REPORT - WEEK OF 12/24/2001: The knee jerk reaction to the 9/11/2001 attacks on the World Trade Center and Pentagon show up all the more clearly this week in my Speculation Index. It jumped another 11 points this week. There were 16 stocks shown on the Best Performers list that had jumped over 100% since the post attack dates. This quarter's best performer was Art Tech with a solid gain of 285% in just 13 weeks.

So, don't let the massive jump in the Idiot Wave this week be too upsetting. It should start to level out again after this statistical anomaly passes.

This crossed my mind the other day: What if the World Trade Center had been struck by a meteor? How would the markets reacted relative to what actually did happen? What would the prognostications been if the event hadn't been "man made?"

I'm looking forward to getting 2001 behind me. I'll be reviewing the last 12 months in my year-end newsletter next week. I've been doing this for several years. It helps me gain some perspective on what goes on.

Happy New Year

From Port Washington, WI, USA

REPORT - WEEK OF 12/17/2001: As I mentioned a few weeks ago, we are now 13 weeks from the re-opening of the stock market after the World Trade Center and Pentagon attacks. This has skewed some of the Idiot Wave's statistics. My Speculation index is now referencing prices that were near their low points. This makes it look like we now have massive speculation. Two weeks ago there was just one stock listed on the Best Performers that was up over 100% in the previous quarter. This week there were 15 stocks up at least that much. If the price was cut "in half" on the 17th of September and now "doubled" from its low, it would be right where it started before the attacks. However, the knee-jerk reaction shows up in my data as a spike in speculation.

The other component that rose dramatically this week is my ZEAL. It has risen because of the WTC attack as well. In the weeks just prior to the WTC attack there were about 7850 to 7900 individual issues being traded on the NYSE and NASDAQ exchanges. The week of the attack there were just 7300 issues traded (thinly traded issues didn't get their chance). So, my Zeal value is reflecting the reduction in issues being traded after that. This week there were 7771 issues traded. Zeal will line itself out again over the next few weeks just as the Speculation component.

In the mean time we're going to see these higher values in the Idiot Wave. 43% Cash indicated isn't the end of the world and truly there has been a return of some speculative activity in recent weeks. Value Line's P/E ratio bottomed the week of October 8th at 15.4 but this week is showing 18.9. Some of that change is decline in earnings and some is the return to higher prices. Just prior to the attack the Value Line P/E was around 18. Both the NASDAQ Composite and the DOW have risen above their pre-attack levels. This P/E makes sense. It also means the market may have gotten a bit ahead of itself. So, maybe the Idiot Wave's rise in risk level isn't too far off the mark for now.

Just one AIM trade was done last week. I sold 13% of my GNSS shares at $66.21. This has provided some extra liquidity as well as giving me a very nice gain.

We're at that time of year when people start to attempt to measure their performance on their accounts. Our Equity Warehouse business requires us to do some special measurements compared to others. First, against what benchmark should we be measuring our results? Fellow AIMer Andy N. makes sure he compares the the number of shares as part of his analysis. This is important in a down year. AIM Equity Warehouses will have lots more inventory in a down year than the previous one. That new inventory has the potential to generate profits in the future. So, we can't ignore our inventory size. So, here's some ideas for you:

I would put the least emphasis on the last measurement - against averages - and the greatest on performance compared to your long term goals. If one year is a 50% gain and one is a wash, then the two together still should be ahead of your goals. When we close out the year 2001 I'll post my results as closely as I can.

With the short trading week next week, I'll probably not get the report written until after Wednesday. I wish all the AIMers a happy Holiday time and a healthy and happy 2002.

REPORT - WEEK OF 12/10/2001: I took time this week to rebuild the data base for my PIC list. It was a big job considering there's about 20 stocks and almost a full year of history for each one. The results are twofold. First, the PIC method of choosing stocks looks to be a sound one even in as unusual a year as 2001. The "Buy and Hold" investor who chose the PIC stocks would now be ahead by 1.5%. Second, "active management" using AIM during a turbulent year proved valuable. In this case, AIM/PIC is up for the year to date by 9.45%, easily beating Buy And Hold. (please note that for the same time period, the DOW is down 6.8% and the NASDAQ is down 18.2%)

As I updated the weekly prices and trades of the PIC list I knew full well what has happened this year. It's amazing how the sinking feeling returned as I approached the week of September 11th. I watched as AIM allocated cash, took profits and waited for whatever came next. I was surprised by the two weeks just prior to the WTC and Pentagon attacks. Most of the PIC stocks issued Buy Market Orders in those two weeks. In other words, things weren't that rosy all by themselves. Then the weeks of Sept. 17th, 24th and Oct. 1st came. Where there was still cash available, most of the PIC stocks bought as heavily as they could. Many zeroed out their Cash Reserves. This is a "theoretical" portfolio, so no emotions were involved in following AIM's suggestions. It would appear at this point that those purchase decisions were valid. PIC/AIM is leading "buy and hold" out of this recession market. Active Management DOES WORK!

A bit of work has occurred at the Warehouse this week. We shipped out 5% of WPC at $22.85 giving us a LIFO gain of 35% in two years. It's nice for the Total Return that we've been collecting rent of about 10% per year (dividend) all the time it's been stored here! JBL was offered at $28.50 (4% of the portfolio) and bought giving the Warehouse a 70% LIFO gain. Even the index fund QQQ had buyers at $42.75 (6% of the portfolio) bringing in a 47% LIFO gain.

You will note at the top of the page I've included a link to my wife's family Christmas Pudding recipe. If you've never had a "figgie pudding" you are in for a treat. If I think of any other good ones for the Holidays, I'll post more later.

I'd like to hear from anyone that has an opinion about The Motley Fool web site and bulletin boards. Right now it's a free service and might make a compatible home for the AIM Bulletin Boards. Right now Silicon Investor is doing a good job, but is only available to members. There's concern that because of financial considerations SI might cease to exist, leaving us without a gathering place. If you know of another bulletin board service that is easy to use and not cluttered with spammers and bashers, I'd like to hear about it. Thanks!

REPORT - WEEK OF 12/03/2001: All four components of the Idiot Wave rose this week pushing the "raw" value up three points. I'll be reporting the Idiot Wave in terms of the RAW data from now on. Should you wish to know the "smoothed" IW value, you only need to subtract the Oscillator value from the raw value. The graph now presents only the smoothed and raw versions of the Idiot Wave without the Oscillator being plotted. I hope everyone likes this new way of presenting the IW data.

Air Transportation is the single largest Sector represented in this week's Value Line Worst Performing Stocks list for the last 13 weeks performance. Seven of the forty one stocks shown are from that sector. Now, I've never been a big fan of the airline stocks as most of those companies have never figured out how to earn a buck from what they do. However, there are a couple of good companies and as is usual with the market, the good ones have been punished along with the bad. Guilt by association. I think we all can agree that Sept. 11th has made a significant change in how people view air travel. However, air freight, for instance might not be affected the same way as commercial passenger service. Packages aren't afraid to fly! Is there something here of value for us to study?

With Tax Selling Season in full swing for the next 4 weeks, there will be some peculiar statistics if this year proves to be like ones in the past. On top of the seasonal peculiarities, we are now about 13 weeks away from the World Trade Center and Pentagon attacks. This will affect my Speculation component by rising in a knee-jerk reaction to the lows posted just after that event. Even so, we're seeing a slight rise in this component. Speculation is hard to kill. What will the gamblers do if they can't speculate in the stock market? This week, for instance, there are two Value Line stocks showing over 100% gains in just the last 13 weeks (predating the attacks). This follows eight weeks where there were NO STOCKS which had achieved a double in their previous 13 weeks. By today's Idiot Wave reckoning nine weeks since the attacks were considered Low Risk periods for starting new AIM accounts or adding to one's position. At this point the NASDAQ is up nearly 36% from its post-attack low while the DOW is up about 20%. So far it looks like the Idiot Wave made a pretty good call.

The only AIM trade that I managed last week was to sell 11% more of my GNSS position at $57.04. That was about 10% higher than AIM's previous sell price. This stock is now very profitable for me after just two years of AIMing. See my Genesis Semiconductor History for a more complete story of how AIM has handled this volatile stock in a peculiar market.

REPORT - WEEK OF 11/26/2001: This week I'm presenting the traditional Idiot Wave (IW) values as seen in the tables above and also a graph that shows the "old" Idiot Wave and a "new" version. Because I've been concerned that too much attention has been paid to the actual value of the IW and possibly not enough to the Oscillator, I decided that maybe a change was needed. The result is an Idiot Wave that has greater range and also rate of change than the original. The Oscillator's function has been to show direction of change and also rate. However, when included in the Idiot Wave graph, it shows a much more reactive nature.

Events of the last two years brought to my attention that the Moving Averages used in constructing the IW in the past may, in fact be hindering it from calling out extremes in the market. Recently, after the WTC/Pentagon attacks the IW dropped from 39 to about 30 over the period of about four weeks. During that time the NASDAQ dropped from about 1700 to near 1400 and returned to about 1700. Although not many investors were doing much but holding their collective breaths during that time, it still indicates that a "lower low" was hit while the IW was still descending. If we look at the IW value minus the Oscillator value we see that the lowest potential value occurred with the report on October 1st. It shows the IW at 34 and the Oscillator at minus 10 for a total of 24. This low point is reached when the NASDAQ is still below 1500. That saved the new AIM investor (and some who still had cash) about two hundred NASDAQ points.

Going back in time to the March, 2000 market peak, the IW would have been begging us to raise our cash reserve levels all the way to nearly 75%. It also reacted quickly enough with the "bear market rallies" since to have warned AIMers to be taking profits and not hesitating.

Now, to see if this idea held water over a longer period of time, I went back into the IW database to 1982 and built a graph showing through 1998 (about as much data as I can cram into that old DOS spreadsheet without it splitting a gut).

So, it would appear that I could eliminate the Oscillator value on a weekly basis as the IW itself incorporates the rate of change and direction this way. I still have some work to do, such as verifiying that the average value is still centered at about 40, etc. One part of me wants to say, "If it ain't broke, don't fix it!" The IW has been very good for nearly two decades. At first blush I thought it was maybe too reactive. In the light of how the world looks since September 11th, it seems to me that maybe something more responsive is in order. I know from the many email addresses that I've received since my hard disk failed on the computer that many of you are not Silicon Investor readers. So, if you feel strongly about this potential change, please let me know via email if not on SI.

Since the last report we've shipped out some inventory from the Equity Warehouse:

REPORT - WEEK OF 11/19/2001: The appearance of the Idiot Wave's 6th week indicating Low Risk is a little deceptive this week. Although strictly showing Low Risk, the Oscillator has unfortunately indicated that risk is starting to rise. It's not surprising with all four components rising for the week. With two showing Neutral and two Bullish, we were able to keep the Idiot Wave right on the edge of the Low/Average risk border.

So, those of you who have been fortunate enough to have AIM trip a Sell trade or two should feel good about your fortitude. It would appear that selectively the Technology Sector has been doing the best over the last six weeks. With the Nasdaq 100 Index being heavily weighted with Tech Stocks, it has done well also. This week my QQQ holding tripped yet another Sell order liberating an additional 5% of my holding at $40.35 which generated a LIFO gain of 38.6% above its cost. Those shares were bought just two months ago.

Good friends are joining us for Thanksgiving. They'll be driving about 500 miles to get here. Along the way they'll be picking up their son in Chicago. I think I'll stop at Ewig's Fish Market and pick up some smoked salmon to make up some spread. Here's the recipe for those that might want to try the same. It makes great snacking while visiting with friends and relatives:

Now, if you have the time to go catch the salmon, smoke it and then make this spread up, that's fine. It will make the snack all the more meaningful. Actually almost any smoked fish can be substituted for the salmon.

Boy! Things must be pretty boring for me to be putting recipies here in the newsletter! :-) I'll be having some of my spread on Thanksgiving while watching the Green Bay Packers and Detroit Lions game. I guess I better save room for some dinner, too!

REPORT - WEEK OF 11/12/2001: Our 5th week of Low Risk signaled by the Idiot Wave. This is good news for investors. It doesn't mean there's no risk for us, but that it has been minimized by the tremendous bear market of the last 19 months and the attacks on the World Trade Center and Pentagon two months ago. My Speculation Index probably tells it best. The Best Performing stock in all of Value Line's 1700 stocks over the last 13 weeks managed to rise 54.7%. The Worst Performer is down 92.2% over the same period! Speculation is washed out for now.

