Those diversified mutual funds have had only one or two trades in the last 18 months. My friend's account isn't large enough to convert to Exchange Traded Funds, so we've stayed with those two funds. My own ETF retirement account divided between six industrial sectors and a high yield bond fund have generated nearly two trades a month on average for the 13 months since conversion. So, we've seen as many trades each month as we would have seen in the entire account for a year and a half if we'd stayed with diversified mutual funds. This is exactly why I made the change.

If the pundits turn out to be right for a change, we may see our tech and biotech ETFs stagnate for a while until earnings start to catch up. The money may well rotate to our healthcare, energy and consumer cyclical ETFs. Maybe it will be as simple as watching the money flow from the higher BETA funds to the ones who's value is under 1.0.

In mid-August I suggested we could see the NASDAQ between 1850 and 2050 in 3 to 6 months before we started to stretch reality too far. I'm still comfortable with those levels as the upper end of this portion of the market cycle. As we passed the 1950 mark recently I started to think I'd been too conservative! At the time the NASDAQ Composite had been at about $1700+. Most of those potential gains are already behind us. I'm very happy to have been able to raise cash levels throughout this period. The comfort level it brings is nice to have.

REPORT - WEEK OF 10/27/2003: Recently I mentioned that my Speculation component seemed to remain Bearish for rather long periods of time. When I originally built this data base we'd not seen the long sustained speculative periods we experienced in the '90s. I'd established a range of between zero and 10 on its scale as being Neutral with values below zero being Bullish and above 10 being Bearish. Well, I dug out the data all the way from 1982 to the present and did another bell curve study.

Using 10% of the data at the extremes as the Bullish and Bearish territories I found that I needed to adjust the middle 80% a bit. Now, instead of zero to ten, the Neutral range will be represented by the values from 0 to 20. The change in where the Bearish zone starts doesn't affect the IW itself, but only the reporting of the components.This graph shows the change for recent years.

This week AIM was busy selling some shares of ICA at $1.47 and again at $1.61. We also added more shares of DIGL to inventory at $0.95. It seems strange to have only my lowest priced stocks creating any trades, but that is how it is currently working.

Relative Valuation is still hanging onto a "bullish" rating, but only just so. Zeal and Divergence are still well into their respective bullish zones. However, even with the increase in the size of the Speculation's Neutral Zone, it is now back in its own Bearish territory. It would appear that the more recent trading days have done nothing to abate the rising speculation, so we can expect the I-Wave to show higher risk in the coming weeks.

The higher value of the I-Wave is letting my AIM holdings start selling again after some "vealies" in some accounts. I think this is a great time to keep vigilant with our AIM programs. The tentative economic recovery could make for some rather jumpy markets over the next quarter year or so.

REPORT - WEEK OF 10/20/2003: Our Idiot Wave has continued to remain relatively low in its risk range compared to the late '90s through the 9/11/2001 attack. That doesn't mean the market can't get a bit ahead of itself, but that the down side risk is not that bad. This week we have three of the four IW components rising a bit with only one declining slightly. In essence, not much change from a week ago. However, this week's trade activity has been a bit harsh compared to recent times. The markets have hit the Biotech and Technology sectors rather hard. Biotech is where it's been for several weeks while Technology hit new highs a week ago only to soften up quite a bit this week.

Last week we sold some GNSS and pulled a "vealie" on PRX and IYC as our only activities. The slowdown in AIM directed sales in recent times might be as good an indicator as any of the need for the market to consolidate. Historically we've seen the markets start to ramp up in the latter part of the year. November through January has been a seasonally good time for investors over the years. I guess we'll have to see how October ends before estimating anything into the future.

When this week's data is tucked away next week we'll see if the crystal ball clears a bit.

REPORT - WEEK OF 10/13/2003: Our friend the Idiot Wave just doesn't seem to want to give us anything but good news in recent weeks. It's been below the historical average value of 40 since mid-August. In that time we've seen the NASDAQ Composite rise over 16% and the Dow 30 Industrials rise over 5%. I guess the IW called it right again.

Well, what combination of the IW's components has brought this strength to the markets? First we've seen a long string of weeks where the Relative Valuation has remained historically very bullish. This single indicator has been quite good at following the overall markets' trends.

