|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________37% Up 1 - Average Risk Growth Stock Mutual Funds___________24% Up 1 - Average Risk IW Risk Oscillator____________________"+2" - Rising Risk |
|
Value Line P/E ratio 14.7 + 30 Year Treasury Rate 5.49 =____ 20.19 Up 0.22 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 8.3 Down 0.5 Neutral (Speculation) NASDAQ Hi/Low Logic Index__________________________ 3.6 Up 0.1 Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-1.5 Unchanged Bullish (Zeal) |
The year proved interesting in many ways throughout. With the NASDAQ Composite starting the year above 4000 its current value shows a decline of about 39% - the first decline since 1990. All the major indexes are off for the year while not as severely. I heard some bozo on CNBC state that 2000 was one of the worst years ever for the NASDAQ. This is true, but he neglected to say that 1999 was one of the best years ever. The pendulum can swing both ways!
Well, did AIM work? Did the Idiot Wave keep us informed? Did we survive "..one of the worst years ever for the NASDAQ?" Let's take a look back................
January - IW = 50% Cash, High Risk; The Speculation component of the IW was showing reason for concern. Tom, Keith Felkins, Bill McKinley, Doug and Stephanie Newberry all meet at the Orlando Money Show and put plans in motion for the AIM 2000 Meeting
February - IW = 52% Cash, High Risk; BioTechs are hot along with almost everything else. My Cash Reserves were swelling to new all time record highs. My account was up 21% for the year to date.
"Because of the market's unusually high Speculation rating in recent times, I've increased my Buy SAFE (Resistance) on most of my stocks and mutual funds. My thoughts are that if a $30 shirt has recently had its price raised to $50, then it's not necessarily a bargain if it goes on "Sale" for $35. If I sum the P/E of all the stocks I own that have P/E values (some stocks aren't showing ANY earnings) and take the average, I find my "average", unweighted P/E is 51. This doesn't include my mutual funds, but I'll bet their average P/E isn't much better than my own."
One week I had 31 separate AIM transactions (buys, sells and 'vealies') to report!
March - IW = 60% Cash, HIGH RISK!!!; New record High Risk level for 18 years of data on the Idiot Wave. NASDAQ Composite breaks through the 5000 mark.
"I guess the way to handle this is that if you own some of the market's recent High Flyers, please follow AIM's and the IDIOT WAVE'S advice and have PLENTY of Cash Reserve on hand. You may also want to insulate your AIM accounts from making purchases too soon in a price correction by pumping up the Buy SAFE (Resistance) to a high level or just letting the clock run a long time before buying. I've chosen to raise the Buy SAFE levels very high to prevent premature buying. I've inflated the SAFE level to the point that I'm comfortable with the buying it will do at a price way below my last Sell. As an example, I last sold shares of NERX at $48-1/8, but by using 100% Buy SAFE, my first buy won't occur until the price falls to under $10/share. The Market seems to think Cash is Trash, but I don't. I want to conserve it until some of these stocks fall back to more civilized prices!"
April - IW = 50% Cash, High Risk; "What appears to have been a serious breakdown in investor confidence on Friday, April 14th occurred. ...........it would appear that the laws of Market Physics (or maybe Psychology) took over. In an astounding week, the NASDAQ Composite fell 25%, and the DOW fell 7%."
May - IW = 42% Cash, Average Risk; Negative press articles abound. Robert Shiller's book "Irrational Exuberance" is # 14 on the Non-Fiction Best Seller's list. Stories of serious margin calls appear.
"....note that I'm still maintaining a defensive posture with high Buy SAFE (Resistance) values on most every stock I own."
AIM 2000 Meeting takes place in Las Vegas. AIMers gather for the first time since Mr. Lichello's last efforts.
June - IW = 39% Cash, Average Risk; Markets back to treading water. Some AIM trading going on.
"For four weeks the NASDAQ Composite index has been within 100 points at its Friday close with last Friday bringing the market to 3845."
".......we've gone from a record high risk level in March to a benign average risk level by mid June. That was a painful lesson for many investors, but was an opportunity for AIM users and followers of the IDIOT WAVE."
July - IW = 38% Cash, Average Risk; Markets continue in a tight range while my Speculation component creeps back into its Bearish territory. AIM trips both a few buys and a few sells.
August - IW = 41% Cash, Average Risk; Steve Kaufman and Keith Felkins drop in to visit Wisconsin and sample some Bratwurst and Beverages. AIM's busy with both buys and sells, but buying is heavier.
"Speculation is Bearish in a controlled fury sort of way. Not as wild as March, but still not a healthy long term sign."
September - IW = 45% Cash, Average Risk; The NASDAQ pulls back from around 4200 to around 3700 by month's end. Rising Idiot Wave indicated rising risk and the market responded right on que.
"Maybe it's still fall-out from the nuclear melt-down of the market after speculation mushroomed back in March. In any case, we're attempting to test all incoming inventory for radioactive waste!! No use contaminating perfectly good inventory with new bad stuff."
October - IW = 50% Cash, High Risk; Market risk as measured by the Idiot Wave continued to rise while the market averages fell. NASDAQ Composite now down to about 3300. Pretty serious AIM buying throughout the month.
"As I've mentioned in the past, it's BEAR markets that seem to attract the most attention for AIM! When all is going well, who needs to manage the risk of investing? When all is flushing down the old sluiceway it appears that we get VERY POPULAR!"
November - IW = 39% Cash, Average Risk; Moderating risk and the NASDAQ down to about 3000 go hand in hand.
"With no resolution yet in the presidential election, the market is going to be quick to take profits in any sort of rally and will continue to punish all stocks that don't do anything less than Herculean feats. So, I'm sticking with my strategy of keeping most of AIM's SAFE (resistance) value on the Buy side while keeping the Sell SAFE very low. I've kept these same settings with only minor adjustments since very early in the year."
December - IW = 36% Cash, Average Risk; Here we are finishing out the year with the NASDAQ at lower levels than have been seen in all but the last couple of weeks of 2000. It would appear that the prolonged election pushed "Tax Selling Season" back to the very end of the month spoiling the Santa Claus Rally.
We are ending Y2K with a much lower risk profile than we started it. As mentioned in the beginning of this article, "The pendulum can swing both ways!" I'm disappointed that we have yet to see the Idiot Wave drop back to a Low Risk value. It may have more to do with the data lag than with actual market conditions. In any case, I think we've seen that AIM does a remarkable job in rising, falling and cyclic markets. I hope that no bugs, Y2K or otherwise, bit you too severely during this last year. I also hope that you now understand why I've spent the last 13 years preaching Mr. Lichello's ways to anyone who would listen. The last twelve months have tested all investors. I think that AIM users have done much better than most.
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________36% Unchanged - Average Risk Growth Stock Mutual Funds___________24% Unchanged - Average Risk IW Risk Oscillator____________________"+2" - Rising Risk |
|
Value Line P/E ratio 14.4 + 30 Year Treasury Rate 5.57 =____ 19.97 Up 0.01 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 8.8 Up 6.5 Neutral (Speculation) NASDAQ Hi/Low Logic Index__________________________ 3.5 Up 0.3 Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-1.4 Unchanged Bullish (Zeal) |
A few more shares were purchased by the warehouse and added to inventory this week:
I also decided to try out QQQ as an investment. The NASDAQ 100 Index looks well suited to AIM and my account. My starting price was $61-1/2. As soon as graphs are available I'll put them up here at the web site. The hold zone for QQQ is approx. $51 to $74.