A more stubborn area of the Idiot Wave has been the Divergence component. This is Fosback's Hi/Low Logic Index as applied to the NASDAQ market. It's currently Neutral and has only spent one week out of the last five in the Bullish camp. However, there's something happening inside that statistic. It measures the number of issues hitting new 52 week highs and lows against the total number of issues being traded on that exchange each week. Since August 10th the number of new Lows has exceeded the number of new Highs every week until last week. So, with the Idiot Wave now at Low Risk, we're finally seeing the number of new Lows shrinking. (the number of new Lows peaked the week following the WTC attacks, at 1365 with only 114 new Highs out of 4415 issues being traded) This last week there were 169 New Highs and 152 New Lows out of 4305 issues being traded for the week. Stealthily the Bulls have been adding to their positions while the Bears have been relaxing. If the trend continues, we should see a Bullish signal in this component very soon with the New Highs exceeding the New Lows nicely.

I've updated my own history through the end of October.

The fall of Kabul seemed to happen almost too easily. However, it seems to have removed some confusion from investors' minds. We may yet see a counter attack that will take this slight shift in confidence away. Like AIM, I don't look to predict the future, but to react appropriately to what's already happened. Some of my stocks are now nearing points where my SELL Limit Orders will fill. This will improve my own disposition! Please stay vigilant yourselves and keep your AIM as good as ever!

REPORT - WEEK OF 11/05/2001: A hectic week at VIEW as we lost a hard drive and have been spending most of the week restoring files and programs. Sorry for the delayed report. As you can see, not much changed. Still three components in the Bullish range and one in Neutral. History indicates that the longer the IW remains at Low Risk, the better the final rally will be. We're now in the 4th week of Low Risk. The NASDAQ was at 1703 when it started and as of today its at 1828 (Friday's close). The DOW was at 9344 and today its showing 9608. So far, so good.

AIM was kind enough to suggest that I do some Selling this week.

As general advice, I would like to remind everyone that it's a heck of a lot easier to copy/back-up your computer data files as well as your software than it is attempt to do it all over again from scratch. I've had reasonably good habits, but didn't realize all the "secret places" some files get stored that I didn't back up. Luck had it that about 90% of the important stuff was recently copied and backed up. I did, however, loose the PIC List histories and will have to reconstruct the AIM accounts to bring them up to date.

Considering how far the market has fallen this year, I don't feel badly about where my account is currently. I'll have an update on the Year To Date in next week's newsletter.

Here's an interesting and timely editorial from my Alma Mater, Hillsdale College. Not the kind of stuff you'd usually hear on the Evening News! Hope you enjoy it.

REPORT - WEEK OF 10/29/2001: The statistics this week again left the Idiot Wave in the Low Risk area. But, as you can see, the Oscillator is now only a minus one. It won't take much of an uptick in the IW data to carry us back to the Average Risk area.

It takes just 24% gain to make Value Line's Best Performers list. The very best is up just 71% this week. On the opposite side, it now takes a 55% Loss to get listed on VL's Worst list and the very worst is off nearly 82% in the last 13 weeks. Looks like Speculation is on the Disabled list! That's good. For way too many years it was out of control. This is the fourth week of this component showing Bullishness.

Only two AIM trades to report this week. I purchased more BMY at $54.60 and sold more GNSS at $48. It seems everything else is stuck in between.

It would appear from the news broadcasts on TV that BinLaden, Inc. continues to benefit from the network's free advertizing for them. I am afraid that I really can't be bothered to watch any more. I've not gained anything from what I've seen and can't understand the willingness of the TV networks to give a multi-national organization such as BinLaden, Inc. free air time. Therefore I've declared for myself a News Holiday. If it doesn't show up in the weekly publications, it's not worth my time to know about it.

I am anticipating that BinLaden, Inc. will continue to try to stay in the forefront of the news as that's where his real "power" is. Until this entity and all its divisions are put out of business I don't see an easy way for the market to rally. Should the criminals escalate their attacks, the markets may go lower. The Idiot Wave indicates that if some resolution or at least a stand-off is reached that we've probably seen the bottom. Under the circumstances, I think my only suggestion is to seek your own comfort level. If you can continue to follow AIM, it would appear that we will start to see some positive results in the future. If you can't even stand to let AIM handle your market risk, then there's always Money Market accounts. I don't recommend that option, but whatever you do it has to be something with which you can live. It also should be a well thought out part of your overall investment business plan. Remember that if you exit the market now, whether profitable or at a loss, there's consequences of those actions. Make sure that you've planned carefully.

David Dreman in his 1977 classic Psychology and the Stock Market derives a formula that states the price of a stock is based upon its actual value, interpretation of information about the stock and the psychological state of the market place.

I and P he states, "can very often be the dominant influence on price. Incorrect interpretation of information and emotional factors can carry price far away from actual worth." Below-average market results are often the result of overlooking these components. "The P of the equation is devilishly tricky, and can often have a substantial and at times overwhelming influence on I. In periods of ebullience or panic, P dominates both I and V. In more normal times, V and I can be more important than P....... V, although appearing almost invisible for long periods of time (1995 through March, 2000?) is eventually the determining factor of stock prices........ Because neither professionals or academics usually place much emphasis on the I and P variables, I believe there is a far greater opportunity to outperform the market than is generally acknowledged........ The cancer of modern investment practice is its absolute obsession with current quarterly and annual earnings, and the downgrading of most other important fundamental evaluation standards."

Finally, Mr. Dreman says, " investors have consistently paid too much for companies that appear to have the best prospects at the moment, and with equal consistency react too negatively to companies considered to have the poorest prospects."
This sounds a lot like AIM selling shares to the one group and buying shares from the other!
".....the (I and P) variables in the favorite companies are repeatedly too high, and are too low in the companies in disfavor........ Because the major barriers (to success) are psychological, the best chance an investor has is to stand apart from popular thinking....... Because (investors) tend to consistantly overreact to events, a mechanical formula designed to moderate such overreactions will work, provided the recent past is not too different from what is to come. .......Years of sweeping changes will occur, and the formula will not function, but such years are very rare. The odds appear very much with the investor who uses the method...."

My choice of a "mechanical formula" is AIM!

REPORT - WEEK OF 10/22/2001: This week we have all four of the Idiot Wave's components showing they have fallen to their Bullish territories. This is great news for all who follow the IW's meanderings. Officially unchanged for the week it is still just inside the Low Risk area of its travels. With three of the four components rising, we're still showing an Oscillator value of minus 2 which means falling risk. However, the rate at which it's now falling has slowed way down from a few weeks ago. In the past these low risk periods have proved to be wonderful times for starting new investments and also for AIM accounts to be accumulating extra shares.

Just one AIM trade to report for last week. I again sold 8% of my remaining inventory in GNSS at $39.70. This made for a very handsome LIFO gain of 335% since about a year ago. This is quite satisfying considering the terrible market conditions for the last 12 months.

How long can we expect this Low Risk Idiot Wave signal to last? I really don't have any way of guessing. Will the market turn and head straight up from here? I don't know. Will the market go down further and create yet new low water marks? Again, I don't know. Usually these Low Risk periods have coincided with market bottoms (See the 11 year IW History). I don't have a comparable historical period with which to compare. We haven't had an active destructive agenda being played out on the world scene during the Idiot Wave's history of 19 years.

People who were guessing at cyclical market bottoms are now not guessing at anything any sooner than 2003 for recovery! That remains to be seen. Is this a cyclical Bear market or is it a secular Bear market? AIM really doesn't care. It was designed around the data from the last great secular Bear market - 1968 to 1981. AIM will take profits as soon as they are available and meet AIM's standards. That money may end up being "recycled" several times before the market trend finally starts to turn upward. This isn't a bad thing since every time AIM recycles cash to buy equities and then sell to recover the cash means a LIFO gain of at least 25% on that transaction. So, if this market bounces along for months or even years near these lows AIM will be doing its best with the Cash Crop available. It will continue to plant and harvest as often as the market prices allow.

Seriously, AIM is best suited to capturing profits in a choppy, flat trending market. If that is what we're in, then AIM will out-perform Buy And Hold substantially and will do so with much less risk over time.

REPORT - WEEK OF 10/15/2001: It doesn't happen very often. It hasn't happened since 1998. When it happens it feels bad at the time and then later feels very good. What is this happening? The Idiot Wave dropping to 30 or below. Just five times previously has this happened since 1982. Each time it has spelled a very good opportunity for investors to be starting new investments or for AIM to be doing serious buying. Will it happen again this time? I certainly hope so. We've been waiting about 18 months from when the NASDAQ and the Idiot Wave peaked for a Low Risk event to occur.

Unofficially we've been at low risk since 09/17/2001 when the Idiot Wave was at 39 with a minus 9 Oscillator giving us a value of 30. It's taken four more weeks for the IW's Moving Averages to settle to give us a 30 reading by itself. The IW Oscillator being a negative 4 keeps it well within the Low Risk area. This should give us extra confidence in making any final AIM purchases. It would be nice to have all four components in harmony on the Low Risk signal, but I'll take what I can get!

In the past the IW has been at Low Risk for as short as one week and as long as 21 weeks. So, it may not mean that the bottom has been reached, but that it's not very far off. Any seeds we plant now should sprout green stuff as the pendulum finishes it swing and starts to reverse.

As if wanting to confirm some of this, here's what AIM's been asking of me recently:

On the Silicon Investor AIM Users bulletin board I'm seeing comments from other AIMers that they have started some minor selling as well. Whether this is just a blip or whether it will be sustained rally remains to be seen. Chances are it will be a choppy ride here as the Good Ship Lichello comes about and takes a new and better tack. We've been beating against the wind for 18 months and it will be good to turn, let the sails out and run with the wind for a while.

REPORT - WEEK OF 10/08/2001: Again this week there are three Bullish components and one Neutral. Two have exchanged places, while the other two remain where they were. I am very glad to see the Speculation component finally wash out to the Bullish part of its range.

In this graph you can see that when there's a high value associated with the Worst Performers and a low value associated with the Best, we've historically had very nice rallies afterwards. However, none of those previous times included on this graph were during a military action by the U.S. Will we now see a rally again? The graph shows that the weak hands have finally let go. Early signs from last week and this week show some strong hands starting to come in to grab up deeply discounted shares. The number of New Lows on the NASDAQ and NYSE are declining. The number of stocks advancing VS declining has favored advancers for two weeks. This is helping to firm up a base from which to launch a new bullish phase. Like newly poured concrete, the longer it sits, the stronger it gets.

I'll be watching the IW Oscillator very closely during the next weeks. We want to see it stay low enough to finally draw the IW into it's own Low Risk territory (now very close). We also want to look for it turning positive as that will signal that the market has started to turn upward. Some of my stocks have started to rise slightly since the end of September. It's not yet been time for me to spend any additional cash as I'm waiting 30 days since my last purchases.

REPORT - WEEK OF 10/01/2001: We've finished the worst quarter on the Dow and the NASDAQ in quite a while. The DOW was down 17% and the NASDAQ down 31% for the last 13 weeks. My account, unfortunately, mirrored the NASDAQ this time around. Here's what the graphs look like for my account through the end of September.

Not the prettiest site in the world, but it's good to see there's a splash of cash left for a last buying spree. With the Idiot Wave hovering just above its Low Risk zone and at the lowest level since our last low risk period in 1998, I'm feeling like the end of the decline is in sight. Only four periods of low risk have occurred since my data started in 1982. Each has been followed by an extremely good market for long term investors. I'm very much looking forward to having the Idiot Wave (IW) confirm a low risk environment again.

Three of the four IW components are now signalling Bullish conditions with the fourth hovering right on the edge. It's very rare that we have all four components in harmony as being either Bullish or Bearish. This is the closest we've been in a long time. Only one stock in Value Line is currently holding my Speculation Index in the Neutral range. Without it we'd have a full blown bullish buy signal from the IW. It takes only a 17% rise in a stock over the last 13 weeks to be in the top 41 stocks of Value Line's universe of 1700 stocks. By contrast, it takes a drop of nearly 64% to get listed as one of the 41 worst stocks! This is truly about as extreme as it gets. Eliminate CKE Restaurants price rise and we're instantly Bullish.