Next is the Speculation component. I'm inclined to go back through the data base and recalculate where the Bearish range should be. This component seems to spend a remarkable amount of time signaling Bearish warnings. I think I need to see where the 80% middle range comes into play and where the two 10% extremes of data fall. Maybe we've been too pessimistic with it as it is.

If someone were looking for a specific signal that was overtly bullish, one would need to look no further than Fosback's High/Low Logic Index. As applied to the NASDAQ Composite Index, what I call Divergence has been extremely Bullish and consistently so since late April.

Finally my Zeal index shows that the rate of attrition regarding the number of issues available to be traded on the NYSE and NASDAQ is slowing. With just over 3500 issues on each exchange, this is the first time in nearly two decades that they've been equal.

Because of the low, healthy risk profile the Idiot Wave has been signaling I've been able to avoid some "taxing situations." Specifically, I've been able to "pull vealies" instead of following AIM's suggested sales. Conserving shares in a moderate risk, rising market seems to be a nice way of handling things. So, where we've been able to raise adequate cash reserves (equal to the Idiot Wave's suggested levels) we'll extend our risk envelope slightly. Until the cash levels again need a boost the "vealie" will continue to be part of the VIEW M. O.

We recently passed the 10,000 Post mark on Investors Hub. Steve "Grabber" nabbed the award for this post. I'm contemplating just what sort of Secret Decoder to present to him for this dubious effort. Thanks goes out to Steve for his contributions over the years to the process of investing systematically with AIM. With the total AIM posts accumulated on Silicon Investor prior to our move to IHub, we now have a library of over 28,000 posts on the subject. Congratulations Everyone!

REPORT - WEEK OF 10/06/2003: This week has seen a slight increast in the major averages. While the Talking Heads have been keeping the "excitement" going the best they can, in reality we're only back to about where we were in late September. With the markets almost flat for a few weeks, I've only managed to trip two trades. We bought 13% more GENE shares at $2.61 and sold 9% of our GNSS shares at $14.51 for a 32% six week gain. So, those of you who believe in Alphabetical lnvesting, it was a good week for the "G" Stocks.

There were small moves in the individual components of the Idiot Wave, but nothing of note. Three components remain in their Bullish zones while one is mildly Bearish. Year over year comparisons continue to look wonderful since a year ago the major indexes bottomed. Looking back further, one can see a more realistic view. In the last year the NASDAQ rose about 49% but since the post 9/11/2001 attack it's only up about 26%. I won't even remind you of where the NASDAQ was in October of 2000. If you don't know, you're very new to investing!

I was looking at my Technology Fund investment that I started at the very end of 2000. It's gained 72% in the last 12 months but up just 22% in the last 24 months. Even with its gains it's still about 14% below its initial investment value. The account has just recently had its first AIM Sale in 33 months of this investment. That compares to 11 purchases in the account before it finally ran out of cash.

I guess we could summarize the overall portfolio's activity by saying we've come a long way, but we still have a long way to go.

REPORT - WEEK OF 09/29/2003: It's about a full year now since the markets hit their Bear Market Lows. So far those lows have held as being the "bottom." Our Idiot Wave was happy to inform us a year ago of the Low Risk environment in the markets.

Since it was just a year ago when I restructured my Retirement Account, I started that account's investments with the IW's recommended 23% cash in the Stock ETFs but 37% in the Bond Fund since I felt it was near a peak value at the time. All that cash held back the performance of my IRA a bit compared to my taxable account. There had been very little cash reserve left in that account a year ago. So, more of the stock price growth since then was quite directly translated into portfolio growth. It was in December of 2002 that I changed over that portion of my taxable account that was invested in diversified mutual funds to the ETF strategy and allocated cash for them. That also dragged down performance a bit since the first of the year. Overall, it seems to be a solid 12 month's work, however.

At this point the accounts are in good shape for whatever the markets decide to do next. There's cash available if we see a retreat from this point. There's lots more inventory to sell if prices rise. Income from the portfolio continues to be adequate for our needs.

Another shift in the overall structure of my portfolio has occurred in that over the years we've added some income producing property. I've not put this into the graphs as of this point. I'll have to get the information and dates and include them as well. It will make a more complete picture of the VIEW operation.