As for me, I've had just about all the fun I can have buying stocks. Now it would be nice to have a chance to sell some shares. The warehouse shelves are sagging under the burden of all those certificates. As of last Friday's close, the account was still ahead by about 10% for the year. Unless something rather dramatic happens between now and this coming Friday, the results could go negative for the year.
I wish all of you very Happy Holidays! We've now had record snowfall here in Wisconsin for December. Your basic Winter Wonderland. Here's a few photos for your review:
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________36% Unchanged - Average Risk Growth Stock Mutual Funds___________24% Unchanged - Average Risk IW Risk Oscillator____________________"-1" - Falling Risk |
|
Value Line P/E ratio 14.3 + 30 Year Treasury Rate 5.66 =____ 19.96 Down 0.25 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 2.3 Up 0.8 Neutral (Speculation) NASDAQ Hi/Low Logic Index__________________________ 3.2 Up 0.9 Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-1.4 Unchanged Bullish (Zeal) |
I'm most disappointed to see my Best/Worst index stall without dropping to the Low Risk area. It's hard to believe that there could be enough stocks with solid gains in the last Quarter to keep it in the Average range. Let's look more closely:
So, as bad as the "worst" stocks were, the "best" stocks still out shone them. I really find it disturbing that there's still some stocks that are showing triple digit gains in the last quarter. After a rout like we've had there's rarely been triple digit gains left. The NASDAQ was at about this same level 13 months ago when my Best/Worst index last signalled a Bullish time. Ten weeks later the NASDAQ Composite rolled over the 4000 mark - a gain of +44% in that short time. After another ten weeks the NASDAQ had soared past the 5000 mark for a total gain of 79% in just 20 weeks. We've seen the market give all those gains back and so, I'm disappointed that we've not yet seen enough FEAR to drive the Speculation Index to Bullish numbers.
Not seeing "total capitulation" happen allows the possibility that it may yet occur. So, if I can make a recommendation to all of you, please stay with AIM and make sure you execute your Sell Market Orders when recommended! Let's recover cash without hesitation as the market heals its recent wounds. This isn't the time for "greed" on our parts. We need to recover our purchasing power in case this turns out to be just a shelf on the way to the final cyclic bottom.
Down at the Warehouse we had only one shipment in the last week. We had an order for 5% of our ADCT shares ship out at $25-5/8 for a 55% LIFO gain in just 6 weeks. Many of my other inventory items also improved in value during the week, but didn't trip any "Good 'til Cancelled" orders. I get moody when there's little activity!
Our "Storm Of the Millennium" came the other day to Wisconsin. It's easy to qualify the storm that way since it's the first snow of this new Millennium! Here's some photos:
"Lake Michigan steams like a young man's dreams....." - Gordon Lightfoot
I recently downloaded AOL's latest Instant Messenger software (it's free). It allows you to "chat" live with other users. Since you don't need to be an AOL member, this is really fun. The software also allows for some audio transmission if you have a microphone and headphones. I've been testing it out a bit with a couple of other AIM users from Arkansas, California, Texas and Florida. So far it looks like it might have some great potential for us to use to have a "Town Meeting" on-line. One can set up private "chat rooms" and bring in others for the forum.
I've used AOL's Instant Messaging for a couple of years, but only to talk to my college attending daughter in the past. Keith Felkins suggested that we give this a try. Thanks Keith! So, if you are interested in attending an AIM Town Meeting, you should consider downloading this handy software. I'll post the dates of the meetings here in the Newsletter in the future.
Please remember that a great way to help your 2000 tax situation is a late year charitable gift. A gift of Cash or Stock works wonders for both the giver and the recipient! Check with your Tax Consultant.
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________36% Down 1 - Average Risk Growth Stock Mutual Funds___________24% Down 1 - Average Risk IW Risk Oscillator____________________"-3" - Falling Risk |
|
Value Line P/E ratio 14.5 + 30 Year Treasury Rate 5.71 =____ 20.21 Up 0.02 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 1.5 Down 1.8 Neutral (Speculation) NASDAQ Hi/Low Logic Index__________________________ 2.3 Up 1.0 Bullish (Divergence) % change, # of issues on NYSE & NASDAQ_______________-1.4 Up 0.1 Bullish (Zeal) |
Good news came this last week with the U.S. Treasury rate for 1 year bonds dropping for the first time since the beginning of September. The long constant would lead us to believe that the FED won't raise interest rates again any time soon. Further a decline has usually signalled that the FED may lower their rates in the coming months. The 30 year and 13 week rates also dropped slightly this last week. All positive signals.
All of my stocks seemed to be in trouble this last week. Buying was heavy enough to reduce my overall cash reserves from 18% to 14.5% in just one week. Year To Date Profits sank to about a 3% gain while my 12 month gains show only 16% now. This market action triggered quite a bit of buying as indicated by the drop in Cash Reserve.
The sizes of the AIM directed buys are much larger this last week because of the large price drops since previous activity. As the total cash reserve continues to decline, we come closer and closer to that point at which Mr. Lichello says is the happiest point for AIM users! If we do make it to 100% invested, it's usually very near the Market Bottom and therefore a happy time. Then we just have to sit back and wait for our recently planted Greenbacks to sprout and start producing a nice harvest. Since AIM is always generous on a LIFO basis, we know that any selling AIM has us do will be a highly profitable return of the cash to our reserves.
Making such large buys in some of those stocks really brought down the NEXT SELL price nicely. For instance, where I doubled my position in CGNX, the Next Sell price dropped from $40-3/8 to just $24! On a LIFO basis the $24 selling price will represent a 36% gain whenever it comes. Even if it should take a year, 36% is a very handsome return. I don't consider this "Counting Chickens before they Hatch" either. I've been through enough cycles with AIM to know that if I stick to the Business Plan and I've chosen the stocks well, these gains are in the not too distant future.
As many of you have figured out over the years, I post these trades for several reasons. One is to show what activity I've had in my own accounts. Another is to show you whether the predominant effort for the previous week was Buying or Selling. Yet a third can be illustrated in this week's report by showing you the relative size of those buys.
Everyone's own portfolio is going to be structured slightly differently than all others, but we have seen that overall, our accounts tend to move with the market. The old saying about tides and boats is true here as well. When the tide rolls in this time, it's going to find that the SS Veale is carrying only a small Cash Anchor, so should be first out to sea with its cargo. There's lots of deliveries to be made and the Storms of November have put us behind. The holds are very full of good merchandise with low spoilage rates. There's plenty of Rum for the Crew, so all should be clear sailing once we're past the Presidential Straits. If the Guns of Greespan are quiet, then we'll slip out into deep waters and onto our first port of call.