Several market measures improved last week including market breadth. Keep your cash handy as it looks like it's nearing the time to spend that last bit.

REPORT - WEEK OF 09/24/2001: The bad news is the Dow and the NASDAQ fell tremendously during last week's trading. The good news is prices are much more favorable for buying now! The data from last week's trading did do a bit of good for reducing the Idiot Wave's risk rating. It dropped another two points overall and the Oscillator has also stayed low this week. If we subtract the Oscillator from the Idiot Wave, we see that we'd actually have a value of 29. That's an Unofficial Low Risk signal. We have three of the four components in the Bullish end of their territories and the forth closing in quickly. Since the Idiot Wave is a construct of the moving averages of each of the components it takes a while for all the data to filter down to a true Low Risk signal, but we're certainly within very close range. The IW Oscillator is built from the raw data and isn't smoothed with moving averages.

I have been very pleased with the Low Risk signals the Idiot Wave has generated over the years. It's always best when it occurs with all four components in harmony confirming the IW's drop below 30 for Stocks and 20 for Mutual Funds. Again this week I'm putting up all four graphs so you can see just how each component is moving. Note that these graphs are constructs of the Moving Averages for each.

As you can see the trend of these four components is towards lower risk for investing. This is a good sign - as painful as the last two weeks and the last 18 months have been. I've worried that the Idiot Wave was "broken" for a long time as it seemed we should have somehow found our way to a low risk environment long ago. However, it's taken much more time to get this far than almost anyone had expected. The Idiot Wave isn't swayed by opinion, so it serves as a good barometer of what is happening in the market.

For instance, this week's Value Line shows that to make it onto their 41 Best Performing Stocks list, a stock price must have risen by about 25% in 13 weeks. To make the 41 Worst list, takes a drop of more than 62%! The obvious bias is showing stocks in a serious downward spiral for the last 13 weeks. Really folks, this is Good News if you're buying. I know it's not feeling good yet, but the market's carving out a bottom statistically and it's now doing it quickly.

Here's a graph that shows how the Relative Valuation is constructed. Note that in the last week both the Value Line P/E and the 13 week Treasury Rate have dropped quickly. This is doing a great job of trimming the last IW component down to bullish weight.

I bought more JBL, VTSS, CHIR, ADCT and QQQ in various accounts in the last week. Haven't taken time to figure out how much of each. There's still some cash left.

REPORT - WEEK OF 09/17/2001:

All four components of the Idiot Wave went down this last week. Some are down because of the pecularity of having only one day of trading last week. Some are down because of the reasons we had only one day of trading. As the Idiot Wave values drop, so does the risk of being involved in the markets. Use your cash wisely and sparingly.

REPORT - WEEK OF 09/10/2001:

If I use the 1990 invasion of Kuwait as an indicator, we'll see bonds and stocks decline radically over the very short term. Bonds will come back with realization that the U.S. is going to survive. Stocks will be under pressure until the situation is resolved, one way or another. It will be very difficult to attain much in the way of capital gain for a while. My guess is that commercial air traffic will decline dramatically for a while.

I cannot tell you all of my feelings this morning. It would take days. I do know what an act of war looks like. I also know of many "isms." Many religions end in "ism." I don't think an attack on civilian populations should be honored with any word ending in ism. I know that the effort put forth to commit such a crime could have been put to so much better use. I know there's "ENERGY" that's given us all. It's up to us individually and collectively to put that energy to positive use. "Energy" isn't either positive or negative - it's the individual expending it that determines whether it's used productively or distructively. Anyone who uses it for destructive purposes, anyone who associates with such people, cannot be regarded as fully sane or maybe even human. All the "Energy" expended for destructive purposes by groups of sub-humans is completely wasted as it makes for no change at all in the long run. If the same energy was expended in a productive manner, literally millions of people world wide would benefit.

I feel it is a time when we must stand together against those who employ their life force for destruction and personal ambition. It doesn't appear that we have the option of politely accepting distructive alternative views.

REPORT - WEEK OF 09/03/2001: Another week of gloom. You wouldn't guess that this is still summer by the cold bitter weather on Wall Street these days. Today, Friday, the DOW flirted with the April low point of under 9600 for a while. I watched CNBC for 5 minutes during lunch and found out it's the unemployement that's to blame (today).

I'm trying hard to stay with once per month buying on my stocks because my cash reserves are so low. This strategy has been working okay this year. I can't claim any missed opportunities so far. I'll go back to more frequent trading when my cash reserve percent rises to something nearer what the Idiot Wave is requesting. Currently my overall cash reserves are hovering right around 6% of total value. The month of August saw my account return to negative territory for the Year To Date. More on this next week when I have all the reports summarized.

The report was a bit later than usual this week as I waited for the Value Line supplement to arrive. Luckily Keith Felkins saved me with a copy of the information from his subscription. Thanks Keith. Of note this week is the number of New Highs on the NASDAQ is dropping letting my Divergence component sink back towards its Average Risk range. Speculation is moderate with the Best Performer up about 192% while the worst is down 89%. These two pieces of the Speculation index are interesting, but the real story is being told with two other pieces. #41 on each the best and worst list show what it takes to get listed at all. Right now it takes a 34% gain in the last 13 weeks to make the "Best" list while a drop of almost 62% is required to make the Worst. This shows that we're finally unwinding Speculation. If the trend continues, we should get a Bullish reading in the next month. Value Line's P/E must come down before we'll get our Relative Valuation to drop back into the Neutral range. Since I don't anticipate the FED lowering interest rates much more, it will take either a drop in average share price relative to earnings or a growth in earnings to accomplish this. I don't recommend holding one's breath for the earnings growth idea. It will happen, but we might get a bit blue in the face while we wait.

REPORT - WEEK OF 08/27/2001: There's nothing pretty about what's been going on in the market during the last few weeks. I've noted that the most popular subjects on Silicon Investor tend to be the gloom and doom topics. Because of my self-determined schedule I've not bought any new shares of stock since last week's report. Today I did some more house cleaning by selling off all inventory of Sealed Air Corp. (SEE). This was done not because of any change in the fundamentals of the stock, but that it has performed well this year and has done everything I wanted it to do for now. Having the value transferred to my Cash Reserve will give me the ability to do some further buying in some of my out-of-favor tech stocks.

The Idiot Wave components all rose this week pushing the IW up one point. We currently have two bearish readings with a neutral and a bullish rating on the other two. Speculation is still showing up as being moderate. Even so, CKE Restaurants (CKR) is cooking, up 170% in just 13 weeks while Metromedia (MFNX) had a bit too much Fiber in its diet and has been unable to retain much value, down 87% in the same period. Binding up some profits has been hard in this market full of Laxitives! It currently takes a 55% loss to make the Worst Performers list in Value Line where a 40% gain will put a stock on the Best list (Value Line Index Section - Page 33).

As of today's close, the DOW is back under 10,000 and the NASDAQ Composite under 1800. According to Trim Tabs money flow has been positive through last Thursday for the week and the month of August so far. Boy, you'd sure never guess it from the action of the indexes. As bad as the NYSE and NASDAQ look, there were more advances than declines on both indexes last week. The NYSE continues to post many more New 52 Week Highs than lows while it's the opposite for the NASDAQ. Looks like three letter stocks are winning over four letter stocks for now.

It remains important to stay focused on long term goals during such tough market conditions. The P/E contraction continues as investors become tighter and tighter with their stock purchasing dollars. It was hard to be contrary when the bull market was still in force through early 2000. Many people thought about abandoning AIM because it was "foolishly" requesting them to lighten up on their stock holdings during the rise. Well, it's equally hard to be contrary now when there's so much gloom hovering over Wall Street. I have to get my reading glasses out to see the motto on my AIM pin. However, it helps remind me to maintain my contrary attitude and discipline.

This newsletter's readership continues to grow. As you can see below, Canada represents three percent now up from 1% at the beginning of 2001. Fully 11% of the total readership now is represented by non U.S. "hits" on the site. Thank you all for coming here to learn about Mr. Lichello's AIM. I hope you all profit from its use.

REPORT - WEEK OF 08/20/2001: Last week I reported that a few purchases were made. Many of my stocks had been hovering right near where AIM wanted some new shares added. I've been limiting AIM's feedings to once per month on most of the holdings because my Cash Reserve position is so low. Well, about a month has gone by since the last feeding and AIM was getting ornery from hunger pains.

The damage being done to the markets finally did show up in my Speculation Index with a drop to the low end of the Neutral range. I expect it to stay there or drop further in the coming week or so. The Divergence index is still indicating that NASDAQ investors don't know what to do. It is interesting to note that there's much less confusion with NYSE investors. While the NASDAQ has been posting simultaneously lots of new highs and lows, the NYSE is showing many more new highs than lows. It would appear that dollars leaving the NASDAQ have been flowing into the NYSE. "Flight to safety?" Maybe or just part of the nouveau value investing trend. Well, the pendulum always swings both ways.

I plan on keeping to the tactic of infrequent purchases for efficient use of the Cash Reserve for the foreseeable future. Should VIEW's cash rise back up to more normal levels I'll allow the Purchasing Department more activity. I don't know how long that might take. In the mean time it just means I have more time to do other things because my Buying is limited to monthly activity. I plan on selling any time AIM asks me should any of my stocks finally quit falling in price. This year I've felt like I'm in the Recycling Business. I keep recycling the same shares over and over. This is the third buy cycle this year on several stocks. Each sell cycle has been brief but rewarding. Gosh, can you imagine having four round trips per year per stock? That makes for some good and profitable activity while we wait for Mr. Greenspan's latest interest rate cuts to take hold.

REPORT - WEEK OF 08/13/2001: This week wasn't pretty again on Wall Street. Outflows of money from mutual funds continued last week and is almost becoming a trend in itself. This makes it difficult for the markets to put together any form of rally. Press articles abound with negative twists on almost any and every stock. Posting on Silicon Investor's threads is way off the pace of normal. Even our AIM bulletin board is getting quiet.

A while ago I sold out of my Devon Energy shares (DVN). This week I used the proceeds to buy more shares of my Vanguard Sp. Energy fund (VGENX). The money is staying in the same general sector but is more diversified now. That fund was nearing where AIM was going to think about doing some buying, so I took it as a good time to add to the overall position. My Biopure shares (BPUR) received some negative press which drove its price down quite a bit. AIM responded by accumulating some extra shares at $17.10. Also, my Stake Tech. (STKL) shares dropped to $1.50 where I added about 5% more to my holding. Today (Friday) my Vitesse (VTSS) shares also took a beating to where AIM will be interested in accumulating more shares. I haven't yet executed any order on VTSS as I arrived at the office after the markets closed today.

I've updated all the graphs of the Idiot Wave's components for all to review. You'll see that three of the components have been showing rising risk for several weeks. Only one component is currently in the Bullish camp - Zeal. The recent profiles of the other graphs isn't anything that is very encouraging at this point. What's odd is that normally as the indexes have risen in the past usually the Idiot Wave has risen in harmony. This time the market is falling while the IW risk level has been rising. This is somewhat uncharted territory for it.

In 1999 and 2000 as interest rates were rising, the market seemed content to ignore the FED rate hikes. After decades of following the FED's every twitch investors were believing that interest rates no longer mattered. Now, after over 8 months of FED rate cuts it appears these same investors and the market as a whole is ignoring the tremendous drop in the FED funds rate. Earnings have been falling faster than stock prices which has pushed the broad P/E ratio of Value Line's 1700 stocks up above 18. This plus the current 13 week interest rate puts our Relative Valuation level into its Bearish territory. Bond funds are swelling with money being removed from stock funds. Even money market funds and bank savings deposits are gaining dollars while interest on these safe havens drops. I guess if we're going to be "buying from the scared" this might be the time to do so. As fellow AIM investor, Steve Grabczyk, put it, "If we sell to the greedy and buy from the scared, does that mean we're stealing from the capitulated?" I guess so! I know most AIMers are working with very thin cash reserves at the moment, so please use the remaining purchasing power to your best advantage. Maybe when Mr. Greenspan makes his next rate cut investors will finally start to realize that the economy can still recover. That realization should help the markets.