We might possibly see a brief return to the Low Risk area of the Idiot Wave's range in the next week or two. I don't expect it to stay there long, but still, it won't bother me to see it happen. Some significant price drops in Biotech stocks this last week brought my IBB biotech index fund down to the middle of its Hold Zone. It had dropped about 13% from its high to the low posted on Monday. IBB represents 11.7% of my retirement account after its first year of operation. It started as 10% of the total. It was the best performer of the account showing a gain of 31% including AIM's cash reserves from its starting point a year ago. I have heard there are several new biotech IPOs on the brink of coming public. This may dilute speculation in existing biotech firms' stocks and hold this index in check for a while. I'd love to get the chance to put some of our cash back to work with further weakness in this sector.

As kind as the market has been to us in the last 12 months, let's not let it go to our heads. We need to stick to our discipline of selling into strength and buying on weakness. The bear market taught us well the value of our Cash Reserves. Let's accumulate them as AIM lets us and make sure we use them wisely.

On a different note, I've been "experimenting" with using the Idiot Wave as a guide to switching between a Leveraged Index Fund, Index Fund and a Bond Fund. This work started with an alumni group of which I'm a part and the assets of that group. Originally I attempted to use AIM to manage both the bond fund (ACG) and the leveraged index fund (UOPIX). I determined that AIM couldn't handle the leveraged bond fund during bear markets. Sadly I determined this after significant losses had been incurred. After the 9/11 attacks in the U.S. I decided to change strategies from AIM to a combination of AIM and "switching." When the Idiot Wave is showing Low Risk there's no good reason not to use something like UOPIX for growth. However, when the Idiot Wave is at High Risk, we'd better get back to safety as quickly as possible. That's the basis of this new strategy. IW at High Risk, we switch all money to ACG and AIM. At Low Risk, we rebalance to 50% UOPIX and 50% ACG, each with its own cash reserve and AIM both. In between AIM should be able to handle most of the markets. Should we have a High Risk event and no return to Low Risk, we'll switch half of the available funds from ACG to QQQ and AIM that holding as well. This application of the Idiot Wave puts quite a burden on it for giving us proper signals about market risk. I think it's up to the task. Here's how we've been doing since 9/11/2001.

This account has cycled between being leveraged fund plus bond fund to all bond fund and back. It's now gone to about half bond fund and half unleveraged index fund. A low risk signal from the Idiot Wave will put it back into the UOPIX fund, out of the QQQ fund. In the mean time the bond fund continues to kick out its monthly dividends.

REPORT - WEEK OF 09/22/2003: The sequence of seeing an "up" week followed by a "down" week seems to be continuing. We managed to see the NASDAQ Comp. at 1850 a few weeks ago only to see it still there a week later. Then last week it advanced to its first close over 1900 in what seems like a lifetime. Now this week it is back tracking to the 1800s again.

Last week AIM helped me to capture some profits in my JBL, IYG and STKL accounts by selling into strength. IYG topped $95.80 long enough to get my trade done. JBL did the same at $29.30 and STKL at $10.27. JBL has been a bit light on cash (after being tapped out for over a year near the lows) so I'm glad to see the reserves building up again (now showing 25%, up from zero as recently as June). IYG and STKL both have fat reserves and "vealies" are becoming part of the operations for those two.

We won't know until next week how the data from this week's activity has affected the Idiot Wave. With it hovering just above the Low Risk area, I'm curious to see if we revisit that rarified territory. Those of you who've read the AIM/IW Newsletter for a long time know that Low Risk markets are very unusual. In the nearly 21 years of data that I've collected for the IW, it's only seen Low Risk for 91 weeks out of 1130! So, only 8% of the time since January of 1982 has the Idiot Wave shown Low Risk values. What may be more important to understand is that nearly half of the 91 Low Risk weeks have occurred since 9/11/2001. Further, the Idiot Wave has been below average risk for most of the last 14 months as seen in this cumulative graphic.