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________37% Down 2 - Average Risk Growth Stock Mutual Funds___________25% Down 1 - Average Risk IW Risk Oscillator____________________"-5" - Falling Risk |
|
Value Line P/E ratio 14.4 + 30 Year Treasury Rate 5.79 =____ 20.19 Down 0.19 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 3.3 Up 1.2 Neutral (Speculation) NASDAQ Hi/Low Logic Index__________________________ 1.3 Down 1.3 Bullish (Divergence) % change, # of issues on NYSE & NASDAQ_______________-1.5 Down 0.4 Bullish (Zeal) |
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________39% Down 2 - Average Risk Growth Stock Mutual Funds___________26% Down 1 - Average Risk IW Risk Oscillator____________________"-4" - Falling Risk |
|
Value Line P/E ratio 14.5 + 30 Year Treasury Rate 5.88 =____ 20.38 Up 0.08 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 2.1 Down 3.4 Neutral (Speculation) NASDAQ Hi/Low Logic Index__________________________ 2.6 Down 0.8 Bullish (Divergence) % change, # of issues on NYSE & NASDAQ_______________-1.1 Down 0.2 Bullish (Zeal) |
Here's the reasons why: 1) the Relative Valuation figure leaves quite a bit of room for either the interest rates to rise or the P/E while remaining Neutral. 2) Speculation has really dried up in the last few weeks. There's now only one stock in Value Line that's up over 100% in the last quarter. This compares to over 15 at the height of the speculative bubble with several up over 200% at that time. 3) There is no Divergence of opinion about where the market is going. Everyone hates the market - that's good news. 4) Finally we see ZEAL! showing absolute shrinkage of the total number of issues being traded on the NYSE and NASDAQ. This means there are fewer and fewer equities from which to choose. The IPO market has dried up for now. No IPOs to syphon off speculative dollars means more traditional stocks will be chosen.
Here's what's been happening at the Warehouse the last week or so:
So, while Veale International Equity Warehouse builds inventory, Veale Savings & Loan has seen its reserves drawn down. My overall account is now down to 18% Cash reserve.
The overall account is now showing +13.5% Year To Date profit and 30.6% Year over Year. So, I still feel as though AIM has done a very good job for me in Year 2000 so far. The DOW is essentially flat YTD while the NASDAQ has fallen 29% YTD. I'm sure there are plenty of Short Term Traders out there that may have given up more than 1/3 of their asset value since the year started. Maybe NASDAQ is the REAL Y2K Bug!!!
With no resolution yet in the presidential election, the market is going to be quick to take profits in any sort of rally and will continue to punish all stocks that don't do anything less than Herculean feats. So, I'm sticking with my strategy of keeping most of AIM's SAFE (resistance) value on the Buy side while keeping the Sell SAFE very low. I've kept these same settings with only minor adjustments since very early in the year. It has helped me to conserve cash while making sure AIM's as good a "Purchasing Manager" as possible. While still experimental with me (that's why I've not changed anything here at the web site yet) it seems to be working okay. I'm using the Idiot Wave and my 'vealies' as the resistance to selling.
Some new discussion has started about when AIM Users might again have a meeting. I'll keep everyone posted as we get some response to this discussion.
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________41% Down 1 - Average Risk Growth Stock Mutual Funds___________27% Down 1 - Average Risk IW Risk Oscillator____________________"-2" - Falling Risk |
|
Value Line P/E ratio 14.5 + 52 week Treasury Rate 6.241 =____ 20.74 Up 0.90 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 5.5 Up 0.5 Neutral (Speculation) NASDAQ Hi/Low Logic Index__________________________ 3.4 Down 0.9 Bearish (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.9 Down 0.2 Bullish (Zeal) |
In the mean time, our IDIOT WAVE has settled yet another point and now is firmly in the center of the Average Risk range. Three neutral readings and one bullish one give the impression that risk has pretty much evaporated. Please don't let this allow you to become complacent. There's still plenty of risk in the markets and it's a long way to the IW's Low Risk values. I foresee a short term rally once the presidency is finalized.
Again during the last week, Cash Flow has primarily been negative. AIM buys have been triggered on many fronts.
So, since the last item is a happy SALE, I thought I'd highlight it at the AIM BB this week. With every trade accounted for and all costs subtracted, the account is now showing a significant improvement through the use of AIM. The gross profit shown at the web page shows what you would have if it were an IRA account. The net shown on the Bulletin Board is what you would have in a taxable account with moderate commission costs. With AIM doubling the profits in a little over three years, it shows what AIM's best performance can be in a cyclical priced stock or what some would call a "rolling stock."
From what I hear down at the diner, there's not as much overtime available now as six months ago. Maybe this is the slow-down that Mr. Greenspan has been expecting. How much further he's take it or allow it to go is not yet known. Everyone's trying to out-guess "Hard Landing" "Soft Landing" etc. I'm just hoping it's not a belly-flop!
The last time the Idiot Wave was at 41% Cash, it was mid-August with the NASDAQ at 3789 and the DOW at 11027. Risk was on the rise then. Now it's declining, the Nasdaq is 20% lower and the DOW is off 4%. There's been lots of churning around during the general decline we've seen. It's looking more and more like a range of 3000 to 4200 on the outside and 3300 to 4000 on the inside for market traders. Most of my AIM accounts will do some light trading at each extreme of that range. So, I guess we will have to satisfy ourselves with clipping some coupons while we wait for the market head up again.
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________42% Down 1 - Average Risk Growth Stock Mutual Funds___________28% Down 1 - Average Risk IW Risk Oscillator____________________"-4" - Falling Risk |
|
Value Line P/E ratio 13.4 + 52 week Treasury Rate 6.241 =____ 19.84 Up 0.20 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 5.0 Up 3.1 Neutral (Speculation) NASDAQ Hi/Low Logic Index__________________________ 4.3 Up 1.3 Bearish (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.7 Down 0.2 Bullish (Zeal) |
The rise in the Divergence component is typical of this sort of market. First there's very few new HIGHS as the market tumbles. Next, as the market starts to flatten out or recover a bit, the new HIGHS start to rise while there's still lots of new LOWS around. I'm not too concerned with this right now, but don't want to see it continue very long.
After Tuesday's U.S. elections, the markets should start to pick a direction. The uncertainty which comes with the changing of the President in the US is like any other uncertainty - something that markets don't like. Soon it will be over for another four years.
It was a quiet week at Veale International Equity Warehouse:
It would appear that we had a positive cash flow week but not by much. However, portfolio value is up and showing a 25.6% YTD gain while being currently about 80% invested and 20% overall cash in reserve. Current cost of Inventory at the Warehouse is 39.4% of current market value.
I still don't see a clear trend anywhere in my portfolio. Today, the market decided it didn't like Cisco Systems. Well, if you're not liking them, well Vitesse Semi sells to them, so why don't they hate them, too? Hmmmm, doesn't Jabil Circuits sell to Cisco? Well, then the market should hate them as well. So, the market trimmed about 7% to 10% off their respective prices at about mid-day. This all over a slight change in one company's fundamentals. Well, does this mean they were over-priced by that same amount or that expectations were that much too high? It probably means that someone got burned and someone else will make some money. For every Seller there's a Buyer.
I will be building an archive of all my weekly newsletters back to early 1997. So, for those of you with a bad case of insomnia, you'll now have something other than the phone book to read when you can't get to sleep! I'll post the link here and make it available from other AIM pages as well.
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________43% Down 4 - Average Risk Growth Stock Mutual Funds___________29% Down 2 - Average Risk IW Risk Oscillator____________________"-9" - Falling Risk |
|
Value Line P/E ratio 13.4 + 52 week Treasury Rate 6.241 =____ 19.64 Down 0.20 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 1.9 Down 12.2 Neutral (Speculation) NASDAQ Hi/Low Logic Index__________________________ 3.0 Up 0.3 Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.5 Down 0.2 Bullish (Zeal) |
The last time we were at 43% on the IW, the NASDAQ stood at 4234 back in early September. At that time risk was rapidly on the rise. Since then the NASDAQ Composite has fallen about 22%. This time the risk is falling as quickly. The market seems in a hurry to both raise and lower risk. There's lots of money on the side right now and when it starts to look for a new home, it will probably look like a Land Rush. Let's hope there's some sense to all of this!
