Replies to post #7765 on A.I.M. Users Bulletin Board (AIMUSERS)

[Rien]

Hi Matt, about your 10 stocks:

Did you plan on AIMing each one separately or lump the 10 together and have just 1 AIM program for them?.

If you decide for just 1 AIM program, then make sure that the stocks are all in the same business-cycle. If you have stocks that are in different business cycles, the volatility will cancel each other out. (AIM cannot work then).

If you want 10 different AIM programs, then make sure that you pick survivors. I.e. companies without debt, a positive cash flow and a possible good future.

Even in the case of 10 different AIM programs I would advice against it. Because you would still need to evaluate every single one of them to see if they still remain valid candidates. If you AIM single stocks, you will need/want to follow the stock to see if they don't develop into "Enrons". And on occasion you will need to change ships. Though on single stocks AIM is preferable to B&H, it remains a high risk undertaking.

Even if you create your own "fund" of 10 stocks in a single AIM program, you probably still want/need to follow the individual stocks. And believe me, that is a LOT of work.

The ETF's might be a better approach, if the funds are specialized in a certain sector. (Each ETF in its own AIM program)

[Toofuzzy]

Hi Matt: More advise:

you wrote:
>>>>Toofuzzy, thanks for your advice about ETFs. I am seeing the wisdom of AIMing a fund instead of stocks, especially starting out. There's no way I want to lose my entire account by picking the wrong stock. <<<<<

Well lets's say you start with three AIM acounts. Each one is a seperate individual stock. If one stock goes bankrupt you will lose the value you started with IN THAT ACCOUNT.

You Wrote:
>>>>However, what is a good method for picking/screening funds? With stocks it's fairly easy. I have gone to Yahoo Finance and used their screener to find stocks with certain criteria (I mentioned a few above). How might you do the same with mutual funds though?<<<<

You need to start with what your investment philosophy (plan) will be.

Individual stocks, mutual funds, ETF's, none of those, all of those.

Next: If you use funds, do want to use either mutual funds (cheaper to add a little money at a time and trade) or Exchange Traded Funds (ETF"S)(lower fees,no active management)

Next: Do you want to invest by style or by industry. I have mixed feelings as to which way is better. Both Tom and I have posted which ETF's we have bought. Tom invested in five he thought had the best prospects and to not have too little in each one to be worth AIMing. I invested in ten to have greater diversification and feel comfortable with more industries even if some do not have as much volitility (which AIM likes) or growth prospects which are not quite as good. I posted on switching from mutual funds to ETF's near the beginning of this month: post #7573. It did not go as quickly as I wanted but that is another story.

Toofuzzy

[OldAIMGuy]

Hi Matt, Personally I feel that $1000 isn't enough critical mass to get good AIM results compared to the trade costs. It might be better to use Twinvest with the same stocks to build a portfolio to a better size for AIMing.

Best regards, Tom

[jibes]

Matt

I think buying 10 low priced stocks at say $1.00 or so a share is a great idea if you are willing to wait for some of them to rise to a much higher value. Do check them out though an make sure they're not duds. #:)
Also keep in mind that a $1.00 stock can go much lower. I once bought 17,000 shares of a stock at 4 cents that did at one time sell for $1.00 (before I bought it) that went to 1 cent (after I bought it) and then it had a reverse split of 1/20 (like that was going to help) and is now selling for .008 cents a share. So my after split 850 shares are worth $6.80! I'm still waiting for my ship to come in on that one! #:)

Or you could do "AIM Re-bal" on 4 low priced stocks. However, in reality I think you should do this with a min of $2000 and only act on transactions that go up or down by a predetermined % for any of the 4. Of course this IS going to happen often with these low priced devils. The action should be fun but be prepared to run out of cash at times. This could very well happen.

I think playing $1.00-$5.00 stocks is OK only if you can stand to lose all or part of your money. Otherwise be careful.

You can check out "AIM Rebal" at my site.

Jibes
TrendSeekers at:
http://jibes0.tripod.com/trendseeker.html