REPORT - WEEK OF 08/06/2001: The dance music certainly seems as though it's changed from the decade of the Nineties. Back then we didn't seem to need any fancy footwork - it was three steps forward and one step back, repeat. We all started at one end of the room and nobody worried about what was going to happen when we all got to the other end. In early 2000 we all piled up with no place to go and realized we'd gone too far. The dance then switched all the way around to three steps back and one forward. Well, the beat has now changed again and the same steps we used in the Nineties or since March of 2000 don't seem to get us anywhere. Just as it was hard not to make money during the last decade, it has been difficult as a long term investor to make money in the last 16 months. We've had to adjust our step to the new beat. As Bob Norman said, we're being waltzed around. One step forward, one to the side, one back and another to the side. Actually if you think about this, it's just the kind of market for which AIM was built. It's going to be harder work with stock and sector selection being very important while using AIM's volatility capture feature to build our positions as the market continues its waltz.

Another problem with such a leaderless market is that investors, even AIMers become disenchanted with their progress. Please resist the urge to switch to some other system just as AIM's coming into its own. If you as an AIM investor are feeling frustrated, imagine what the Short Term Trader must be feeling. The market has a slope of zero right now and that's a hard one to say "The Trend Is Your Friend." Should the market continue to be in this range for the rest of the year, I know my total inventory turnover will be less than other years. But at least what will have turned over will have done so profitably.

My "Speculation" index (Veale's Best/Worst index) as predicted went way to the bearish side 13 weeks after the April market lows. It's now almost back to the neutral range. The week of July 17th data showed the Best Performer in Value Line up 305% in the 13 weeks from its April low. This week we see Pep Boys up 186% as the Best. The index should continue to moderate in the next few weeks.

The Price/Earnings ratio for Value Line has expanded from 14.4 at the beginning of 2001 to its current value of 17.9. We all know this wasn't because of prices rising while earnings stayed flat! In fact it was the shrinking of the earnings at a faster rate than the prices were dropping that caused the bloating of the Value Line P/E ratio. Looking only at the P/E ratio would make one think that there's been an increase in risk. However, if we also look at interest rates at the same times we see that things really haven't changed towards the worse as much as we thought. Back on January 1st the 13 week Treasury rate was 5.43% and now it's 3.56%. If we combine them, then back in January it added up to 19.83 where now it adds up to 21.46. In January it was at the lower end of the Neutral range and now it's at the upper end. As much noise about the FED policy that's been made, it appears the FED's kept the P/E + Interest value inside the Neutral range during a very difficult time in the market. I doubt if the FED's going to lower much more. The effect of dropping interest rates should start to help earnings thus putting a lid on the P/E ratio over the next quarter. We may yet "earn" our way out of the market slide.

REPORT - WEEK OF 07/30/2001: I have to say that it's been hard work to find much good news being reported by the financial press recently. So, I guess I'll have to just create some for myself.

Considering how lousy the market has been, I think this is good news! At least for the last week none of my stocks have dropped enough in price to trigger any more AIM purchases. This doesn't mean that they've necessarily gone up in price, but have at least temporarily stopped dropping! So, the good news is that maybe my fingers can heal from trying to catch all those falling knives last week.

Overall, July turned out to be not much of a month when viewed in the context of the rest of the year so far.

Value Line's "Worst Performers (last 13 weeks) list shows again this week that 11 of the 41 stocks are from the telecom. and telecom. equipment sector of the market. Classic Over-Sold conditions like this don't last forever, so if you have interest in this business sector, it's time to do your homework, find those companies that will prosper the most from any coming rally and start your AIM investments. Starting them with 48% Cash Reserve as suggested by the Idiot Wave may seem excessive for the rather low levels of these stocks, but we may not be through with the market uglies! Using "vealies" in the next rally to keep the cash reserve under control will enhance your performance even when starting at such high cash levels.

There are other areas of the world's economy that will do just fine in the future. If we take some time to think about what life might be like ten years from now we might see where some of the potential is. Then, by carefully screening of investment candidates in those areas of the economy we feel have long term potential we will have a great starting place for our AIM accounts. As we know from experience, it won't be a straight line price increase on any of our picks, and that's why we use AIM. It acts as the shock absorber for our investments. It takes the good and bad and processes it in a way that is profitable. AIM will slowly build a position in the formative years as prices bounce around and speculators come and go. All the while we wait for the long term potential to be realized. Rewards can be impressive when viewed from a 10 year vantage point.

I've updated all the graphs and information on my PIC List as of the end of July. As of that time AIM was showing a gain so far of 4.4% where Mr. Buynhold would be showing a gain of 2.4%. This means that AIM, in this very short time frame has beaten buy and hold and done so with significantly less risk. Mr. Buynhold is 100% at risk where AIM is currently only about 68% at risk. Many of these stocks still seem to be relative "good buys" compared to a year ago.

The Usage Graph for July shows that our readership continues to expand world wide. Canada, Germany, The Netherlands and Singapore each represent more than one percent of our readers. An additional 4% of the readership is from other nations. Welcome to you all. I hope this site and Mr. Lichello's prudent investment model help you with your local markets as well as the world markets.

REPORT - WEEK OF 07/23/2001: As prices have been declining in recent weeks they have passed through my Hold Zones from the Sell side to the Buy side. All this time AIM has waited patiently for the declines to be large enough to generate real interest. A few stocks had fallen far enough to generate AIM Buy signals sooner but because not enough time had passed by since the last purchases, I waited for a full month or more to go by. Well, here's the list of orders as of today:

I've been managing a very conservative account for a while for a friend. The majority of the stocks purchased this week were in that account. Even these low BETA stocks have cycled to very low prices and tripped AIM trades. It's important to check on the fundamentals of our stocks if we see significant declines and verify that the reasons we own them are still justified.

This week in Value Line at least 11 of 41 stocks listed as the Worst Performers (last 13 weeks) are from the Telecommunications and Telecom. Equipment sector. As mentioned here before, any time we get that type of concentration of stocks from just one sector, it cries out "OVERSOLD!" Now, not every one of them is a bargain and not every one that might be a good company is listed, but we certainly know what sector to study to find a new "favorite." I can say with certainty that the telecommunications equipment sector isn't planning on going out of business entirely. We can expect stocks in these sectors to rebound nicely over the next 6 months.

Last week Molex (MOLX) was added to the PIC list. I used the closing price on Monday, July 16th ($34.53) as the beginning price for the new listing and 46% Cash Reserve taken from the Idiot Wave. PIC has not exactly set the world on fire yet, but it is still showing a $589 profit on its $180,000 commitment since the beginning of the year. Still, break-even is better than most of the indexes for the year.

We're starting to see my Speculation component unwind from its knee-jerk reaction to the April lows. With the market prices off recently and moving the point of reference further into the April-May rally this figure should drop back towards the Neutral range over the next few weeks. It would appear that money is still searching for the latest "winner" in the game of Stock Market Musical Chairs.

REPORT - WEEK OF 07/16/2001: A "tradeless week" at VIEW this last week.
Neither a Buyer nor a Seller Be...... was AIM's suggested activity. Neither the DOW or the NASDAQ did anything too spectacular but there were dollars to be made by the brokers as trading was still going on while investors attempted to devine which market sector and stock might go up or down next. It's nice to see just how "laid back" AIM is during such turmoil.

Some early noises started being made by some of the CNBC guests suggesting that the FED's rate cutting starting about a half a year ago is starting to possibly show some benefit in selected areas. At the same time there's a different kind of noise filtering through which suggests the whole world is now in recession because of the US slow-down. Who's right? Time and AIM will tell.

It's just that sort of confusion that shows up in my Divergence component (NASDAQ Hi/Low Logic Index). 265 new Highs and 270 new 52 week lows registered in the same week. Advances and declines on both the NYSE and the NASDAQ were a wash as well. I've mentioned several times in recent weeks that we'd see a balloon in the Speculation component around the first part of July. The reason is the April lows. Just a modest rebound from April would be a sizable percent gain now. Note that all 41 stocks on Value Line's Best Performers list are up over 100%! The Best Performer, Pixelworks (PXLW), is up over 300% since early April. Certainly AIM would have had investors selling off healthy portions of their portfolios with such a rise! I own and AIM Genesis Microchip (GNSS) which manufactures similar parts and it's up nicely as well. Here's how my AIM is on Genesis Microchip.

Since the sum of the Idiot Wave and its Oscillator indicates where the IW would go if all things remained the same for the next several weeks, we see that there's some concern. Two components Bearish, one Bullish and one Neutral. We're certainly keeping a close eye on the data. Market confusion means we should exercise caution. I'm keeping the resistance to buying high while my resistance to selling is low with the SAFE settings I've chosen. These have now been in place for more than 15 months.

REPORT - WEEK OF 07/09/2001: Other than a 7% addition to my QQQ position at $40.94 and the sale of 8% of my remaining GNSS position at $37.25, all's been quiet at the Warehouse in the last week. No Fireworks for VIEW!

The last couple of weeks have been a bit spooky. Net cash "outflow" from US mutual funds has put a damper on the market averages. Hard to drive prices up when redemptions out strip new deposits with the mutual funds. In the last week there's suddenly lots of analyst "upgrades" on tech stocks and other areas. This is sort of suspicious. I happen to agree that buying stocks when they are out of favor is a good thing, but am always wary of what the motives of the analysts are.

The PIC list ended June with a slight decline for the Buy & Hold investor and about break-even for the AIM investor. The new addition of TLAB at $19.38 hurt results immediately by falling to nearer $15/share. AIM has been trading wisely in this hypothetical account. AIM is giving this portfolio a nice head start in a turbulent market with very little direction. Of course AIM was designed for just such a market, not for year after year of Bull market.

It will get more and more difficult to maintain your patience and composure the longer the market is stuck in a range. Please do your best to reinforce why you became an AIM investor in the first place. Concentrate not on how far your portfolio has fallen from its peak, but on how far it's come in the last three to five years with AIM's assistance. All the magazines, papers and television want us to concentrate on the short term. AIM doesn't think in those time frames. We still want to be involved in what will be the best industry sectors for the next 5 to 10 years. If we can buy into those sectors when prices and valuations are near their low points, we'll do very well in the future. AIM will help along the way if it doesn't happen instantly.

REPORT - WEEK OF 06/25/2001:

A quick report to tell you that the Idiot Wave is rising slightly again this week. One Neutral, one Bullish and two Bearish components make up the list. I've indicated that the Speculation component can be discounted right now because it's reflecting the terrible deep correction in the NASDAQ and DOW right around the beginning of April. Since this component is based upon the Value Line Best and Worst performers over the last 13 weeks, it's not surprising to see this index showing a rapid rise in stock prices in the last quarter - 13 weeks since the lows occurred.

Tellabs (TLAB) was added to the AIM PIC list this week as Value Line dropped its Timeliness rating to #5 for this "Highest Growth Stocks" listed equity. More on this at the AIM PIC website on Silicon Investor.

My taxable account shifted its Equity/Cash ratio a bit more in June, but the total value slipped just slightly.

Overall, on a comparitive basis, I'm still ahead of the NASDAQ Composite this month, but slipped from about 118% to 116% of the index. I'm hoping to stay a bit in the lead while the market recovers.

Robert Gammon has kindly been reproducing tapes of that meeting and making them available for a price of $10 ea. including shipping and handling. Several AIM users gave presentations. If you are interested in this 5:50 Hr. long video, please send Mr. Gammon an email. It's rare to have this much information available at such a reasonable price. Note that last year's video, AIM 2000, is also still available at the same price.

REPORT - WEEK OF 06/25/2001: Last week left the Dow and the NASDAQ Composite almost unchanged after a week of churning around. Individual stocks, however, showed much greater movement than the indices. The previous week had been quiet at the Warehouse, but this last week was busier for both the Purchasing and Sales departments. Here's the trades:

Some selling, some buying and about a net zero for cash flow for the week.

The AIM PIC list didn't change too much last week, but did give back some previous gains. Mr. Buynhold has to be content with a slight loss of 3% since he started. AIM on the other hand is currently at break-even. So, AIM's already showing it's stuff by performing better with less risk. My hope is that this will continue as the market finds its base for the next leg up. CGNX has now been knocked off of Value Line's Highest Growth stocks list. No new #5 Timeliness stocks have been added in recent weeks.