At Veale International Equity Warehouse we were buying since the last report:
All of these buys were after the shares have suffered setbacks that have been going on for several weeks. I don't know whether I'll be buying more or if this is the end of this shopping spree. Some of my stocks have now exhausted their cash reserves while others are still holding plenty in case of yet cheaper prices.
You may have noted in the Speculation component this week that where it's been in the Bearish area for some time, it fell to near the bottom of the Neutral range now. Depending upon this week's data, it could actually turn bullish. I always like such a signal as this component has rarely been wrong about short term bull markets. This week Value Line's Best Performer was up 118.4% (American Eagle Outfitters was Soaring) in the last quarter while the Worst was down 89.7% (Copper Mountain looks to be in Death Valley!). This gives our Speculation Index some balance. There were 153 new Highs and 511 new Lows on the NASDAQ the previous week. Although no longer bullish, Divergence is still in a healthy range.
Those of you who have followed AIM and the Idiot Wave for some time know that when we get a big negative value on the IW Oscillator that it won't be long before the market reaches a bottom. It may take getting the presidential election out of the way to reduce traders' uncertainty. Well, we don't have to wait long for that.
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________47% Down 2 - Average Risk Growth Stock Mutual Funds___________31% Down 2 - Average Risk IW Risk Oscillator____________________"-7" - Falling Risk |
|
Value Line P/E ratio 13.6 + 52 week Treasury Rate 6.241 =____ 19.84 Down 0.40 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 14.1 Down 12.7 Bearish (Speculation) NASDAQ Hi/Low Logic Index__________________________ 2.7 Up 1.2 Bullish (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.3 Down 0.1 Bullish (Zeal) |
  |
It's not that there isn't useful information on CNBC, but that it's too much like a Soap Opera. As though each minute of each business day is really all that important to the price of the equities. I have a feeling that more harm than good has come from the five years that this show has been on the air. My own account is up 255% in that time period and I can't honestly say that I've made a single dime from anything I've seen on their show. For the next few weeks, I'd suggest you turn off the TV set and not watch their program unless you have a bottle of MAALOX handy!
Something delightful has been happening down at the Warehouse. We have actually had a couple of SELL Orders pass through Shipping and Receiving!
Cash flow for the warehouse was still negative for the week, but better than in recent weeks. It would appear that the biotech stocks are attempting to be the market leaders right now. I'm not taking any chances and am selling any chance that AIM gives me to move inventory. As this market seeks some direction out of its current abyss, we should attempt to make every round trip from a buy to a sell that comes along. The sooner we get our Cash Reserves back to civil amounts, the better all will sleep!
The IW is still relatively high by historical measures. We can't relax yet. AIM will continue to guide our hand while the IW provides our target. Bringing the target closer by reducing market risk certainly will help our AIM. We should soon start to see articles showing that Mutual Funds are heavy with CASH. This has historically signaled that we're near a market bottom. Cash flows into mutual funds hasn't dropped yet, so we know those managers are going to have to start to spend some of it one of these days. They're not in business to be running Money Market Funds!
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________49% Down 1 - Average Risk Growth Stock Mutual Funds___________33% Unchanged - Average Risk IW Risk Oscillator____________________"-4" - Falling Risk |
|
Value Line P/E ratio 14.0 + 52 week Treasury Rate 6.241 =____ 20.24 Up 0.10 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 26.8 Down 13.3 Bearish (Speculation) NASDAQ Hi/Low Logic Index__________________________ 1.5 Down 2.0 Bullish (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.2 Down 0.1 Bullish (Zeal) |
REPORT - WEEK OF 10/16/2000: As bad as last week "felt" it really wasn't too bad unless you were fully invested in the DOW 30 stocks. The rest of the averages had a bad week, but not like the DOW. Friday's enormous rally and all-day endurance caught many short sellers by surprise. It also probably set the stage for many investors to call their brokers and enter "Stop Loss Orders" on many of their securities. They probably thought they wouldn't get triggered after that strong one day performance. Well, I think today, Wednesday, they all might have been stopped out in the AM! The DOW was off about 400 points and the NASDAQ Composite was down about 200 points not long after the bell.
Then, as though a Wall Street Miracle had occurred, the prices reversed direction and the major indexes spent the rest of the day treading water around the neutral lines on the charts. The volume was heavy on the sell-off and as we all know, for every seller, there's a buyer. So, those of us who were in the buying mode picked up some nice shares at or near their daily lows. Wasn't that clever of someone to invent Stop Loss Orders so that we could take advantage of such situations as AIM users?
We've had to ask the employees to work some overtime down in the Warehouse. Here's what they've been doing:
With the large inventory increases shown in some of our holdings, we've had to re-arrange the warehouse a bit. Some serious alterations to our Open Limit Sell Orders had to be done also. It's nice to see the Lichello Bands shift to a lower octave with the purchases! :-)
A significant change in the Divergence component of the IDIOT WAVE was complemented by drops in two other components Speculation and Zeal! The combination was enough to pull the IW back out of the high risk range after just one week. I don't think we're ready for continuation of the Bull market yet, but it certainly looks like we may be very near the bottom of this particular cycle. Having all the buying going on at Veale International Equity Warehouse makes it look like there's some panic selling going on someplace. I'm glad to lend support to those who are wanting to unload their equities at reasonable prices. Where a few weeks ago there was considerable divergent thinking about the market's next direction, this last week's data showed no confusion at all. There were only 77 new highs on the NASDAQ exchange out of more than 5000 issues! There were 1031 new lows during the same period! Everyone hated equities last week. The Advance/Decline numbers for the NASDAQ exchange confirmed my Divergence component as well. 1366 advances with 3318 declines were registered during the week.
Mr. Fosback, who created the Hi/Low Logic Index shows that when this Divergence value shrinks to very small levels, we're in for a good rally over the next quarter. Let's hope he's right yet again! Either way, VIEW is prepared. I still have cash available for buying and have plenty of inventory should the prices rise to my asking points. Many of my mutual funds have arrived late to this party and are now just starting to do their buying. These will turn out to be valuable inventory in the future as well.
As I've mentioned in the past, it's BEAR markets that seem to attract the most attention for AIM! When all is going well, who needs to manage the risk of investing? When all is flushing down the old sluiceway it appears that we get VERY POPULAR! This graphic shows this quite well:
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________50% Up 2 - High Risk Growth Stock Mutual Funds___________33% Up 1 - High Risk IW Risk Oscillator____________________"+4" - Rising Risk |
|
Value Line P/E ratio 13.9 + 52 week Treasury Rate 6.241 =____ 20.14 Down 0.10 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 40.1 Up 6.9 Bearish (Speculation) NASDAQ Hi/Low Logic Index__________________________ 3.5 Down 3.0 Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.1 Unchanged Bullish (Zeal) |
The Speculation value is still way too high by historical comparison. This will be self-correcting if the markets stay in turmoil. Good news shows up with a Value Line P/E that's reasonable compared to interest rates and is dropping slightly. To me this means that prices are dropping faster than earnings! The other bright spot is that the Divergence component is showing that there is now conviction that the markets are going lower. Although a short term indicator, the High/Low Logic index applied to the NASDAQ gives some great signals. Maybe by next week's report this piece will be Bullish again.
In this graph I've plotted my own performance against the NASDAQ Composite on an relative basis. This means that I'm showing my overall performance as a percentage of what the Index has done.
From this graph we can see just what a market "Bubble" will do to our overall performance when trying to keep up with an index. When valuations were out of sight in 1999 and early 2000 I fell terribly far behind. Now AIM and I are catching up nicely.
