Replies to post #4106 on A.I.M. Users Bulletin Board (AIMUSERS)

[Lou Dina]

Hi Bernie. My experience precisely.

When I first started Newport, I began by reviewing prices daily, then bi-weekly, weekly, bi-monthly, and now monthly. I used to be so caught up in watching the tape, and I even updated Newport daily at first, using the "Fix a Price" feature in the maintenance menu. Talk about anal!!

I typically update on a monthly basis now. The only time I alter that behavior is when there is a super dramatic drop in the markets, which presents a great buying opportunity. If Newport already had me scheduled to buy, then I might buy before a month passes. I did that after 9/11. This, of course, adds the element of subjectivity into an otherwise unemotionally structured AIM program. Still, it works for me.

In general, I have found what you have found. I miss a few buying opportunities, but some of my trades are placed at much better prices. It's probably a wash, and might even favor less frequent trading.

In spite of a prolonged bear market, I still have a reasonable cash reserve, while I suspect many weekly (or more frequent) traders do not. Monthly trading slows down cash burn considerably.

Lou

[karw]

Hi Bernie,

There is another reason for me to go to monthly updating:

I am just reading 'Expectations Investing' (website www.expectationsinvesting.com) which is about stock valuation. It is based on discounting expected cash flows. It is not calculating a stock price, but uses the stock price to see what the expectations are of the market.

The authors make a very good case that market prices reflect long-term cash-flow prospects. As expectations shift, so do the stock prices.

A monthly update period is much better tuned to this shifting of expectations, often more than 10 years of cashflow, sometimes 30 years! It seems to me that one is more in tune with the market with monthly updating. Maybe a month is "infinitesimal" compared to many years of cashflow. Updating daily is really just playing within 'noise levels'.

Regards, K

PS If moving to monthly updating is capitulation, the stock market should go up!