Replies to post #26497 on A.I.M. Users Bulletin Board (AIMUSERS)

[Undertakr]

My strategy to avoid the divers when you purchase is to only buy a stock when it's already below it's 50 and 200 day moving averages. The farther below those, the better, if it's a good company. Then you aren't falling from a high back down to it's average, which I see happen a lot. Try to get into the stock when it's already low, if it goes down, you get an extra discount, if it goes up, profit city.

I also try to avoid volatile industries like banking, airlines, cell phones, etc and stick to tried and true name monopolies like Coke, Pepsi, Harley Davidson, Wal-Mart, Costco, McDonalds, etc....companies that won't go out of business so I can hold onto them for the long haul if I get in too early or whatever.

While AIM may not always be the best strategy with every stock (Apple going from $20 to $200 to $120 for example), it will save your ass and it will create structure for your trading, which is the #1 problem I see. I don't have to think of when to sell or buy, I KNOW when to sell or buy and until those triggers are hit, I can safely ignore my investments. I look only when the markets are closed and usually only trade every other Friday night or so. Makes it simple, which is the key in my book.

Invest in peace...

[Neil Scott]

Hi Toofuzzy

I have tried to balance my portfolio with more large blue chip shares & I'll place more money int them than the small cap shares.
Typically I'll AIM the blue chips and LD-AIM the Small caps.
The small caps demonstrate more volatility (although that seems to have change and the large companies are showing large swings now).
As always the question is how much do you throw into a falling share.
I think I may add another rule to The Book.
1.As well as increasing the Buy Safe on subsequent buys,
2.The thirty day buy spacing rule,
3.I'll add the no more than 3 buys into the falling price
4.A cap on total funds into an individual share.

Wow is that too many rules.
These will be the ones applied fully to small cap shares and with discretion on the Blue chips.

Regards

Neil

PS hey guys, were you feeling depressed overnight!

While I was out enjoying Meow Meow (strange burlesque cabaret) at the Adelaide Fringe festival you guys were jumping from the high buildings.
If you ever get the chance to see Meow she is great, superb voice & strange habit of wanting the audience to undress her (not totally mind you)

[ls7550]

Unlike Toofuzzy I am more accepting to AIM'ing stocks individually, the collection of which form my own virtual fund.

I believe the key is diversification across good quality stocks.

AIM'ing each stock individually with their own cash reserves limits the maximum you'll lose on any one holding to a relatively small proportion of your overall total fund value. Provided that you don't allocate too much to any one stock you'll generally be OK.

As in how some investors are totally against any form of timing, claiming that missing a small fraction of the best periods would have produced significantly lower returns overall. This is a narrow view that totally avoids the opposing argument that missing the small fraction of worse periods would similarly avoid substantial losses. Impartial views recognise this and that the two tend to counterbalance.

Rarely do you hear those proclaiming that timing misses the small fraction of best periods counter the other side of the Bell curve - such as 1800 to 2007 for the UK FT All-Share - missing the 5 worse years across the period would have avoided a greater than 92% loss (0.078535 factor).

With diversified individual holdings you'll likely encounter an equal number to that of failing stocks that turn in 100%+ gains.

The volatility of individual stocks is also much higher than that of collections of stocks - and as we all know AIM likes volatility.

The potential deficiency with AIM therefore is not so much that of deep divers/total failures, but that of selling out of potential 100%+ gainers too soon. Vealies tend to help somewhat here.

Each to their own - and that which provides the greatest comfort.