There's plenty of AIMers that like data out there. I've promised for a long time to have some of the Idiot Wave's raw data available for analysis by others than myself. I think I've found a way. I'm not sure if these files are easily handled by spreadsheets, but please give them a try. The Idiot Wave Component Data can be accessed here. You'll need to take each one in turn. I don't have the ZEAL! indicator finished yet, but the others are all there. Data starts in 1982 and goes to present in most cases. Please let me know if you have any problems. In each case, I've put the date, data, and the NASDAQ Composite on the page. This should, when included in a spreadsheet, give you some good comparisons.
Down in Shipping and Receiving, we've been busy.
During all of this buying, my larger pharmaceutical stocks have stayed even or have risen slightly. Also the Energy related stocks have had a good week this week. Most are nearing new highs since I've owned them.
10/13/2000
I've not heard much in the way of details about what happened to the US ship which was bombed today. The explosion seems to have rattled windows all the way to Wall $treet, however. I remember only too well what happened temporarily to the markets in 1990. It was painful at first, but it set the stage for the massive 1991 ralley. In any case, I still have plenty of cash reserves should things get uglier.
If terrorists put as much energy into being productive citizens of the world, they'd be millionaires. Instead they waste time, material and lives in a futile attempt to gather what they feel is a limited number of marbles in their game. If they only could finally join the industrial revolution, they'd realize they could make all the marbles they could ever use. This is true in all corners of the planet. With productivity, what was finite becomes nearly infinite.
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________48% Up 2 - Average Risk Growth Stock Mutual Funds___________32% Up 1 - Average Risk IW Risk Oscillator____________________"+8" - Rising Risk |
|
Value Line P/E ratio 14.0 + 52 week Treasury Rate 6.241 =____ 20.24 Down 0.30 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 33.2 Up 6.5 Bearish (Speculation) NASDAQ Hi/Low Logic Index__________________________ 6.5 Up 2.5 Bearish (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.1 Up Bullish (Zeal) |
It would appear that the selling is a bit over-done by now. September took much of the bloat out of the markets and this first week of October hasn't let much fat gather either. Still, my Speculation index shows that things are still a bit out of control. There's still 13 stocks in Value Line that have risen over 100% in just the last thirteen weeks. It looks like the party's winding down, and the hang-overs are nasty. The market's confused state is showing well in Fosback's Hi/Low Logic Index as I apply it to the NASDAQ. With 328 New Highs and 620 New Lows last week, direction isn't indicated well yet. Confirmning the confusion is the 2067 Advances and 2611 Declines on the NASDAQ. There's still betting going on even as the Casino has been indicating "Last Call!"
I noted in the data this last week that the DOW, S&P500, NASDAQ and NASDAQ 100 all dropped while the Russell 2000 Small Cap Index rose slightly. So, is that where the money flow has been going? Will recent small cap investors be willing to stick it out even as the DOW and NASDAQ are falling? All good questions. I don't think I have the answers yet, but will be sure to report them AFTER we know for sure! :-)
I've not done much trading in the past week.
Although there's three buys of UOPIX, each was done as a Minimum size order. The three finally satisfied AIM's desire to own more shares of this very special index fund. As of the last purchase, there's still 10% Cash Reserve left in the account and the Total Return since starting is still over 80%. No sells again in the last week. My accounts are still, for the most part in Limbo between buying and selling. Although the Warehouse's Asset Value has declined a bit since September, it's actually risen in the last couple of weeks and is still about 28% ahead of my starting point in January. Cash Reserves are hanging right around the 24% mark overall.
I've noticed that the retirees at the local library aren't talking about their investments and "trading profits" as much these days. It's not that they're talking about how wonderfully the Green Bay Packers have been doing that's keeping them from market discussions. I think there's some reality that's seeping into Middle America about what's been going on with Wall $treet. It's when the faces are the longest that AIM users are usually the happiest. AIMers just don't recognize that buying shares in a depressed market is a "Happy" event until after it's over. Once the prices stabilize and start their long term upward trend all will be smiles. AIMers always smile first after a correction.
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________46% Up 1 - Average Risk Growth Stock Mutual Funds___________31% Up 1 - Average Risk IW Risk Oscillator____________________"+4" - Rising Risk |
|
Value Line P/E ratio 14.3 + 52 week Treasury Rate 6.241 =____ 20.54 Up 0.10 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 26.79 Up 6.8 Bearish (Speculation) NASDAQ Hi/Low Logic Index__________________________ 4.0 Down 0.6 Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.3 Unchanged Bullish (Zeal) |
The Idiot Wave value has been slowly rising for 13 weeks, so I guess we have had adequate notice that some change was occurring. What's interesting is that really only one of the four components has been influencing the rise in risk. If we want to look at this optimistically, we could say it's a situation that should be easily remedied. What seems to have been happening is that the concentration of investment dollars is still narrowly focused driving our Speculation component into almost permanent Bearish territory.
Looking in my journal it's easy to tell where the money isn't going! I've been buying shares, so that should mean that the market is selling those same issues.
Profunds' Ultra OTC fund frustrated me this last week. It was very close to my AIM buy point several times only to turn and dance away. Maybe I'll still get a chance to add a few more shares to that account. In reviewing that account for my fraternity's annual meeting next week I find that while the NASDAQ Composite Index rose 37.8% in the last twelve months, our AIM/UOPIX account has risen 46.7%! Both numbers are great, but I'm pleased to see that AIM has performed exceptionally in the last year. Even our bond fund managed to rise 16.7% partially through AIM's management and partially from accumulation of dividends and interest. Not bad for a year's work!
Fall colors are starting to show themselves here in SE Wisconsin. This is my favorite season for many reasons. I guess one of them would be that each year it seems I get to do lots of buying of my favorite stocks! In the last few weeks the Cash Flow has been negative from the Warehouse. Lots of shelves are filling up with inventory as the nervous investors plug holes in their portfolios by selling shares and stuffing greenbacks into the leaks. Where will they go next with their money? I don't know how to guess, but they seem to always chase the latest earnings glamour reports. I feel a solid portfolio is built on a foundation of strong companies in strong industries that will be good performers over the next 5 years or so. I've positioned a significant amount of my account in technology stocks, telecommunications related companies, biotech and energy as main concentrations. Lastly, I have had money in brokerage stocks as well. All should do well over the next five years or so, in my opinion.
If nothing else, the unusual market conditions for the Summer of 2000 have offered an excellent opportunity for AIM to demonstrate its strengths. Many AIMers have been pleasantly surprised by the number of "Round Trip" buys and sells they've had during this period. Of course this is just how AIM makes money for us. Long periods of flat markets with lots of churning going on is just what we hope for as AIMers. It's fun to participate in long rallies, but AIM does its best work when the market averages are stuck in a range like they've been this summer. Let's enjoy it to the fullest!
Those of you who have questions about how you can improve your AIM, please don't hesitate to email me. So far Year 2000 has provided me with a 27% gain Year To Date. Looking back 12 full months, my account is showing a gain of 56% as compared to NASDAQ's 37.8%. All this was done within the confines of AIM's conservative, rational activity. I certainly hope you account is looking as pretty!