This week will end the "Window Dressing" period for institutions and mutual funds. Much of the recent peculiar action in the market place may be due in part to this quarterly activity. By selling off their "bad" stocks, they tend to drive those stocks' prices down even further. Corresponding moves to accumulate the latest winners can be responsible for rises in prices of the "good" holdings. After we start the new quarter, we can take a look back and see if this has happened to any of our own holdings.

I created a composite graph showing Relative Valuation's components over time.

This month so far we've had readers from 22 identifiable countries around the world. The graph near the bottom of the page shows where the readers are if they represent 1% or more of the readership. I'm pleased to see Japan rise to be a full percent of our readers. I would think that AIM might have saved some of their investors a lot of grief over the last decade.

Robert Gammon has kindly been reproducing tapes of that meeting and making them available for a price of $10 ea. including shipping and handling. Several AIM users gave presentations. If you are interested in this 5:50 Hr. long video, please send Mr. Gammon an email. It's rare to have this much information available at such a reasonable price. Note that last year's video, AIM 2000, is also still available at the same price.

REPORT - WEEK OF 06/18/2001: Last week's retreat on the NASDAQ trimmed nearly 10% off the previous week's close. The DOW also gave up some ground. Decliners outnumbered advancers on both the NYSE and the NASDAQ. Still, there were more new 52 week highs than lows. A year ago the Idiot Wave was at just about the same level having fallen from its all time high earlier in the year. But, the NASDAQ stood above 3800 a year ago and now it's at about 2000. So, for the same relative risk measurment on the IW, the NASDAQ has given up nearly 50% of its value. My own account stands at 81% of where it was a year ago. I guess this means that "market risk" isn't something to be taken lightly.

A year ago my cash reserves represented 21% of the total value, this year I'm showing 6%. So, AIM's brought my account up in Equity/Cash ratio while the market is down. I believe this is exactly what we want to happen. AIM's guided me to be more fully invested now that the overall value of my account has fallen. Sometime in the future, the shares purchased in the decline will be redistributed profitably to rebuild my cash reserves.

I bought some shares of VTSS while selling some more GNSS in the last week. Not much else to report at this time from the Warehouse. Much of my account is in its "Hold Zone" where no AIM trades are occurring.

Watching a little of the business news indicates to me that the market is hungry for any news, good or bad. Good news brings sharp, short rallies where bad news does just about the opposite while the market continues to trade in a range. For investors the WALL OF WORRY is a tall and difficult one to climb. For AIM, each time we can trip a Sell Order, we drive another sturdy piton into the wall. It's going to take time to make it back to new heights. But, we'll have the security line of a substantial cash reserve when we get there. That line is tied off at each sale's spike in the wall along the way.

While trying to contain all costs here at the Warehouse during these trying times, I decided to cut down on telephone expenses. This meant selling off all shares of WorldCom (WCOM) and its new tracking stock MCI (MCIT). I've not had a trade in WCOM since February and just decided the money could be used in some better fashion. I'll let everyone know where the dollars go if I add something new to the account. The fact that I've sold out will no doubt have the usual effect of sending the stock price to the moon over the next three weeks just to prove I know nothing about market timing!

Robert Gammon has kindly been reproducing tapes of that meeting and making them available for a price of $10 ea. including shipping and handling. Several AIM users gave presentations. If you are interested in this 5.5 Hour long video, please send Mr. Gammon an email. It's rare to have this much information available at such a reasonable price.

REPORT - WEEK OF 06/11/2001: Last week's efforts saw the DOW stay nearly unchanged while the NASDAQ made a small gain. Both the Advances of the NYSE and NASDAQ out stripped their Declines for the week. New Highs beat New Lows. So, was it all just too much good news all at once? I can't think of any logical explanation of this week's activity so far.

At least the Idiot Wave seems to understand. It reduced our view of the market risk nicely las week and shows signs that there might be some continuing risk reduction in the near future. Of the four components, not a single one is showing Bearish sentiment right at the moment. Two are neutral and two are bullish. As low as my Cash Reserves are it's nice that we're not facing a High Risk event! Please remember that Average Risk doesn't mean NO RISK, however.

Activity slowed at the Warehouse last week with just a few trades:

We continue to offer fair prices for our inventory and advertize the prices via our broker networks. Given time I'm sure order levels will pick up. The SALES Dept. assures me they are doing everything they can.

When you think about it, placing Good 'til Cancelled Sell orders on your inventory at a Limit Price is much like what folks are doing on Ebay with all sorts of things. My limit price is similar to the "reserve" price they set. The time people have to come to me to buy isn't limited, however. But there's only so much inventory available at a specific price. If demand rises and my supply falls, my prices go up.

This week Cognex (CGNX) has been knocked off Value Line's Highest Growth Stocks list but not my PIC List of potential AIM candidates. (Note: I own CGNX in my personal account and have since May of 1996. See my most recent CGNX/AIM history, last three years.) It's Timeliness rating has risen to be less attractive than it was. However, waiting in the wings are some new possibilities. They're currently rated a Timeliness of #4, so don't quite make the grade but we're keeping a close eye on them. Alliance Capital (AC), Claire Stores (CLE), Legg Mason (LM), Merrill Lynch (MER), Raymond James Financial (RJF), Schering Plough (SGP) and Tellabs (TLAB) are all near the qualifying mark of historical and projected high growth while being quite out of favor. A drop to #5 Timeliness will clinch their position in my History of Perverse Investment Candidates! It's not too early to start studying these stocks.

Here's the first of the photos taken at AIM 2001 this May.
More should be coming along soon. In the mean time, Robert Gammon has kindly been reproducing tapes of that meeting and making them available for a price of $10 ea. including shipping and handling. Several AIM users gave presentations. If you are interested in this 5.5 Hour long video, please send Mr. Gammon an email. It's rare to have this much information available at such a reasonable price.

REPORT - WEEK OF 06/04/2001: May closed out pretty well for V.I.E.W. with the Cash Reserves rising nicely and the overall account back up as well.

Although not nearly enough Cash is on hand to add true comfort to this AIM user, it is nice to see it slowly increasing. As I've mentioned before, the interest on the cash reserves is part of my monthly income. So, in April, my income was as low as it's been in quite some time. Luckily the cash isn't the only source of income I have. My bond funds make up the base, so actually the interest on the Cash Reserve is the premium income. I don't starve when there's no cash reserves, but peanut butter sandwiches are more common in the diet!

The good news is that even though the market's pace has slowed a bit, V.I.E.W.'s sales force has been very busy.

I didn't get a chance to calculate the LIFO gains this week. However, all trades were profitable as usual.

The PIC list of potential investments has been formalized this week with a new web page here at the AIM Users Home page. The Perverse Investment Candidates, although a new AIM hypothetical portfolio is showing great promise. It's currently up 9% for the Year To Date. I hope some AIMers will benefit from this contrary method of stock selection.

I enjoyed having the chance to describe AIM, Twinvest and Value Line Stock Selection ideas with a new Investment Club in S.E. Wisconsin. Much of what I presented is similar to what I talked about at the AIM 2001 Meetings in May. Robert Gammon has kindly been reproducing tapes of that meeting and making them available for a price of $10 ea. including shipping and handling. Several AIM users gave presentations. If you are interested in this 5.5 Hour long video, please send Mr. Gammon an email.

REPORT - WEEK OF 05/28/2001: Before you all write me, yes, I've done some "revisionist history" on the Idiot Wave. Last year when the 52 Week Treasury was pretty much dead ended, I was left with the choice of either switching to the 13 week or the 30 year bond. I, at the time chose the 30 year and went back and revised much of the earlier data.

Well, it didn't satisfy me. So, I've now gone back to 1996 and changed all the interest rate data to the 13 week Treasury info. It's a much better measure and more in line with what I originally intended. However, this has shifted the whole Idiot Wave data base. This means going back and editing all the previous newsletters in the archives! This isn't going to be done overnight! So, be warned that the data is going to look a bit peculiar and the IW is now slightly different from what you've been seeing in recent weeks. I've updated all the component graphs as I did this project. Here's what they look like now:

Here's the report from the Sales and Purchasing Departments:

I improved the Value Line stock selection page to be more readable. This will now be a permenant exhibit here at the web site. I've created a link to it from the home page for future reference.

The market continues to be tricky. AIM's been very active attempting to regain some of our Cash Reserves for the Warehouse. Should the market continue in a tradable range, 2001 may yet turn out to be a good year.

REPORT - WEEK OF 05/21/2001: I officially declare the AIM 2001 Meeting a success! Good presentations by a variety of speakers ranged from AIM improving "The Efficient Frontier" to some basic accounting for AIM. The presenters were well prepared and the audience received the material well. The Money Show received somewhat mixed reviews. Some took in lots of talks and felt having to endure a bit of sales pitch was offset by some very good information. Some felt it was too much sales pitch even when the talks were free.

Mark Hing was kind enough to act as our Stenographer while the meetings were going on. Here's some links to the digests of the papers.

Robert Gammon took his personal time to create a video of essentially all of the meeting. There you will be able to see the slides and Entertainment that went along with the presentations. RG has kindly offered to duplicate his tapes for distribution. Please contact Robert Gammon for further details.

Various awards were handed out during the AIM Meeting.
Mark Hing received "Most Prolific Poster" for his efforts on Silicon Investor.
Rajan Ramchandani received the "Longest Distance Travelled" award for coming all the way from Singapore!
Rob Hansen received the "JZ Galt Excellence Award" for his biting the bullet last year and consolidating his portfolio into his most likely winners.
Keith Felkins received this year's "Lichello Award" for returning to AIMing nearer "by the book."
However, the "Coveted Strewie Award" nominations are still open! You still have a chance to win this year's award. Please submit your Strewie candidate to me via Email and we'll compile the results. Keith, your award will be in the mail today.

It was a good thing that I left AIM in charge of the Warehouse while I was gone. As usual AIM did a marvelous job of inventory control and sales. The list is quite lengthy and is a bit more diverse than recent weeks. Here's what was hot at VIEW during the last two weeks:

It's been a VERY LONG TIME since I've had a string of sales that long and that well diversified. Veale's Savings and Loan appreciates the new deposits and Veale Intl. Equity Warehouse appreciates the business. Inventory that's been cluttering up the Warehouse for over a year is suddenly in demand. Good thing I had some on hand at the right price for those weary shoppers.

Since none of us is prescient enough to see the future, let's make sure we follow AIM's advice when it suggests we let some of our precious inventory go. There's folks out there who NEED it and are willing to pay us a nice premium over our last purchases. At VIEW we try hard not to turn customers away.

REPORT - WEEK OF 05/14/2001: Something unique happened this week with my Speculation index. PurchasePro.com was the Worst Performer in Value Line this week while Priceline.com was the Best! Dueling DotComs! One is up 162% while the other is off almost 85%! Well, I guess if you held both 13 weeks ago, it would be just about a wash!

The Idiot Wave Components moved around a bit this week, but the net result was that the Idiot Wave itself stayed the same. Both the Dow and the Nasdaq fell slightly last week while 364 New Highs showed up on the NYSE and 324 on the Nasdaq. Only 48 new NYSE lows and 58 new Nasdaq lows for the week. This is generally a bullish sign that all the investors (lemmings?) are moving in harmony.

I received this nice Postcard last week. It describes how I feel most of the time:

Well, Keith Felkins (LemonHead) decided to help his son learn to use a new pair of special 'skate shoes' called "Heelys."
Here's the new Adv. that Heelys is now using at their web site.
The image was made just moments before Keith broke his ankle!

I leave this afternoon for sunny Las Vegas for the AIM 2001 meetings and The Money Show. I hope to see many of you there. I'll have a supply of the special (politically incorrect) Limited Edition AIM Lapel Pins with me.

Just the thing for letting people know how you feel about investing!

I'll attempt to give you all a report next week on how the meetings went. I'll ask someone to report into the Bulletin Board on S.I. periodically as well.

REPORT - WEEK OF 05/07/2001: This is the fourth week of nice low Speculation readings coming from my Best/Worst index. It's always a healthy sign, even if it's not dipped to true Low Risk territory, I like it when it comes down and stays there for a while. Compared to just a short while ago, there's now only two stocks on the Best Performers list showing 100% gain in the last quarter where we were seeing ten to fifteen before. It now takes about 42% gain to get on the Best Performers list while a drop of over 65% is required to get a stock listed on the Worst Performers.

