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Undertakr

01/01/03 10:47 PM

#6714 RE: Bernie Goldberg #6713

I think you misunderstood his concept of Low AIM, let me try to explain it as I understand it.

Lets say you have $10,000 to invest. Using standard Aim you'd put $5000 into one stock and $5000 cash, making your risk 100% in the one stock you chose.

Low AIM says to take your $10,000 and spread it across 3 or 4 stocks, but still use a higher Portfolio Control than the amount you actually put into each specific stock as if you had put in the $5000 to begin with. So, you have the portfolio control of the $5000 (I'm using generic numbers, please do not go use these exact numbers!) with only the risk of $2000. Since you only risked $2000 you can now buy 3-4 times the companies, diversifying your risk even further while still investing the same amount of money.

You are essentially putting in an initial buy to set your 'starting point' for the basis of the math (you could probably establish a completely ghosted starting point investing nothing at all I'd imaging) and then making your buys and sells with cash in hand to do more buying. If you buy a stock and immediately go into sell mode, you kind of defeated the purpose of AIM really. The purpose is to buy more shares at lower prices and by taking a LOW AIM approach, you actually should have more cash to buy low across more stocks so you can build more shares in more companies to sell on the rise than if you did a BTB AIM investment in one company.

It's an interesting concept, one I'd like to discuss and research further.

- Steve

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The Grabber

01/01/03 11:50 PM

#6720 RE: Bernie Goldberg #6713

Hi Bernie:

The whole point for me currently is Diversification, Amplification, Maximisation.

Your points related to 'losing' dividend income by investing fewer $ is correct, but I'm ok with that if it gets me to my goals as stated above. I'm not running into this blindly.

I'll ignore the Enron reference. This is totally different.

In LD-AIM there are no borrowed $, no phantom $, no jingoistic magical spells. Just a reasoned approach to leveraging the AIM algorithm at the start of a program for fewer $. Thereby making the unused $ 'Available' for another program.

I guess it's AIM on Sale <smile> 2 for the price of 1

Regards, Steve