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________45% Up 1 - Average Risk Growth Stock Mutual Funds___________30% Up 1 - Average Risk IW Risk Oscillator____________________"+3" - Rising Risk |
|
Value Line P/E ratio 14.2 + 52 week Treasury Rate 6.241 =____ 20.44 Up 0.30 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 19.9 Down 10.0 Bearish (Speculation) NASDAQ Hi/Low Logic Index__________________________ 4.6 Up 1.8 Bearish (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.3 Up 0.1 Bullish (Zeal) |
There's so much "news" around for folks to dwell on that is negative right now that such divergent opinion is not surprising. Oil prices are rising and scaring everyone. Is recession just around the corner? If we have recession world-wide, does this mean the Telecos will quit buying all the fancy new techie stuff? Will the world have enough energy to power all those cute little cell phones? What will happen if we go out to dinner without our phone or PDA? Well, none of these things are really of much worry. I don't know if energy prices will stay at the levels they currently are holding. It was only about 18 months ago that oil was priced incredibly low. My guess is this is just one more swing of the energy pendulum. I doubt there's much I can do to prevent a recession, personally, so I'm not going to worry about that either.
Down in Shipping and Receiving we managed to keep busy.
So, while not pushing us into any overtime work, we managed to keep busy at the Warehouse.
While nobody loves a BEAR market very much, AIMers seem to manage just fine in a Trading market. To me that's what we've had since around the end of March. This is more like a consolidation that's taking too long than anything else. Maybe it's still fall-out from the nuclear melt-down of the market after speculation mushroomed back in March. In any case, we're attempting to test all incoming inventory for radioactive waste!! No use contaminating perfectly good inventory with new bad stuff.
That about covers the AIM related news for this week. I've been watching the Olympics as often as I get the chance and enjoying the games very much. Hope you have, too. Maybe we should have an AIM Olympics!
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________44% Up 1 - Average Risk Growth Stock Mutual Funds___________29% Unchanged - Average Risk IW Risk Oscillator____________________"+4" - Rising Risk |
|
Value Line P/E ratio 13.9 + 52 week Treasury Rate 6.241 =____ 20.14 Down 0.20 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 29.9 Up 7.3 Bearish (Speculation) NASDAQ Hi/Low Logic Index__________________________ 2.8 Down 0.7 Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.4 Unchanged Bullish (Zeal) |
This week I updated all the IDIOT WAVE Component graphs for your review. I have an arrow on each component graph that shows the low point if the IW Oscillator during the week of 04/24/2000. This way you can see the way the Idiot Wave, Oscillator, NASDAQ and the components all were at the same moment 20 weeks ago. As you will note, only Speculation is in the Bearish area. This is in part because about 15 weeks ago the whole market was still in shock from the April-May correction. Since then many stock prices have risen. This tends to color my Speculation Index to look like there's been a bit rise in prices, where there's only been recovery. What is surprising is that 21 of the 41 stocks listed in Value Line as the Best Performers for the last 12 weeks are up over 100%. This is quite unusual even in a "recovery" period.
Please note that my Zeal!! component, although still Bullish, is on the rise. Part of this is the IPO's of recent weeks. As this component returns to the Neutral zone, we lose the effect of having the money concentrating in fewer and fewer stocks. We've had that luxury working for us for a long time.
We've been busy moving into our brand new Headquarters of
This is a significant upgrade from our last facility and should allow for faster shipping, receiving and inventory turnover through modernization. With all this distraction, we only managed to:
Not much for a week's work, but it wasn't a very good week in the marketplace, either.
Welcome to all our new readers! I invite you to spend time investigating this site as deeply as you wish. I've received some great correspondence via Email from both Holland and Australia this week. I could understand the Dutch, but not the Aussie!
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________42% Unchanged - Average Risk Growth Stock Mutual Funds___________28% Unchanged - Average Risk IW Risk Oscillator____________________"+2" - Rising Risk |
|
Value Line P/E ratio 14.1 + 52 week Treasury Rate 6.375 =____ 20.48 Up 0.1 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 13.1 Down 4.6 Bearish (Speculation) NASDAQ Hi/Low Logic Index__________________________ 4.2 Up 0.5 Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.5 Up 0.1 Bullish (Zeal) |
Cash flow for the Veale International Equity Warehouse was positive for the week. Profitable trades were made on many equities.
By week's end the rather sad story of BPUR's recent price history had somewhat turned happier. It closed the week at $19+, so that last AIM directed buy was right as usual! It's good to see my mutual funds finally moving out of their HOLD ZONEs. They've been somewhat dormant since the buying done in April and May. The increase in their Cash Reserves adds comfort and future purchasing power.
Many new AIM users have been starting to post on the Silicon Investor AIM Bulletin Board. This is not only good for those of us who post, but also for you "Lurkers" out there! The questions, comments and comradship all are attracting more talented investors to AIM. If you've not taken time, please read along with the running dialog - it's FREE! (to read, anyway!)
I've updated the History page to show the results through the end of August for your review. Right now my personal account is ahead of my retirement account for the first time in many moons. I've been gaining slowly on the NASDAQ Composite as well. I like it when I can beat the averages!
With the market reheating a bit heading into Fall, please make sure you are sticking to AIM and letting your Cash Reserves recover to proper levels. We are about in the middle of the Average Risk range right now and the markets seem to want our inventory. No reason to hold out on them if we're still not flush with cash. If Risk continues to rise, we'll all be very happy to have as much cash available as AIM will generate and the IDIOT WAVE will allow.
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________42% Up 1 - Average Risk Growth Stock Mutual Funds___________28% Up 1 - Average Risk IW Risk Oscillator____________________"+3" - Rising Risk |
|
Value Line P/E ratio 14.0 + 52 week Treasury Rate 6.375 =____ 20.38 Up 0.3 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 17.7 Up 7.4 Bearish (Speculation) NASDAQ Hi/Low Logic Index__________________________ 3.7 Down 0.3 Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.6 Up 0.1 Bullish (Zeal) |
Overall Cash Flow for the week was good for the warehouse and the savings & loan! Everything is going well overall.
I'm not so sure of the IW's rise again this week. I don't like to see it do anything but decline! Speculation is Bearish in a controlled fury sort of way. Not as wild as March, but still not a healthy long term sign. I guess as long as Speculation is rising and we're AIM Selling along the way, it's not all bad news, however. The other components are showing just moderate risk.
Read along for free with other AIM Users at the Silicon Investor AIM Bulletin Board. REPORT - WEEK OF 08/14/2000: It's amazing what happens when we think we're getting bored. Just as I was getting restless last week who should show up here in Wisconsin but Steve Kaufman (SoCal) and Keith Felkins (Lemonhead) from our Silicon Investor Bulletin Boards and AIM 2000 Meetings. To have two "electronic friends" show up to tease and harass me for a couple of days was a treat. At one point we had five AIM users together for a beverage or two. That solved the boredom problem!
  Keith Felkins, Tom Veale, Bob Norman and Steve Kaufman in Port Washington. Steve checks out Tom's race car.
To keep myself busy for the last week here's what AIM's had me do: So it turned out not to be so boring after all. Those CALL options I sold are for the shares AIM would have me sell at those same prices. So I'm doing just what AIM wants, but just doing it early! If the price exceeds those call prices, those shares will be called away at the contract price, and I get to keep both the proceeds of the sale as well as the premium from the option. I do this when I have plenty of cash on hand for my stocks. I've updated all the component graphs for the IDIOT WAVE today, so you can see what's happening inside the indicator. In general the IDIOT WAVE is neutral and the market is in a trading range. AIM's been able to nibble a few trades on both the buy and sell sides in the last couple of months while the market decides where it will go next.
