment is that sometimes it just sits there. There is not enough movement for a buy or sell.

I have done quite well using this combination. AIM is great because you can't always tell when the market will move and short trades are great in the mean time.
What do you do?

Smilin'