Divergence has also dropped nicely. On the NASDAQ, last week there were 327 New Highs and only 91 New Lows. The NYSE shows similar findings with 322 New Highs and just 50 New Lows. I guess we could expect the Speculation Index to start back up soon with those Divergence readings.

However, when it gets right down to it, Mr. Lichello's AIM doesn't really care about any of those statistics. He was much more concerned with profitable activity than data footnotes to history. Here's what Mr. Lichello would be asking about:

Although these orders are only small portions of their individual holdings and even smaller parts of my overall account, the cumulative effect on my account is starting to show. The account advanced another 3.7% for the week just past and added some nice pocket change to the Cash Reserve. I'm letting AIM have its head in selling as often as we cross a new Sell threshold. With my overall Cash pile very small, it's no time to quibble! At the same time, I've been keeping my SAFE ranges heavily biased towards disbursement and not accumulation. I plan on keeping it that way until my cash reserves have recovered somewhat. It was in March of 2000 that I made this major change because of the Idiot Wave's High Risk signal and have left it essentially unchanged since.

For those of you heading to Las Vegas next week please have a safe journey. I'll be heading out Monday evening and will attempt to get this Newsletter done beforehand. Robert Gammon has kindly offered to prepare video tapes of the AIM 2001 Meetings again this year. I'll have more information on how you can order a copy when I return. I'll also be putting a summary of the talks up here at the web site. I'm looking forward to meeting this year's attendees at Gilley's Saloon at the New Frontier on Tuesday evening at 6PM. I thought about driving the old Jag to Las Vegas, but with fuel prices what they are, I decided to spend the money on air fare! :-) We're at $1.96/gallon (regular) here in Port Washington, WI with threats of up to $3/gal for the summer months.

My P.I.C. List has turned out to be more rapidly changing than I expected. Many of the stocks that were on Value Line's "Highest Growth Stocks" list at the beginning of the year have been removed. Lucky for the method I've chosen, these "delisted" stocks have mostly retired at a profit. The remaining stocks are still showing a nice profit as well. The simple selection format is explained at the Silicon Investor site. I know several people who are AIMing some of the stocks on the list. I hope to start reporting their successes.

REPORT - WEEK OF 04/30/2001: First let's see what has been happening at Veale International Equity Warehouse.

So, not everything in my portfolio is tripping AIM Sells yet, but at least a couple of things are! This positive cash flow is very heartening. I hope your portfolios are also improving as well. What's really pleasant is seeing the overall portfolio go up a solid 25% in just the month of April. Here's what it looks like:

Even with a solid April performance, the account still shows a 4% loss year to date. That is not unfavorable compared to the 16% loss for the NASDAQ YTD. I'm not exactly satisfied as of yet, but things are looking up. I continue to keep full canvas up on the Good Ship AIM to catch any wind blowing my way. Here's hoping the Sails turn into more Sales!

Again this year we're tying our AIM meeting to THE MONEY SHOW (May 14-17, 2001). Our meetings will take place on May 16th and 17th.
Note: Costs for the AIM 2001 meeting will be divided between attendees. It is expected to be less than $50 per person.

Those of you who attend the AIM 2001 Meeting in Las Vegas in May will be treated to talks by

Starting at 6:00 PM I'll be in Gilley's Saloon at The New Frontier to meet and greet all AIMers who wish to attend. This is a "Get Acquainted" cocktail hour so those of you who've not yet met will have a chance before the meetings begin in earnest. Food is available.

AIM 2001 Meeting starts at 1:30 PM sharp at The New Frontier. Please be prompt. Presentations will last until 4:30 PM.

5:00 PM - You are all invited to attend our AIM dinner which this year will be held in the VooDoo Cafe' & Lounge starting with cocktails at 5:00 PM on the evening of the 16th. We'll be seated for dinner at exactly 5:30 PM. The VooDoo Cafe' is on the 50th floor of the RIO hotel and offers a spectacular view of the entire Las Vegas area. Please join us for cocktails, dinner and special awards that evening including the coveted STREWIE AWARD!

Dress code for Dinner is "business casual" so I guess that means no bib overalls and undershirts! Seriously, they did say no tee shirts, but said that coat and tie were not necessary. I'll be posting the menu and prices soon, so please check back at the AIM 2001 page.

REPORT - WEEKS OF 04/16/2001 and 04/23/2001: A week's vacation seemed to do some good for both the Stock Market and me! It's always interesting to set a bunch of Good Until Cancelled Limit Orders for stock transactions and head out of town for vacation. I have to tell you that I'm pleasantly surprised by the results. It's not that a lot of trades took place, but that the total inventory at V.I.E.W. improved in value while I was away. In fact, the Warehouse's inventory went up in value by a tidy 14.8% since the last Newsletter. What is more important for Operations is that the first trickle of Cash started to come back after running out at the beginning of April. Here's what transpired, almost all AUTOMATICALLY, while I was away:

So, not only did we return some cash to the Savings and Loan division, but we returned it with very handsome profits attached. It's nice to know there's plenty of inventory left should demand increase.

As the Idiot Wave indicates with the last two week's data there's still no LOW RISK event in sight. However, it's good to see the Speculation component drop back to a more neutral stance. We're still dead center in Average Risk range meaning there's still plenty of things that could go either right or wrong! The Idiot Wave is most ambiguous when in the Average Risk range and I'm afraid there's not much we can do about that. It does provide a nice target for us regarding our Cash Reserves, however. I think most AIM users would be very pleased to have a market that would let them sell profitably all the way to the IW's suggested Cash Reserve levels.

It's not too late to sign up for the AIM 2001 Meeting. I was wearing my AIM 2000 shirt while on vacation. I remember last year people would look at the shirt and be just a bit envious, knowing that the shirt symbolized investing in the Stock Market. This year people looked at it and gave me a sympathetic nod of the head, thinking of me as one would a wounded veteran of some far-off war! What a change in attitude in a year's time! I wonder what next year's attitude will be.

I'm keeping my GTC Sell orders all up to date. Knowing that every sale will be profitable gives me confidence to let AIM sell as often as it would like. I'm still keeping a very tight leash on the Purchasing Department, however. I have NO open orders to buy any stock at this time. Until my Cash Reserves recover sufficiently buying will be done only on a selective basis.

REPORT - WEEK OF 04/09/2001: Trim Tabs showed a negative $11 Billion for Mutual Funds last week. Compare that to the -$30 Billion for the entire month of March and it becomes a very impressive number. Maybe it's a sign that people were finally getting scared about the condition of the market. Add to that concern the natural defensive posture that most people take with their investments when an international incident takes place, and it might just have flushed out some of the excess speculation that has plagued my Idiot Wave for so long.

As shown above, my Speculation component did drop down nicely from the previous week even if it's still in the Bearish zone. Value Line's data will probably reflect more of that sell-off last week in the coming week's data. The Tuesday Rally this week took many by surprise. Fear suddenly was being replaced by cautious optimism. By day's end, it was possibly the people with SHORT positions that started to fear what was going on. Again last week there were thirteen stocks in Value Line that showed gains of more than 100% during the previous quarter. However, the overall gains weren't quite as generous as a week earlier.

Two new stocks were added to my Perverse Investment Candidates (PIC) list this week. SCH and CSC joined in the celebration of being listed #5, Lowest, for timeliness in Value Line. Since these stocks are well off their previous highs, chances are the down-side risk is not too bad. Since starting the PIC list with data from January 1st of this year, it's currently showing a 3.5% gain as of 04/11/2001. That is better than any of the major indexes for Year To Date gains. The idea of the list is to easily screen for out of favor stocks that have proven long term growth histories. Please study the Candidates before you invest!

Those of you who attend the AIM 2001 Meeting in Las Vegas in May will be treated to talks by

I want to welcome a new AIM Newsletter Reader from Andorra! Yet another Country added to our list. It shows just how far and wide the Internet and World Wide Web are now connected. There must have been lots of readers of Mr. Lichello's book over the years. This month the list of "hits" at the web site had lots of "Search Strings" with the name Lichello, AIM, etc. included. I'm glad for two things; 1) that new potential AIMers are finding their way to the site and, 2) that current market conditions have prompted inactive readers of Mr. Lichello's book to renew their interest in AIM.

It won't take too many postings on the AIM Users Bulletin Board or on the various stock BBs about profitable AIM Sales to start attracting attention. For instance, this week I've had two sales, the first two in quite a while. AIM had me do the following:

REPORT - WEEK OF 04/02/2001: My imagination isn't good enough to come up with what it's going to take to finally get a low risk reading from the IDIOT WAVE! However, by looking at the components we can see that there's still way too much speculative money still available and active in the general market. Thirteen of the forty one Best Performers in Value Line (Page 39 of the Index) are currently showing gains of over 100% with two of them showing better that 200% in the last quarter. I don't know how many of you had that sort of gain, but I didn't! It takes a gain of 65% just to make the list. We need to see the Best Performer's list with nothing higher than 100% gain for the best and the threshold for being on the list to be 35% to 40%. We can also see that Relative Valuation still needs to fall about a point to get us to a Bullish reading. If those two things were to happen, then I think we could convince Divergence to also go back to a Bullish stance. So, we need a combination of P/E and Interest rates dropping, everyone running scared and withdrawing their speculative money and everyone convinced that the world is coming to an end. So far the Idiot Wave has been right. There's been no capitulation so far.

The market on Tuesday this week looked like we might get there sooner than later! The NASDAQ 100 Index only had two stocks up and 98 down for the day. However, it's going to take more than just one day of that sort of thing to flush out the speculative urge of investors, apparently. Part of this is the massive cash inflow through Dollar Cost Averaging retirement plans like the U.S. 401K plan. Most people haven't yet changed their allocations in their retirement savings, so those dollars are still flowing into company stocks and mutual funds. Without that support, I think the markets would look even worse.

Even so, about $30 Billion of cash was the net outflow from mutual funds during March. The site at Trim Tabs will give you a weekly report on such things. This is a huge net redemption for the month. It does show that some are getting seriously worried. That is the sort of thing we need to bring an end to the Bear Market.

Recently I've added shares of JBL at $20.93, QQQ at $38.38, GNSS at $9.50, SWZ at $12.25, GER at $8.60, BMY at $58.72, APCC at $12.50, ADCT at $7.88, and VTSS at $24.50. I'm now all finished as this graph shows.

So, I've done the Buying side of AIM. Now I'll have to wait to do some of the Selling side. I don't like the fact that my cash reserves are now exhausted while the Idiot Wave is still suggesting Average Risk and significant reserves. It makes it feel that AIM and I spent the money too soon. However, the reality is that my reserves were spent according to plan, but were inadequate for the task apparently! That task was to be able to buy shares even on some stocks that have now fallen to just 25% of where AIM last sold some shares.

AIM was designed to handle quick drops of up to 60% and slow drops of about 50% without running out of cash (assuming we started with 50% at the peak). However, long drawn out drops of 70% or more is too much for AIM starting with 50% cash. A rule of thumb is that the percentage of cash is about equal to the drop AIM can tolerate and still be buying (assuming standard AIM settings). So, if you were fortunate enough to have 85% cash at the peak in your VTSS account, you would most likely have been able to buy some shares today at about $15 ($105 was its former high!). You would just have run out of cash.

What is painful to me is that I know there are probably people now switching their 401K contributions to Money Market Funds and Bonds because they've taken such a beating in recent times. Of course if you think about it, in a Dollar Cost Averaging effort like these retirement plans are, this is exactly the time to be contributing the most to equities. These people can probably buy anywhere from 25% to 50% more shares of their favorite growth stock fund with the same contribution than a year ago. Yet a year ago they were content to be piling all their chips on the Equity block in their game of Market Roulette. The same problem with market psychology that kept them from becoming conservative when the market was over-cooked last year is what will drive them to into a conservative stance now that the market has dropped so far.

I wish my Idiot Wave was telling us that the end of the Bear Market was in sight. Unfortunately it isn't. It will be proved right or wrong about this sometime in the future. Not every market rally in the past needed the Idiot Wave's confirmation of "Low Risk." Many have started from the Average Risk portion of the IW's range. It's always been nice to have the coincidence of low risk readings from the IW to confirm a bottom, however. I'm ready to perform AIM Sells as soon as any of my equities pop up a bit. The minimum orders are all in place and waiting.