I was looking back at how generous Mr. Lichello's AIM has been to me. I usually try to remind the readers here of the fat LIFO gains that AIM provides. However, I pay my taxes on a FIFO basis. Here's what my FIFO gains have been in recent times: Just wanted to say thanks again to Mr. Lichello for creating a system of consistent wealth accumulation. It's nice to see that in my "worst" year I was still earning almost 22 cents profit on every dollar of inventory sold. I hope you are having similar results with your warehouses!
Best regards, Tom Veale in Wisconsin Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________41% Up 1 - Average Risk Growth Stock Mutual Funds___________27% Unchanged - Average Risk IW Risk Oscillator____________________"+1" - Rising Risk |
|
Value Line P/E ratio 13.5 + 52 week Treasury Rate 6.375 =____ 19.88 Unchanged Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 17.0 Up 1.0 Bearish (Speculation) NASDAQ Hi/Low Logic Index__________________________ 3.0 Unchanged Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.8 Up 0.1 Bullish (Zeal) |
Last week showed a 2.4% gain in the DOW, 3.4% gain in the NASDAQ, 2.7% gain in the Russell 2000 and a 4% gain in the NASDAQ 100 Index. It almost looked as though we were going to be starting a new rally of some sort. The NASDAQ Advance/Decline ratio was essentially 1 to 1, however. Not exactly convincing. Add to that 151 New Highs and 490 New Lows for the week and we see why the Warehouse is still adding more inventory.
On my way to my office each day I get to see Port Washington's harbor and marina. On a clear morning I can see the taller buildings in Milwaukee - 25 miles away.
Can you tell it's been a bit slow here at the Warehouse? Here I am providing a Travel Guide to Port Washington! Well, I'm sure we won't have to wait long for something exciting to stir up the markets again. Last night we had 26 thirteen year old kids at the house for a birthday party. Good thing it ended early! Even my 20 year old was a bit overwhelmed by it all!
As we sail through the Summer Doldrums we'll have to keep the jibsheets trimmed and watch over our shoulders for any gathering clouds. Right now the IW is saying we have clear sailing for a while. Nothing visible on the near horizon. I'd be a lot happier if the breeze would freshen a little. My "sales" aren't doing much good with no wind!
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________40% Unchanged - Average Risk Growth Stock Mutual Funds___________27% Unchanged - Average Risk IW Risk Oscillator____________________"+1" - Rising Risk |
|
Value Line P/E ratio 13.5 + 52 week Treasury Rate 6.375 =____ 19.88 Down 0.10 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 16.0 Down 1.7 Bearish (Speculation) NASDAQ Hi/Low Logic Index__________________________ 3.0 Down 1.1 Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.9 Up 0.1 Bullish (Zeal) |
Almost all the activity was in the form of Adding to Inventory!
That's the bad news!
Here's the action from the Warehouse:
That explains the Cash Flow situation for the warehouse. Almost all out-flow. There's not been much constant about the markets for weeks other than confusion! It may be that there's still portfolios suffering from the traumas inflicted earlier in the year. April and May were serious reality checks for many investors. For AIM users, it was the first chance in a while to become fully invested. As of last Friday's close, my account was still up 19% YTD even though it was down for the month of July by 7%. My cash reserve is still healthy at 22.5% overall.
So, if the worriers want to worry the prices down a bit, I'm prepared. If the exuberant speculators need to buy shares in desperation, I have inventory. In the mean time it's a matter of making sure we buy and sell efficiently as the market churns about in its current range.
My guess is that this recent correction will help to lower the Speculation reading back towards its Neutral zone. It doesn't take much to trim the top off the Best Performers list when it's sporting over 200% gain in just 13 weeks. The rest of the IDIOT WAVE components are behaving quite well. There could be a nice rally once Vacation Season is over. The Value Line P/E is still low relative to interest rates and could provide some safe growth before turning bearish.
I want to welcome all the new readers from the last few weeks. One is a Cayman Islands resident. Maybe I should relocate closer to his computer! Another long term AIMer found our Bulletin Board and has started to post. All this bodes well for our future.
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________40% Up 1 - Average Risk Growth Stock Mutual Funds___________27% Up 1 - Average Risk IW Risk Oscillator____________________"+4" - Rising Risk |
|
Value Line P/E ratio 13.6 + 52 week Treasury Rate 6.375 =____ 19.98 Up 0.30 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 17.7 Up 5.9 Bearish (Speculation) NASDAQ Hi/Low Logic Index__________________________ 4.1 Down 0.4 Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-1.0 Unchanged Bullish (Zeal) |
Leaping Cats Pride - David Hinton's '52 red XK 120, Tom Veale's '53 green XK 120 Roadster, and Edgar Boles' '59 XK 150 Coupe
Edgar's Shagadelic CatBlu!
I can't say that I know much about what's been going on in the markets. The IDIOT WAVE tells me that Speculation continues to rise at an unhealthy clip. The other four components of the IW are okay, however. I've been hearing that there's a bunch of IPO's coming to market in the near future. This will show up in the ZEAL component sometime soon as well. While the IW's still showing average risk, this represents the second week of it rising slightly. The +4 value for the IW Oscillator indicates the risk is rising overall. The above graph shows this quite well.
Boston Scientific's stock (BSX) was crushed last week and AIM had me buy a bit more at $19-1/2. American Power Converter (APCC) managed to rise to my selling price of 47-1/2. APCC was recently in the high $20s to low $30s and offered some AIMers a nice buying opportunity and now a fat LIFO gain. Bristol Meyers (BMY) dipped down and tripped my GTC order to buy additional shares at $48-5/8. All this happened while I was away from my desk and was guided by AIM's sensible market orders. It's nice to know someone will take care of things while we play!
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________38% Unchanged - Average Risk Growth Stock Mutual Funds___________25% Unchanged - Average Risk IW Risk Oscillator____________________"0.0" - Steady Risk |
|
Value Line P/E ratio 13.3 + 52 week Treasury Rate 6.375 =____ 19.78 Up 0.10 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 9.2 Up 6.6 Neutral (Speculation) NASDAQ Hi/Low Logic Index__________________________ 3.5 Down 1.1 Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-1.1 Down 0.2 Bullish (Zeal) |
In looking over my account briefly, it would appear that Jabil (JBL), Chiron (CHIR) and a few others are ripe for me to do some AIM related selling. I'll see if that gets done while I'm goofing off this week. My BMY position has been creeping up for about a month now as well. It's not ready for an AIM Sell yet, but is closer than a month ago. Most of my mutual funds are doing well right now also.
With three Neutral ratings and one Bullish, the IW components are all looking rather content right now. If there's any concern at all it would be that the Speculation component is showing signs of rising to an undesirable level again. With Lilly Industries 'A' rising 157% in just thirteen week as compared to a drop of about 75% in Superior Consultants in the same period shows that speculation is getting stronger while caution is still high. We'll keep an eye on this over the next few weeks.
Keep your AIM sharp. I'll have more to report next week.
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________38% Down 1 - Average Risk Growth Stock Mutual Funds___________25% Down 1 - Average Risk IW Risk Oscillator____________________"-1" - Falling Risk |
|
Value Line P/E ratio 13.3 + 52 week Treasury Rate 6.375 =____ 19.68 Down 0.30 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 2.6 Down 2.4 Neutral (Speculation) NASDAQ Hi/Low Logic Index__________________________ 4.6 Up 1.1 Bearish (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.9 Unchanged Bullish (Zeal) |
Right now the Best Performer in Value Line's universe of stocks is up about 100% in thirteen weeks while the worst performer is down almost 76%. This gives "balance" to the Speculation portion of the IW. It appears to me that we've created a great launch platform for the next move of the market. We have low speculation, low relative valuation numbers, a shrinking universe of equities and just enough confusion to keep the markets on edge. I'd love to see a 12 to 18 month slow rise from here and that's the way it "feels" to me.