There continues to be much worry about "secular bear markets", "bear market rallies", "rampant speculation" and other matters yet the Idiot Wave has been telling us of BELOW AVERAGE RISK environment since the market lows of a year ago. In that time we've seen the broad markets soar carrying those willing to be at risk up along with the averages. A year ago AIM was telling us to hoist every single square meter of Sail Area we had available. It was telling us that TRADE WINDS were going to start to blow. I ask each and every one of you, "Did you believe the Idiot Wave in October of 2002? Do you believe it is correct now?" We couldn't see the wind ripplets on the water a year ago. We didn't know when we'd get out of the doldrums. It took a while for our SAILS to fill, and a while longer to see our ship start to part the water. A year later we've covered a long distance and delivered cargo profitably all along the way. For the longer term readers, one more question comes to mind, "Did you believe the Idiot Wave when it suggested about 75% Cash in March of 2000?"

I've been receiving a lot of Email recently. "Is it too late to get started with new AIM accounts or have all the good ships left Port?" seems to be the main question. Some stocks are probably over bought, some however, remain over sold. The IW is indicating relatively safe conditions still after a year of bullish activity. So, find yourself a sturdy vessel, bring AIM aboard as your Navigator and weigh anchor. Our IW will watch out for the next tsunami for us.

REPORT - WEEK OF 09/15/2003: We're seeing continuing rise in the Value Line P/E ratio. This is forcing our Relative Valuation component upward. It's now nearing the upper limit of its Bullish territory and looks like it will soon cross over into its Neutral territory. Without Earnings rising in conjunction with stock prices, we'll continue to see this component rise with the market. We'll have to see what the 3rd quarter earnings reports do to this value.

The breadth of the market advance is impressive still. We see hundreds of new Highs weekly with just a couple of dozen new Lows occurring. Advances have remained ahead of decliners as well. There's been a shift in money flow with mutual funds that parallels this. Money which had been going to bond funds has started to be redirected to stock funds. Here's what Trim Tabs had to say about it:

I've read a bit about the insider selling that has been occurring recently. I can't say I've seen it quantified in any fashion, just that I've been seeing the usual AIM coincidental selling along with insiders. This has always been a comfort to me. I like it when AIM is buying and selling in harmony with the corporate executives. If you've never tracked this with your own account, you might want to. It makes the appreciation of AIM all the stronger.

REPORT - WEEK OF 09/01/2003 and 09/08/2003: A week ago three of the four components were rising in value. This week all four dropped giving us a dip in the Idiot Wave again. We're now in the 4th week of below average risk for the markets in general. In that time the NASDAQ has risen around 200 points while the Dow 30 hase risen 300 points. This comes as a bit of a surprise to people unfamiliar with the Idiot Wave. Most expected September to start off slowly and decline for the month. All you had to do was listen to the Talking Heads and they would have assured you of this. The Idiot Wave had instead been showing a lower risk profile than we'd seen since the end of June.

Three of the IW Components remain decidedly bullish while our Speculation Index still is bearish. As you can see from these graphs, Relative Valuation has been rising in risk while Speculation has been in decline. This has had a counterbalancing effect keeping the overall Idiot Wave showing a moderate risk profile.

Finally Zeal shows a steady if small decline in the number of issues available on the NYSE and NASDAQ from which investors can choose. Still no IPO surge here.

As with any sharp rise in the indexes, we're bound to see a pause now and again. They are actually a healthy occurrence for the markets. I've mentioned in the past that when we have the four components all signalling the same thing it's a powerful sign. Right now we have three Bullish components with just one out of sync being Bearish. Too much speculation in more normal markets is bearish for certain. Coming off the worst bear market in almost three decades gives the Speculation component a challenge. Because stocks have been so depressed for so long, we tend to get the effect of them all springing back. This will give the illusion of bearish speculation when it's actually just the pendulum returning to a more centered area.

We broke through the 1850 NASDAQ Comp. level the other day, just a couple of weeks after I guessed this would be done. I mentioned that the 1850 to 2050 range was possible during the next 3 to 6 months. Well, we got one of those out of the way. It doesn't mean the market is unhealthy. We can still see 2050 without pushing the Relative Valuation back into its own Bearish camp.

In the mean time the Warehouse has been busy shipping out inventory. We've had sales of VTSS, PRX, CHIR, STKL, JBL, IYW, EWG and IBB in the last two weeks. Inventory value has been rising while our Savings and Loan division has been building up loan reserves. From what I've been reading on the AIM Users Bulletin Board our warehouse isn't the only one doing great business.

