Replies to post #43616 on A.I.M. Users Bulletin Board (AIMUSERS)

[Toofuzzy]

Hi Aimstudent

First: what makes you suddenly discover a security that is at a 52 week high?

Aim works best with long term holdings so they can go thru multiple market cycles. In other words, what do you want to own forever as part of a diversified portfolio?

I wouldn't start An Aim account with less than $20,000 in any one security otherwise the trades become too small.

Funds are safer than individual stocks that can and do go to zero. Then there are the deep divers that go down.....and then stay there.

Buy the time you have an s+p 500 fund, a Russell 2000 fund, a foreign fund, a REIT fund, and a long bond fund you are talking a minimum of $100,000 before you might consider more specialized funds like technology, health, mining, etc

I don't know if I answered your question or just gave you more.

If you are just starting out with modest funds I would start with a large cap fund. Then I would decide what else you want to own the rest of your life and then add one fund at a time as you have the funds.

Toofuzzy

[SFSecurity]

Hi AIMStudent, I suggest you sell a PUT option at a price below but fairly close to the price you want to get in at. This brings in a bit of money which lowers your basis a bit plus you get it on a minor dip, which also helps a bit.

[OldAIMGuy]

Here's the current v-Wave "Stocks" graph:



As you can see, even though the stock indexes are at or near their previous peaks the v-Wave is suggesting that market risk is quite a bit lower than at that previous peak. This doesn't mean that individual companies might not be over or under priced at this same time.

If you are buying mutual funds or ETFs, risk is quite a bit less than individual company stocks. Therefore you don't need as much cash on hand to be able to buy effectively to a future market low. Generally we've been suggesting to divide the "Stocks" value of the v-Wave by 1.5 to get an appropriate cash level for diversified mutual funds and/or ETFs. So, this week's value of about 46% for Stocks would equate to about 30% to 31% suggested cash for ETFs and funds.

I'd leave the SAFE values alone. There's too much potential emotional connection to those. Awaiting a "drawdown" will make most people crazy and again might be subject to emotional over-rides that could be wrong.

Much depends upon what sort of investment you're anticipating. For instance, in Value Line this week there are 3 drug store companies listed on the "Worst Performers" list for the latest 13 week period. Is this a "sector" thing or are there really three bad drug store chains simultaneously showing terrible results? Further, there are 11 companies listed there that are "retail" oriented (out of 41 companies, total). Does this mean that all retail is bad or that 11 companies are bad in the same sector? Some might view this as a sector rotation thing where others might feel it is the last dying breath for Brick and Mortar stores.

Hope this helps,
Tom