This week we pulled into four ports and off-loaded some merchandise. Here's the results of those trades:
So the ship's holds are lighter on inventory and heavier on doubloons for the next leg of the journey. The trade winds are fair and the natives are peaceful. The Good Ship AIM is on course with the decks swabbed and the bottom cleaned. Our cannons are ready and we have plenty of dry powder should we see any pirates on the horizon.
There's still a slight bulge in the "Yield Curve" with the 52 week Treasury still paying better than the 13 week and the 30 year. This sort of thing would have been reason enough for serious hand wringing a few years ago. This time around nobody seems to care. At this point, I don't really care either. My reason is that I believe the FED is just about through with its upward rate adjustments. We should see the market resolve the bulging yield curve as the market price of those bonds shifts around over the next couple of months.
There have now been over 50,000 visits to the AIM home page. Mor than 35,000 visits have occurred here on the Newsletter. A long time ago Bruce Bowman told me that to get some momentum going with AIM, it was going to take organizing a MEETING someplace! Well Bruce, we finally got the first one done. I certainly hope you can be part of the next one as well.
Looking back about a year, it would appear that I've shipped out between 150 and 200 copies of Mr. Lichello's book! I wonder if he appreciates the royalties?! I certainly hope that people are grasping just how timely AIM is today. It's as though it took the realm of "On-Line Trading" to occur to create the volatility needed to make AIM as useful as it is. The same on-line trading capability with its vastly reduced commission costs is also what has made AIM such a proper tool for TODAY. No "systems" have lasted as long as AIM, as most have become out-dated. Mr. Lichello's model, on the other hand, seems to be more and more useful as it ages gracefully and productively.
I updated all the graphs of the Idiot Wave Components this week. Please take a look at them and see how much better they look now than at the end of March. Again with this latest bought of High Risk, the Idiot Wave continued to be a good guide and companion of AIM's.
It looks as though there's a new software choice for use with AIM. Please take a look at Automatic Investor.com to see what they have to offer. I've down-loaded their trial version and will be fiddling with it during the next few weeks. I'll report on my findings.
Please note that the email link at the bottom of the page is now working. When I moved these pages to aim-users.com some of the former links didn't function and I was unaware that the email didn't work until just recently. Thanks for your patience on this!
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________39% Unchanged - Average Risk Growth Stock Mutual Funds___________26% Unchanged - Average Risk IW Risk Oscillator____________________"-2" - Falling Risk |
|
Value Line P/E ratio 13.6 + 52 week Treasury Rate 6.375 =____ 19.98 Down 0.10 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 5.0 Down 2.4 Neutral (Speculation) NASDAQ Hi/Low Logic Index__________________________ 3.5 Up 0.2 Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.9 Down 0.1 Bullish (Zeal) |
For four weeks the NASDAQ Composite index has been within 100 points at its Friday close with last Friday bringing the market to 3845. A 2.6% trading range for four weeks is something we haven't seen in some time. Still, AIM seems willing to work in this environment even if its not overly active. Here's my trades since the last report:
So, it looks like the tide was primarily moving out on my Trade Ship. We have plenty of inventory in store and will be able to trade with the natives when we arrive at our next port of call.
I might have been willing to guess that the FED would not raise rates this time around. My favorite bond fund, GSF, has been rising in price recently from near its lows. It has covered the distance from $6-3/8 to $7+ in the last four or five weeks. This may not seem like much, but remember this is a "bond fund" and not a tech stock! In the mean time it pays $0.78/share in dividends on an annual basis.
Our efforts in bringing AIM towards a more "mainstream" recognition have been working well. It is gratifying to me to have many new people joining our ranks and prospering right along with the "core group." Thank you to all who have been working with me to show off AIM's best features. Market activity in 1998 and now again in 2000 have made believers of those new to AIM and made nice profits for all of us.
I was digging around for my Organic Chemistry books the other night (my oldest child is taking it right now) and noticed how much thicker the new texts are than my old ones. After looking inside, I decided there's just more "pictures" in the new one. I also pulled out my "Investments" textbook. Written in 1967, it quotes from a list of 70 institutions and endowment funds for colleges and universities. At that time there was $6.6 Billion represented then. While nothing to sneeze at even today, it would represent only a small portion of what those same schools would have under management today. At the time I took this class, my college didn't have a computer. However, the very last chapter of the book is titled The Computer in Portfolio Selection. "Many sophisticated statistical techniques are opened tothe analyst, since he is relieved of burdensome calculating work and his horizons are broadened. Many suggested timing devices can be tested on the computer, at least in terms of their usefulness historically." They mention that once information is gathered and stored in a computer it could then be possible to perform screening processes. Boy, wouldn't they love to see our current databases and ease of access?
They don't discount the individual as the final decision maker. "The financial analyst must still evaluate and interpret on the basis of his knowledge, experience and skill the vast accumulation of data and statistics produced at unbelievable speeds by mechanical means. The less skillful and mediocre analyst will find that he may simply make bigger mistakes at a faster rate, with more disastrous consequences than ever before." I think I know that person!!
|
Value Line P/E ratio 13.7 + 52 week Treasury Rate 6.375 =____ 20.08 Up 0.20 Neutral (Relative Valuation) Veale's Best/Worst Index ______________________________ 7.4 Up 1.5 Neutral (Speculation) NASDAQ Hi/Low Logic Index__________________________ 3.3 Unchanged Neutral (Divergence) % change, # of issues on NYSE & NASDAQ_______________-0.8 Unchanged Bullish (Zeal) |
I'm pleased with both the Purchasing Dept. and the Sales Dept. for making such handsome profits on a LIFO basis! Nothing like the "team" working together for the best possible results!
With the IDIOT WAVE OSCILLATOR back to near the neutral mark, I don't believe we'll see much more reduction in market risk in the near term. However. we've gone from a record high risk level in March to a benign average risk level by mid June. That was a painful lesson for many investors, but was an opportunity for AIM users and followers of the IDIOT WAVE. I remember just a few months ago that Summit Technology had been knocked way down in price and was a resident on Value Line's Worst Performers list. Guess who's now at the summit of the Best Performers list? That's right, Summit Tech. (BEAM). AIM investors are saying "Beam my net worth UP, Scotty!" These two lists in Value Line are really lots of fun to watch. They are the heart of my "Speculation" component and are always full of interesting ideas for AIM investors.
I added the basic outline of my opening remarks from the AIM 2000 meeting to the photo page. I'll add more later from the other speakers. Only those who have a copy of Bob Gammon's video or Keith Felkin's audio know what I actually said! I certainly don't remember!
Also this week I added the graphics and text of Santos Torres' speech which was intended for the AIM 2000 meeting, but Santos couldn't attend. Santos created a block diagram and some simple line diagrams that help explain what goes on inside your AIM accounts. Please take a look at the Torres Report.
As a final addition to the AIM pages this week I have added some graphics to the AIM Improvements page to show how the "Vealie" and Split SAFE ideas work with my current favorite stock, Vitesse Semiconductor (VTSS). I hope you find the graphs interesting.
|
Suggested Cash Reserve For New AIM Accounts Using: Individual Stocks____________________40% uNCHANGED - Average Risk Growth Stock Mutual Funds___________27% Unchanged - Average Risk IW Risk Oscillator____________________"-3" - Falling Risk |