REPORT - WEEK OF 08/18/2003 and 08/25/2003: The Idiot Wave's best signals are given when all four components are telling us the same thing. For some time now three of the four components have been bullish while Speculation has remained bearish. In fact, it's been 15 weeks of the same situation. The "majority" of the components have been bullish (3) while one has remained stubbornly stuck in the bearish camp. It was so bearish a couple of times as to nearly drive the IW all the way to High Risk all by itself.

For the last five weeks Speculation has finally started to unwind itself. The NASDAQ and the DOW 30 have remained essentially flat compared to a month ago.

The mixed bag of stocks that I've collected in the PIC List have had a good year so far. The entire group on average is profitable with some very nice performances turned in by some components. However, there are some disasters in there as well. I invite you to look over the list to see if there's any familiar names and to see how well AIM has done with the PIC list as fuel for its engine.

We had been waiting to sell out of CVX for some time. We didn't want to hold that energy stock by itself any more. It seemed to be a good idea to sell it and add to our IYE energy index fund instead. This transition happened this week. As time has progressed we've managed to cut back on the number of stocks and funds we inventory here at V.I.E.W. We're now down to under 20 for the first time in years. There's more consolidation we'll be doing as time progresses.

With the moderate risk level the IW is indicating we can expect the markets to hold their current support levels and move higher as favorable economic news is announced. After a period of lean times companies tend to come back with good earnings comparisons. This should help things a lot. First, it will help to hold down our Relative Valuation component to low or neutral levels. With over 700 new highs last week compared to 27 new lows, sentiment has been strongly in favor of a continuation of the bullish phase of the market. How high can the indexes rise? My guess is we can see the NASDAQ between 1850 and 2050 in the next 3 to 6 months without straining things too much. I, for one, would love to see the index cross over the 2000 mark again. It's been over 18 months since we last saw that level.

Several of my accounts have cash reserves now equal to or higher than the Idiot Wave's suggested level. So, in keeping with my personal methods, I'm continuing to use the "VEALIE" method of conserving inventory and capping the size of the cash reserves. As you know, I tested this method over long periods of time, but only had the opportunity to use it during the late Bull Market (from 1995 on). The Bear Market and now the recovery has let me use it under circumstances only theoretically tested before. I hope those of you that attempt to use this addendum to AIM do so with full understanding of how it works. If so, you should be pleased with the results over time.

REPORT - WEEK OF 08/11/2003: The Newsletter last week discussed the recent drop in some of the high yielding funds available to investors. Not to bore you all with this subject, but in discussions with Don Carlson we've been reading tea leaves and gazing into the crystal ball.

I've mentioned here in the Newsletter and also on the AIM Bulletin Boards that I thought the next cyclical low point for ACG might be $6.00 per share. That opinion has been based partly on tea leaves and partly on how the dividend acts to support a stock or fund's price. Don C. mentioned that he thought it could dip even deeper than that and was kind enough to create a good looking graph as part of his explanation. Don says we might even see $5.50 during the next part of the cycle.

Don has considerable experience in this type of projection so I don't take it lightly. So, how does this compare to what I've been thinking? Well, my guess on ACG is also based in history. I've owned this fund and its sisters for many years. At the time I was speculating about the "next low point" I was still thinking of the dividend being about $0.87/share. With a $6.00 price that would work out to a yield of 14.5%. That dividend is no longer the paying rate. It has dropped to $0.81/share since and would be yielding 13.5% at $6.00.

Using the new, lower dividend and the guessed 14.5% yield, we'd calculate the next low price to be $5.58. That's not very far away from Don's prediction of $5.50. If we look at the dividend back at the last market low for ACG, it was paying $0.90 per share. It bottomed at $6.375 per share giving it a yield of 14.1% for those clever enough to have purchased these shares in late 1999. Using the 14.1% yield as the basis for the new "floor" of ACG's range, we'd calculate the next low to be about $5.75.

Don was also kind enough to give us a prediction as to when this new low might be reached. His crystal ball timing device suggests it should occur in the September - October time frame of 2004. I put the year in bold for a reason - it's also my guess that it could take a year or so for this bond market to back track. As you can see, there's no hurry. If you are building an income portfolio these high yield funds look as though they might be coming back into buying range. This next image shows our real time activities with ACG for the last three years.