REPORT - WEEK OF 03/26/2001: Maybe the market is suffering from Data Overload! It seems like any statistic that happens along the way gets immediate attention and drives the market for the moment. The next bit of information will be greeted with the same enthusiasm even if the direction reverses polarity! Against this confusing background I post weekly the IDIOT WAVE graphs and data. Note what a cool hand the IW has applied to what has seemed to be complete chaos in recent times.

A year ago in March it signalled the highest risk reading it has ever had, right near the market peak. It gave us a solid average risk signal during the first leg of the decline only to climb back to near the High Risk area once again during the summer. Although it's shown us average risk values for a long time, it's not given us false hope. It's been content with the Average Risk readings week after week while measuring out the influence of each component. Even after the severe Nasdaq correction being compounded with a brief Dow Bear signal it still isn't willing to give us a full Low Risk signal. "What," many of you are saying, "does it take to get the IW to go to Low Risk?"

It's going to require Value Line's P/E ratio to drop another point and a half. It also requires Speculation to cease being a pest and drop nearly 12 points. Further, these things must happen for long enough to encourage the IW's Exponential Moving Average calculations to give us a sum total of less than 30% Cash Reserve suggested for Stocks and 20% for Diversified Mutual Funds.

It does happen! If you place your cursor on the 1998 NASDAQ low late in the year and then, using your arrow keys, scroll down, you'll see that the Idiot Wave gave us a great Low Risk signal at about the same time. If you do the same with the NASDAQ 2000 High you'll find that the Idiot Wave gave us more than adequate warning of the impending collapse. So, I guess for now we're stuck in the Average Risk range with the market churning about looking for some direction. So, as the folks on CNBC throw data around like snowballs in a schoolyard, if it's starting to get to you just come back and take a quick look at the Idiot Wave. I've also updated all the IW Component graphs for your review as well.

My own personal cash reserves aren't any where near what the IW's guidance has been suggesting. My NASDAQ heavy portfolio has sucked up all but a trickle of cash. As of last Friday's close, my reserves stand at just under 9% of total value. Total portfolio profits if I were to liquidate stand at 86% above costs. I have a full grouping of AIM Sell Limit Orders in place ready for any market rally that comes along. Those initial orders are set at my order size minimums.

NASDAQ has a nifty new feature called the NASDAQ-100 HeatMap wherein they show all 100 stocks in the index and where they stand for the day. By stopping your cursor over the map on the stock of your interest, it gives you current quotes on it. "Right Click" on your favorite stock and there's a nice menu of information about that particular company. Since I own both the QQQ Nasdaq 100 Index fund and several individual stocks in the 100 index, this is a nice quick way to glance at the largest cap stocks there.

With only 91 new highs on the NASDAQ in the last year and 841 new lows, it's not too much of a debate about whether the market has turned bearish. Lucky for us, Bears don't usually live as long as Bulls!

REPORT - WEEK OF 03/19/2001: The Tug O' War between the Bulls and the Bears is continuing this week. Mr. Greenspan was pushed into a position that no matter what the FED did, the market was going to dislike it. A half point cut would be "not enough" and a 3/4 point cut would mean that things were "really bad." How can he win with that sort of opposition? So, the discounting of equities continued after the FED rate reduction of 1/2 point. Today, Wednesday, the markets have wandered back and forth across the day's starting point with no clear direction.

I have managed to add to my VTSS position at $34, CHIR at $38-1/2 and BPUR at $15 this week. The additional shares have come into the warehouse at the right prices and will correspondingly bring down the next Sell prices of all three equities in accordance with AIM's usual methods. I have a full array of Sell Limit Orders placed on a Good 'Til Cancelled basis waiting for the market to start a recovery.

I like the NASDAQ Major Indicies Page for a quick and nearly current update on the ebb and flow of the market during trading hours. The histograms of each day's trading are fascinating, even if they don't make me any money!

A division between what market analysts and economists think is developing. The economists are worried, but not ready to say we're in serious trouble yet. The manufacturing sector is in the worst shape of the bunch. Market analysts, on the other hand have only to point to the bloodletting so far on the NASDAQ to show that the world will surely come to an end. Even the Dow 30 index is shedding excess fat in an attempt to catch up with the NASDAQ's anorexia. All the while as stocks are being sold at lower and lower prices, somebody is buying. What was a major surprise to me was to see it takes a 72% gain in just 13 weeks to make the Best Performers list in Value Line. It takes a 52% drop to make it on their Worst list. Old line engineering company, Foster Wheeler, showed a 291.8% gain in just the last 13 weeks! It hit a three year low at the end of December, but I'm not sure it's that much better now. It's landed a couple of nice contracts in China and other places. This week showed 19 of the 41 Worst perfomers being related to the Communications industry either as equipment suppliers, chip makers, ISPs or network companies. This spells OVERSOLD to me along with SECTOR ROTATION. I think it's time to quietly do some serious study of this area and pick what you believe to be the long term viable players for your portfolio. It's very rare we see so many companies related to one industry in the Value Line Worst list. When we have, it's been a clear signal that the sector is over-sold.

Pirsig goes on to say, "The person who responds with the most elaborate lie gets the highest score for sanity. The person who tells the absolute truth does not. Sanity is not truth. Sanity is conformity to what is socially expected. Truth is sometimes in conformity, sometimes not." This relates to believing what we want to believe and ignoring what we don't want to know. This fits well with the idea of investor's denial.

He tells a story about sailing in Lake Erie on a very stormy night. "He had just barely been able to sail to windward off the rocks through the night until he reached a harbor about 20 miles down the coast from Cleveland. When he got there and was safe in the lee of the jetty he went below and grabbed a harbor chart and held it, soaking wet, in the rain, using the spreader lights to read by while he steered past concrete piers, dividing walls, harbor bouys and other markers until he found the yacht basin and tied up at a berth. He had slept exhausted for most of the next day, and when he woke up and went outside it was afternoon. He asked someone how far it was to Cleveland.
"Your in Cleveland," he was told.
He couldn't believe it. The chart told him he was in a harbor MILES from Cleveland."

The sailor had noticed discrepancies between the chart's markers and what he was finding in the night during the storm. However, his mind chose to believe the chart even though it was of the wrong place, because he was convinced it was another harbor. I think many investors were caught in a similar storm a year ago as the NASDAQ stocks soared. They were starting to believe all the charts they were seeing. However, it turned out they were in the wrong port!

Now again this year, I believe possibly there is another grave error taking shape. Just as sure of the course they were on a year ago, investors seem to be sure of the course of the markets today. A friend points out the discrepancy between what Economists and Market Analysts are saying. Again, if the skipper reads the wrong chart there could be a shipwreck in the near future.

For AIM investors, there's quite a difference between riding out a storm at anchor and ending up on the rocks. As AIM hauls in its sales and puts out a sea anchor, it appears many other investors are abandoning their ships. These others were either ill prepared or ill advised. AIM seems to be carrying way too big an anchor when seas are fair but it's what saves it during the worst of storms.

During the last week I've been busy in the Warehouse. Here's the results:

A peculiar mix of trades, indeed! However, it's given me something to do. I noted this week that the Worst Performers list in Value Line now contains some names of tech stocks that were very popular just a year ago. There's enough names there for me to declare that the sector is now reaching "Over-Sold" condition. For those looking to do some shopping, this is usually a good time.

As you can see from these two graphs, my Spending days are pretty much over. It will take a rally substantial enough to get AIM to do some selling before I do much more buying. In the mean time I've read that money market funds and other non-stock investments are collecting quite a bit of money which used to go to stocks and equity funds. If and when that money starts to move, my heavily burdened inventory should start to sell again.

The Idiot Wave still hasn't given us a clear Low Risk Signal. I am beginning to wonder if it ever will. As you can see, my accounts are way below what the IW would suggest we have for cash on hand for new or existing accounts. AIM knows how to sell at the right price. Now it's just a matter of patience.

For VIEW to be able to buy shares of our favorite inventory items, someone must be willing to sell them at a price we feel is appropriate. Conversely, when VIEW is reducing inventory, there must be someone out there who's willing to buy our products at the prices we set.

This got me thinking about who it was selling me shares during the last couple of weeks. I remember last July selling some shares of ADCT at $42+ (and so does my Uncle Sam, btw) and at the time I though about who my customer was. Since I purchased shares of ADCT last week at $11-1/8, it looked to be a significant discount to last summer's price. Could my former Customer now have turned into my latest Supplier? As recently as last September, someone begged me to sell them some shares of JBL at $65+ and last week I added some shares to inventory at $21.60. Again, do you think it was the same person? AIM assures me that we offer equal opportunity to all our buyers and sellers. At the time of sale we receive very high "Customer Satisfaction" ratings. Also, those who sell to us consider VIEW one of their better accounts.

Interesting!

In Lake Michigan our commercial fishermen use what's termed a Gill Net to catch Whitefish and other fresh water treats. It's a relatively passive method of fishing compared to your average bass fisherman. The Gill Net is suspended via floats at the proper depth for a period of time and then hauled in. The Fish swim into the net in the deep waters off-shore here in Port Washington, WI and get caught. They're too big to get through the net and their gills keep them from backing out. I find this much like VIEW's use of "Good 'til Cancelled" Limit Orders. They act like a Gill Net. Should the Fish swim into my net, I'll catch the ones that fit my net openings while others will swim through or past the net.

Well, my hooks are baited, my lines are set and my nets are placed.

Now, let's sit back and relax while we wait for the little fishies!

We have again been reminded that the Idiot Wave reading of 40% Cash Reserve - the midpoint of the Average Risk Range - does not mean NO RISK. There are reasons why the market could go up, down or sideways right now and for some months to come. The Idiot Wave is expressing reasonable caution. My own account is essentially fully invested again after February so any rally substantial enough to trip any of my GTC Limit orders will be much appreciated!

Well, has it finally happened? Have those who short the markets made all they want and will now cover? Will the NASDAQ Composite break down under 2000 and free fall? I just wish Forrest Gump was around to answer all these questions! With as much known about the feel and pattern of the end of Bear markets, you'd think that "capitulation" would be a thing of the past. However, as Forrest told us, "Stupid is as stupid does!"

For me, February was nasty. It basically erased the nice 10+% advance I made in January. It also reduced my Cash Reserves to being very close to fully invested. But BOY, do I ever have plenty of Inventory! The shelves are sagging under the weight of all the certificates! Last week's Idiot Wave components seem to have stopped it from rising as quickly as it had. Maybe once we've compiled the current week's numbers it will actually fall off again. As you know, we've still not seen the Idiot Wave drop to a Low Risk reading even with the massive sell-off in the NASDAQ. The Idiot Wave looks at a broader section of the market than just the NASDAQ, however, so maybe that's why it's not yet made it below 30. If you look at the graph, you'll see that it dipped briefly into the Low Risk area in 1998 and we had a magnificent rally thereafter. Is it too soon to hope for something similar?

As bad as it's been, I find my account is still about 50% ahead of where it was at the beginning of 1999 and about break-even with the beginning of both 2000 and 2001. So I guess things could be worse. The cost of my inventory is just about half of the current value, so if I sold out everything I'd average a 100% gain at this point. This is because of the very long time that I usually hold my investments. It would be difficult to give back such gains.

There are those who this week thought that the sun might not ever rise again. Well, I wanted to show you all that it can!

I sold some shares of Sungard Data recently, but that's been the only sale I've had in the last few weeks. I've bought more shares of QQQ, VTSS, TWE, NERX, VFINX, TWNOX, JBL, ADCT and WCOM all within the last 10 days. AIM has been begging me to spend more, but with reserves near their lows, I've been buying in the stocks that I feel have the best possibility to recover most quickly.

Particularly disturbing are that Speculation is Bearish at the same time our Relative Valuation is also. For several weeks I've been discussing the eroding earnings forcing up the Value Line P/E. The interest rate for the 30 year Treasury hasn't fallen fast enough to compensate. Couple this with a sector rotation mentality that keeps some stocks showing 200+% gains over the most recent 13 weeks and we have a double bit of short term bad news. Add to that some market confusion as measured by Divergence. Remember that the sum of the Idiot Wave value and the Oscillator show where the value would be if no moving averages were part of the calculation. A reading of "46" is still in our "Average Risk" area, but the trend isn't good.