As you can see, AIM's done a remarkably good job of taking a fund that kicks out a handsome yield and building a good, although infrequent, capital gain base profit. Please note that the dividends are not included in the Cash Reserve portion of the Bar Graph. Those dividends are syphoned off as monthly income at the Warehouse. We use standard AIM settings on this fund of 10% SAFE for buying and selling plus a 5% of Portfolio Control as a minimum order size. Nothing fancy here, just solid AIMing. Note that we were within pennies of a Sell just recently. That would have raised our first buy-back price a bit.

Maybe next week we'll talk about some growth stock or another! Hope this hasn't bored all of you. On the AIM BB we showed how a very Low BETA stock like ACG can work as a counterbalance to a growth portfolio with High BETA. This graph shows how they tend to move in opposite directions:

REPORT - WEEK OF 08/04/2003: As AIM crossed the Equator from the Buy side to the Sell side there was quite a bit of activity. It's always more interesting when we're heeled over full tilt to port or starboard. However, now it seems we've passed into the Doldrums. Our Trade Ship's Sails (sales?) are in a Luff and we hear a lot of Flapping coming from them. There's not any driving force, and here we sit rocking back and forth. Maybe we should break out the Dramamine or maybe the Rum. We can see some squall lines off in the distance, but they don't seem to be moving our way. We've navigated these waters before and the biggest danger is the boredom. We don't need to do any changes to the rigging, just make sure we've hung out enough canvas to catch any breeze that might come along. Daytime we watch the horizon for thermals forming; at night we watch for lightning in the clouds.

Since our last log entry we delivered shares of WPC at $33.10, VTSS at $6.43 and CGNX at $28.03. While in port we brought aboard shares of GNSS at $10.89. We heard rumor that we may be able to pick up quite a bit of GNSS at the next port of call over the next month or so. As we weighed anchor and headed back out into open waters we were reminded by an old Salt on the docks that we're heading into hurricane season, so we'll double the watch through the Fall.

It is interesting to note just how things can change and at what pace. I include here two income producers we inventory on board the good ship CLOUD VIEW. The market for both ACG and WPC has retreated from recent highs as the Bond Market sagged.

REPORT - WEEK OF 07/28/2003: A quick look at the components of the Idiot Wave should help to explain what is going on in the markets right now. With three components still in their own Bullish ranges, why is it that the Idiot Wave has risen as much as it has? The reasons are that both Speculation and Relative Valuation have been rising. Speculation has been bearish for some time. It's so lopsided right now that it overshadows the other three components. Relative Valuation's rise has been in concert with the rising values of the composite indexes. The low interest rates have helped to keep RV from heading to Neutral or Bearish levels.

Maybe the best way to explain this Speculative wave is to know that about 13 weeks ago not much at all was of interest to speculators. Now it is like some huge burden has been lifted from the marketplace. Note in this next graphic that the Worst Performers value has dropped to a very low level while the Best Performers have been soaring.

REPORT - WEEK OF 07/21/2003: As mentioned in last week's Newsletter, when we start to see the Idiot Wave stabilize in the middle of the Average Risk range we can expect to see both buying and selling in our accounts. No sooner than those words were typed did our Purchasing Dept. get busy. We added shares of STKL (prices from $5.08 to $5.12), increasing our inventory nicely. Further, GNSS shares dropped and triggered our Limit Order ($13.04) to accumulate more shares for the Warehouse. That's all the buying for now. This week we saw shares of CGNX leave the Warehouse for their new owner's. That sale was done at $26.50 and represented a LIFO gain of 67.7% since the end of July, 2002.

The pause in the big indexes this week may provide some relief for the Idiot Wave. We've seen the Value Line P/E ratio rise from a March low of 14.2 to its current reading of 17.3. Although not enough to drive this component Bearish, our Relative Valuation is not nearly as bullish as it was. Speculation continues to be a pest, rising significantly in recent weeks. Avanex was the Best Performer in Value Line, up over 470% in just 13 weeks. Oneida was down just 34% making it the Worst Performer in all of Value Line. It takes a 114% gain to just make it on the Best list while a drop of only 8% plants your stock on the Worst Performers list. This imbalance traditionally shows just how speculative the market has become. It can remain at this kind of imbalance for some time while the leaders rotate, but eventually it spells the end of a rally. The other two components are unremarkable other than their general bullishness remaining.

I won't get too concerned about the Bearish Speculation component until we start to see confirmation by the other three components. It is, however, a healthy reminder to take profits as they present themselves.

A chicken and egg thing has been on my mind that I have pondered for over 30 years. Are we content when we can pursue our hobbies or do our hobbies bring on contentment? Some of my most creative work has come at times in the past when I've been unemployed. Generally those times should have brought some form of dissatisfaction, but instead it seems to have allowed me to focus on other, more interesting things. The Idiot Wave is an example of this process. The data on which it is based had been a curiosity while I was still a "workin' stiff" but really didn't get studied or colated until the late '80s after investing became my full time occupation. It was in 1993 that I first started writing about the Idiot Wave on the internet. A decade has passed with it as a good tool all along. But it really showed its strength in 2000 calling out a major market top and again last year giving us a very bullish signal right as the major indexes bottomed.

So much for the "idle hands" theory!

:-)

REPORT - WEEK OF 07/14/2003: A quick note to say that Sales have continued at a reasonable pace at the Warehouse. Shares of BPUR, IBB, IYG, CGNX and IYW have recently been in demand.

It appears the Idiot Wave wants to settle here in the middle of the Average Risk range for now. This isn't a bad place to be. Trading on both sides can occur from this location. Sector Rotation will probably be more of what we experience over the coming weeks. This might allow us to do some judicial buying once in a while, interrupted by some occasional sells.

I start my latest avocation as a Cobra Replica driver as of this weekend. The car is sorted about the best I can do without having it on the track or roadway. I hope to have glowing reports next week along with some photos.

Maybe my skinned knuckles will have healed by the time of the next letter.

REPORT - WEEK OF 07/07/2003: Apparently investors paid no regard to their usual caution before a long weekend. They managed to bit up both the DOW 30 and the NASDAQ just before the 4th of July. Now the NASDAQ has broken through yet another centenial barrier heading beyond 1700 this week. The DOW 30 seems to be having trouble moving beyond the 9200 mark.

One of my long time favorite stocks, Cognex Corp., was in demand this week driving the price/share beyond our next Sell price. We dutifully shipped out about 4% of the position to its new owner at $24.38. We've raised the minimum order size to 10% now. I think this example tells alot about how AIM can make good on what might appear to be a sorry situation.

An example of where I continue to use "vealies" to my overall account's advantage is with Stake Technology. STKL has been a shining star for much of the Bear Market. So, we've been able to keep a lid on the size of the Cash Reserve as the stock price continues to climb. The small vertical white lines show when we've pulled "vealies" in place of Sell Market Orders. This conserves our shares and also keeps a more logical Equity/Cash ratio with a rising share price.

So, with these two examples, you can see Good News and Bad News stories each with a pretty happy ending at this point. In one case AIM's kept me rational with a high flier and the other, it's helped me retain much of the value previously gained in other portions of its business cycle. I hope this is instructive for those of you who have yet to use AIM through an entire price cycle. CGNX and I have been through several since starting that investment about 10 years ago. STKL and I have generated nice profits since AIMing it since 1997. Thanks to Mr. Lichello, AIM has helped V.I.E.W. survive the latest bear market quite well so far.

I want to send out a special thanks to Mr. Henry for the Ertl 1/18th scale model of the AC/Ford Cobra. It arrived in the mail on Wednesday just in time to meet its full size Snake replica. That was a pleasant and unexpected surprise. Next weekend at Elkhart Lake, WI I'll be taking it for its maiden voyage around the 4 miles of Road America Race Track. There's lots of little, fussy stuff that I need to check over before making this first public appearance. I wouldn't want to embarrass myself any more than necessary! Wish me luck!

REPORT - WEEK OF 06/30/2003: To make sure that we get the AIM/IW Newsletter out before the Fireworks begin, I've located the proper data and added it to the histories. As you see above it backed down a bit this week. This is the second time this year that it has raced up toward the High Risk mark only to fall short (for now). Since it's been the Speculation component that has been boosting the IW upward, it makes sense that it was what also allowed it to fall back a bit this week.