I can see the problems materializing in another more pragmatic way. Much of the AIM pressure to sell shares has evaporated again. Although most of my AIM holdings are a long way from starting to buy again, I still would prefer to be selling. I've left most of my holdings set with very high Buy and very low Sell Resistance (SAFE) values to conserve cash and promote distribution of inventory. These settings have remained nearly unchanged for the last year.

PacifiCare Health showed its vigor during the last thirteen weeks with a body building 226.8% gain. This is while VerticalNet had done a Bungie Jump with no apparent tether, falling 82.2% in the same period. There's better balance on the Best and Worst Performers lists in Value Line with the rest of the 80 stocks shown. It takes a 55% gain to make the Best list and a 50% Loss to grace the Worst list.

Intel (INTC) has been dropped to a "5" Timeliness rating by Value Line. It remains on their "Highest Growth Stocks" list (page 39 of the Index) even so. I've started compiling the stocks that are simultaneously on this list and have dropped to VL's lowest Timeliness level of 5. This pseudo portfolio was started at the beginning of this year. As other stocks' ratings appear as Timeliness 5, I'll add them to the list at the price shown that week. It's interesting to see how this contrary selection process is going. So far with the stocks listed this year there's about a 16% gain. You can look at what I'm calling the Perverse Investment Candidates or PICs at SILICON INVESTOR, the host of our AIM Users Bulletin Board. In case you have insomnia, there's nearly 15,000 AIM related posts at the AIM BB for you to digest. My PIC portfolio isn't meant to be something arbitrary for selecting stocks for your own portfolio, but as a list for study and consideration. The companies listed have shown ten years of growth in Sales, Cash Flow, Earnings, Dividends and Book Value averaging 13% for the period and are expected to keep this minimum pace up for the coming 3-5 year period. With 100 stocks on the list from at least a dozen sectors, I've chosen to single out the ones currently "out of favor" as measured by Value Line's "Timeliness" measure. Please let me know what you think of my new list. (I may from time to time own some of these same stocks)

We have chosen The New Frontier as the site for the AIM 2001 Meetings. They will be holding a block of rooms at $45/night (plus a sizable tax), double occupancy for us. They also have "Atrium Suites" available at $65/night+tax. These are week-day rates and won't apply if you stay into the weekend. As we get a sum of meeting room rates, equipment rentals, food and beverage expenses we will post the total. It is expected that everyone attending will share these expenses. No profits, but also nobody left holding an unexpected expense. The more of you that attend, the lower the "average" cost will be!

People seeking good growth over the last quarter should have purchased Conseco, Inc. for a 147.8% profit while VerticalNet proved good to its name with a near vertical drop of 81.4% over the same period. It takes a 56% rise on a stock's price to get it listed in Value Line's Best Performers while a drop of 46% will put you in the corner with a dunce cap with 40 other of the Worst Performers.

This week I bought some more ADC Telecommunications (ADCT), Vanguard Technology Fund (FTCHX), and sold some Genesis Semiconductor (GNSS). My Cash Reserve is holding at about 12% overall and it appears that I'm "exchanging" almost evenly between buys and sells these days. While the NASDAQ gave back about 7% a week ago, my account held steady. This is a good sign for Veale International! It wasn't the way I would have chosen to break ahead of the NASDAQ, but I'll take it any way it comes.

Please keep close tabs on your own inventory and make sure none sits idle if there's demand by customers. This isn't a time to be greedy, just good warehouse supervisors!

Keith Felkins has been putting in overtime to get our Las Vegas AIM 2001 Meeting settled. I'll have more details here as soon as available. We've been looking for the most reasonable rates along with good access to the "STRIP" and good conference facilities. I think we're getting very close. Dates are set as May 15th, Social Hour and Get Acquainted Session (evening); May 16th, half day afternoon meeting; May 17th, morning meeting with afternoon for roundtable discussions.

I'm in the process of lining up our speakers and getting their topic. I'll list these as soon as I can.

Please note that I will be available at the aim_users voice (and type) chat room tomorrow, Friday, Feb. 16th from 1PM Central Standard time until 5PM. Please stop by if you are in the mood.

I regret bringing sad news to the AIM Users, but I've learned Robert Lichello passed away last Thursday, February 1, 2001 after illness caused by cancer. Inventor of the Automatic Investment Management method Mr. Lichello first published the formulae in 1977. Born September 12th, 1926, he authored several books on investing, history and biographical subjects during his 74 years.

His AIM book has been constantly reprinted since it first appeared 24 years ago. His work has been inspiration to an entire generation of investors. It has been the advent of personal computing which has made AIM easier to use and the internet as a method for users to share their experience that has popularized AIM with thousands of new and experienced investors.
T.M.V.

My Speculation measure is slowly creeping back up towards the Bearish end of its range as well. Pacificare Health is showing a 13 week gain of 152% giving its investors a nice infusion of Net Worth. At the same time, Rent Way has been going the Wrong Way with a decline of over 79% during the same period. It now takes a gain of over 57% to make Value Line's "Best Performers" list while a decline of 42% gets one named to the "Worst Performers" list. As you will note by these percentages, there is a return of mild speculation to the market from the lows seen a month earlier.

After noticing changes in the number of issues on the NYSE and the NASDAQ many years ago, I started to measure the rate of change. I call this measure my ZEAL! component. It might not seem as exciting as some of my other measures, but it is interesting to note that just since 1998, the total number of issues traded on those two exchanges has declined by nearly 1200! We now have about 8300 issues from which to choose where in '98 there were about 9500 stocks available. This can be considered a long term bullish sign. Less Supply being courted by plenty of cash Demand. At this point it's hard to determine if our markets would have been worse without the decline or if it is indicative of better markets to come. We're keeping our eye on this.

Please note that I've updated the graphs showing my accounts' history for your review. January was a good month for the taxable account while my IRA is lagging behind. Please also note just how low the Cash Reserves were a month ago.

The votes are in and counted, dimpled, hanging and pregnant chads included. We'll be heading to Las Vegas for the AIM 2001 meeting. Keith Felkins has gathered information on the hotel and conference room. In the next couple of days I'll be posting the basics on the AIM 2001 Meeting for your review. We'll again be tying our event to The Money Show conferences.

Again during the last week AIM has guided our Sales and Shipping Departments to keep active. Here are the most recent shipments:

So, again V.I.E.W. had a solid positive cash flow for the week. I hope that your warehouse is doing similar things. It was such a long time since we've had the opportunity to do some serious selling that I thought I'd forgotten how! This new cash is a welcome cushion for the business. It's why V.I.E.W. had a "Soft Landing" in 2000. Not only is it pleasant to see this change of events, but to see the inventory turn over at such generous profits is exhilarating. Thank you Mr. Lichello!

We've been attempting to get some momentum up for the AIM 2001 Meeting. It would appear that there are two choices for destinations; Las Vegas and Wisconsin. Below are links to the descriptions of both destinations.

Dates will be early May for Wisconsin or mid-May for Las Vegas. No matter where we end up for the meetings, we plan on having a full session for all attendees. The agenda will be described in the next few weeks as we get a bit deeper into the planning. Our meetings are planned as two half day sessions. I'm thinking that they might be afternoon meetings. That would leave our mornings for break-out sessions if we decide to have some. This year we also plan on having a "round table" discussion with all speakers fielding a Question and Answer session. Remember, this meeting is planned for all AIM users, whether new to the system or an accomplished AIM marksman!

So, I need your votes as soon as possible on your choice of the destination. If you prefer Las Vegas, NV or Elkhart Lake, WI please let me know. Please indicate your preference by E-MAIL. If you have no preference, I'd still like to hear from you.

With all the hand wringing going on with Wall Street participants and guests on CNBC, I'm certain that AIM will be kept busy over the next few months. In the first week of January, I showed you that my Speculation component of the Idiot Wave had gone to Bullish status. It was only a brief, one week signal. However, as the chart showed, we generally have a very good few months afterwards. So far, so good!

Cash Reserve is now back to about 12% of total value, up from just under 10% two weeks ago. Portfolio value is up about 11% in the last two weeks. All in all quite satisfying.

This week in Value Line I noticed that 6 of the 41 Best Performers in the last quarter are Common Carrier Trucking Companies. This tells me that this sector of the economy is probably overbought a bit. I hope if you own some of these stocks (ranging from M.S. Carriers, up 162.7% to Yellow Freight, up 49.5%) that AIM's been advising you to lighten up your load and kick in the Jake Brake!

Ahead of the next FED meeting I hope all AIMers are starting to see some profits and a rebuilding of their cash reserves. I don't know what the FED will do, but I know AIM will know what to do afterwards!

Note this week that the Value Line P/E ratio again climbed. We're now at a point where we're nearing the "bearish" area of Relative Valuation. Please note that the P/E isn't rising because of a rising stock market but because we're seeing some declining earnings with prices steady. Any way it happens, it's not a healthy move for the markets. We'll have to see if the FED's next interest rate adjustment helps the Relative Valuation stay in the "neutral" range.

While away and since returning to work, the Warehouse has been busy satisfying a return of demand for our inventory. Here's what's been the hot items in the last week:

With Warehouse walls bursting at the seams, this inventory reduction has helped clear some of the isles and passageways. It also indicates that the inventory value at V.I.E.W. rose nicely for the week. Roughly a 10% increase in inventory value in just one week. Current status is 90% inventory, 10% cash reserves.

It's nice to finally have some positive cash flow at the warehouse. I have to hand it to the folks in sales and shipping for getting all this nice work done for me while I was sampling Grouper Wraps and Rum Tonics on the beach. I hope your warehouse has stepped up its shipping schedules as well.

Let's keep a close eye on the IDIOT WAVE over the next few weeks and make sure that this market doesn't get too far ahead of itself in the short term. In the last few months of 2000 we laid a base for a long expansion. Let's hope the speculators spoil it. Please let AIM guide your order placements and help you raise your liquidity as the market recovers.

With an abundance of negative market coverage and a continuing stream of worry over President Elect GWB's cabinet appointments I'd say the markets held up pretty well. For the average investor expecting the typical January Rally it had to be a bit depressing to not see something in double digit Net Worth gains for the first week! It also looked this morning (Monday) like the sad story was going to continue. Most indexes were in negative territory through late afternoon. A strong rally in the last hour returned most of the indexes to near neutral for the close.

With several good AIM software packages being marketed the readership here on the AIM Users Web site continues to grow and become more diverse. When a country reaches 1% of the readership the graph shows it as a distinct section. I'm pleased to see 15 separate countries represented in the first week of the new year.

Last week generated a few buy orders for my account. I bought shares in TWCUX, TWNOX, TWCVX and JBL during the last week. All shares were welcomed into the warehouse's already crowded inventory and stored away for resale at a later date. My warehouse inventory hit a 52 week low for value this last week. Cash Reserve is now at about 10% or total value. Total liquidation profit would give me a gain of 95% currently.

This last week started something unique. I participated in an AIM teleconference and also in an AIM Chat Session. The teleconference was conducted by AIM users in Arkansas while the Chat Session was hosted by Automatic Investor one of our AIM software providers. Both sessions were productive. I even got my computer working with a headset (earphones and mic) and "talked" to a couple of AIM users. Several AIMers are now using AOL's Instant Message software - a freebie which can be downloaded from their site. We hope to be able to do more of this sort of thing in the future.

I hope you all enjoyed the year end report last week. I had fun reviewing the year in that format. You may have noted that I've added an NEWSLETTER ARCHIVE here at the AIM Users site. Essentially all the newsletters written since 1997 are collected there for your review/amusement! These are big files, so be patient when accessing these pages. I've created links so that you can click on the month and year in which you have interest and then "read backwards" through that month.

I've not taken the time to summarize all the recent trades, but sold a bit of TX, bought some CSTGX, VTSS and ADCT. I also ended my investment in LU and used the proceeds to buy more ADCT in one account. It is my gut feeling that ADCT will rise faster and maybe further than LU will in the next year. Both have about the same P/E and are in the Telecomm Equipment Manufacturing business.

The Federal Reserve's first rate cut for this portion of the interest rate cycle was received warmly on Wednesday. A half point drop during market trading hours may be unique. The drop will help flatten the Yield Curve. It should also help get the markets to at least stabilize. It's amazing how fast money can flow when something like that happens. I have a full complement of "Good Until Cancelled" Limit Orders placed to sell off portions of my inventory when prices rise. My cash reserves are essentially depleted and so any selling will be a welcome change.

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.