It's not that the other three components have been dormant, but Speculation has shown itself to be very strong. For the third week running all 41 of the Best Performers in Value Line were up at least 100%. It's rare enough that this happens that we take notice even with the other components being Bullish. All three of the other components rose in value this week making the case for caution a bit stronger. All three of our bullish components still can rise quite a bit before they would become bearish, however.

A long weekend approaches for the U.S. Stock Market. Many times in the past the market participants will get a bit defensive just before a holiday and get some liquidity. We may see this as the Independence Day holiday comes closer. I've staged all my Limit Orders to catch any falling stars that might come my way. I've been very pleased that the AIM accounts picked off some nice profits in my Exchange Traded Funds just before this recent decline. It always makes the graphs look all the better. It also brought the Next Sell prices up to more reasonable levels. So, who knows, maybe the Purchasing Dept. will have some work nearer the end of the week.

REPORT - WEEK OF 06/23/2003: Riding up on the single component of Speculation, our Idiot Wave ascended to a level not seen since January 27th of this year. We had a brief surge of speculation back then that dampened enthusiasm and gave us an essentially flat bunch of major indexes for all of February and most of March. Should we expect the same this time? Well, this week so far has proved to be essentially flat with the past three weeks on the NASDAQ while the DOW continued to rise to 9200 before giving back the last 200 of that gain.

Selling and shipping from the Warehouse slowed quite a bit this week. Just one order shipped, STKL, at $6.85.

With the FED down to just 1% for their "Fed Funds Rate" there's not much room to wiggle for monetary stimulus. I've listened to the various arguements relative to inflation and its evil twin, deflation. I'm not sure I know what to think. For the first time in decades I'm now looking at mortgage rates as being quite favorable. I'd even consider some debt load if the right buying opportunity came along. Locking up mortgage rates at 5% or less for reasonable periods of time almost seems to make some sense. Still, I'm glad I have a general aversion to debt.

As we head toward Independence Day next week I hope everyone's portfolio is also heading for creating your own Financial Independence.

REPORT - WEEK OF 06/16/2003: Shipping from the Warehouse continues at a very rapid pace. Sales have been particularly good for shares of JBL, BSX, SDS, ACG, CHIR, WPC, IYW, IYH, IBB, IYC, UOPIX, and even IYE. Overall, Veale Savings and Loan has taken in a very nice bit of deposites in the last few weeks. Even better, the Warehouse is getting inventory down to a manageable level. Asset value has climbed and so has the relative cash holding. This is a very nice combination.

Note that a jump in the Value Line P/E from 16.2 to 16.8 this week has pushed the Idiot Wave back to the center of its Average Risk range. Also note that the Oscillator is at +8 indicating a rising trend in the relative risk of the market. So, if we're doing a lot of selling, then the IW thinks this is a good thing. My reserves had been close to the IW's suggested amount for a diversified mutual fund (I consider my overall portfolio to be a defacto mutual fund), but this jump leaves me a bit short of its suggested goal. VIEW's current cash reserve level is 21% of total value. Even with all the selling, it has only risen one basis point relative to the total value. We're moving in the right direction and are still pretty close to what the "smoothed" IW level is showing (Smoothed IW is 32% for stocks and 21% for div. mutual funds). All in all it is very rewarding to see the business plan working as it was designed.

Other than the Speculation component we have no other BEARISH indicators.

The biggest question that remains is what the Federal Reserve is going to do relative to Interest Rates? It seems the Party Goers believe there will be yet another cut in the Fed Funds rate. Short term Treasuries have priced this in, dropping the 13 week rate to 1.024% last week from 1.133% the previous week. This is the most we've seen it move in quite a while. So, what will Wall Street do if rates 1) Drop or 2) Stay Unchanged? Somehow it feels like, no matter what, it could spoil the mood on the $treet. I guess we'll know soon enough.

I've passed on the kind words from the AIM Users who wrote after last week's newsletter. He's coming along and working very hard. His stamina is improving daily. Thank you for the notes.

REPORT - WEEK OF 06/09/2003: A little trickier of a week for investors just past. Not all was roses all week. Yet, AIM and I were able to make yet a few more sales as the market did a bit of worrying. Maybe the worrying isn't