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 all bad. It might just keep the rally alive.

It's important to recognize just how fortunate our luck is sometimes. A good friend of 27 years missed a turn in the rain two weeks ago and turtled his car in a ditch. Clean and Cold Sober for the MADD's out there. Two emergency neck surgeries later, Ken is sitting up on a wheel chair, but it's yet unknown just how severely his spinal cord has been damaged. His air bag deployed, his seat belt was on, he's relatively uninjured except for a scalp laceration. However, his bruised spinal cord isn't transmitting signals to anything below his arms. Even his hands and arms are not fully functional. Nobody talks optimistically in a spine trauma center. Prognosis is unknown, so worst case is usually about all anyone will discuss. If the patient does better than that we celebrate.

Having been through neck surgery just four years ago, I have spent some time with Ken letting him know what little I know about such things. We have surgery in common, but I started with a pinched, but healthy spinal cord where he's starting with a traumatized one. Since his fusions are essentially in the same locations as mine, I did "Show and Tell" on head rotation and tilting so he can see what to expect. We talked about sore throats from the surgery, stiffness from lack of moving around, etc. Then the Physical Therapists came to get him. Believe me, they kept him moving. He was worn out from all they asked of him.

So, little things like stock market crashes seem a bit less important to me this week. We know they're going to come along once in a while and do the best we can to prepare for them. I just don't know how one can be prepared for an event like my friend Ken has gone through. He's tough. His family is tough. They'll make it work, but it's going to take a long time and a lot of effort. Ken doesn't have any brain trauma from the accident, so at least has his "intellectual property" to use. That can go a long way.

REPORT - WEEK OF 05/26/2003 & 06/02/2003: Here we are back in the Average Risk range once again after a long 12 weeks of Low Risk readings. The DOW was at 7891 and the NASDAQ at 1338 when we started this last Low Risk period. Last Friday the Dow closed at 8850 and the NASDAQ at 1596, up 12.1% and 19.3% respectively. I've received a lot of pleasure (and a lot of SALES) since the end of February, and hope you have, too.

The largest contributor to the IW's move upward is my Speculaton index.

That's not what you'll hear on most television broadcasts these days, however. Most are providing mortar to the Wall of Worry by talking about P/E ratios, deflation, inflation, interest rates, bond bubbles, and hyperspeculation of stocks. Recently they've added worry about IPOs to the mix. So, let's look at the rest of the components to see where they stand.

How about a nice short term sentiment indicator like our Divergence index?

Well, let's address the "problem" of high P/Es. We know that overall P/E ratios aren't any where near their historical lows when we've seen BEAR markets in the past. This is of concern to those who only look at the P/E by itself. Elaine Garzarelli was kind enough to explain to us that there's a relationship between P/E and interest rates that has historical significance. Right now interest rates are historically VERY low. So, the combination of P/E + Interest Rates is what we need to address. As this graph shows, although it's been rising, we still have a very long way to go to get to the BEARISH end of things.

Okay, so should we be worried about everything the TV commentators are telling us? Much depends upon whether you are an AIM user or not. If not, then be prepared to give back some of the recent gains if the market consolidates for a while. As a fan of Mr. Lichello's AIM, it's led me to 57 consecutive SELL ORDERS executed since the beginning of April. My Cash Reserves are now adequate enough that I've been able to use some "vealies" along the way as well. Needless to say this has pleased me. It's been a very long time since the Sales Dept. had a string of sales like that about which to brag.

REPORT - WEEK OF 05/19/2003: As the PIC list grows longer it becomes an even bigger chore to update all the graphs and histories. I weekly plug in the prices and simulate the trades, but capturing the graphics for the web site took over half a day. I hope you will enjoy looking at all the images. See the Perverse Investment Candidates for all the good and bad news. What is important to me is that since starting the project in 2001, the AIM PIC list is profitable and that 28 of the 34 histories show AIM ahead of Buy & Hold. Six lag, but all those are profitable, so it hardly matters. The most active traders are the ones that have benefitted from AIM's assistance the most. Cognex is a good example:

Another of my low priced stocks tripped a Sell order at $2.60 late last week. About 10% of my GENE shares shipped out to their new owners. There's been general strength in the Biotech sector overall and GENE has been announcing good news on several fronts. All that has helped to raise the share value 51% since January 1st and my "restarted" AIM account's value about 30%. When I restarted this account, it was with a 50% cash reserve in January. That was "high" relative to the Idiot Wave at the time, but this tiny biotech company has required lots of cash reserve at various times in the past.

The Speculation component of the IW has risen back to Bearish this week. Relative Valuation is also rising. These two components have pushed the IW up this week. Still in the Low Risk range, it won't remain there long with this sort of pressure. The market seems to be saying "Too much, too fast." We may be in for another week of consolidation and sorting in the market.

The logic of "realized gains" continues to be a powerful incentive to use AIM. Those harvested dollars are the seeds of the next crop. Already I'm hearing from some that they're planting again after recent harvests. The AIM Business Plan continues to do its work for us (if we let it!).

REPORT - WEEK OF 05/12/2003: The previous week seems to have been one of consolidation of recent gains. I'm happy to report that our AIM Equity Warehouse had already done some healthy consolidating a week earlier. So far this week we've has sales of ACG at $9.10 and IYH at $52.40. All nicely profitable.

Cerner Corp. came up as an addition to our PIC list. I'll update the PIC page next week to include the graphs for this stock. The AIM PIC portfolio has returned to profitability this week. It's now sporting a 3% profit VS Mr. Buynhold's loss of over 5%. Twelve of the PIC stocks are still showing a loss in the AIM portfolio while 18 are losers for Mr. B.

The two sales this week were both in my Retirement Account. The overall account is now showing a 10% profit since restructuring last September. Most of the components have now triggered a trade or two. You can see all the individual components with the above link.

As important as it was to stick with the AIM Business Plan during the three years of Bear Market, it's equally important for us to maintain our discipline and keep with the plan as we see market recovery. We can't afford to let our guard down or get greedy with those stocks we own that have started to rise.

REPORT - WEEK OF 05/05/2003: Shipping at the Warehouse has been busy since our last report. We let 13% of our GNSS shares go at $17.52 giving us a 42% LIFO gain. We sold some more IBB in another account at $57.30. ICA was a popular inventory item again with another 8% of inventory shipping at $1.60. Another big seller recently has been STKL and we shipped off an additional 10% of inventory at $5.40 this week. I believe that is the highest price we've ever received for shares of that stock. From my retirement account we profitably shipped 6% of our IYG shares at $84.76 gaining nearly 21% on the sale. We also sold some IYC at $46.32, UOPIX at $13.80 and also some VTSS at $4.17. All these trades were also profitable.

Selling profitably into these rallies has a good feeling for me. The cash will eventually be put back to work after resting a while. The various business shows were not sure if this rally could continue or not. Were we in a cyclical Bear market rally? Are we seeing a secular Bear market? Is this the beginning of a brand new Bull market? AIM said it didn't care. It just wanted to make sure we got what business done we could, when we could! Thank you Mr. Lichello.

My PIC list hasn't been updated in a while. I'll be doing that next week. It's interesting to note that it was showing a 12% LOSS in early February and is now sporting a 1% profit. That's a nice turn-around. It, too, has been selling "virtual shares" from that hypothetical portfolio.

Two of the Idiot Wave's components rose significantly this week giving the risk model its first increase in four weeks. Nothing serious yet, with all components neutral or bullish, but still a change in direction. I guess we could say, "With a Rally comes additional Risk." Good thing AIM was there to help neutralize the additional risk by selling some inventory. It's hard to give back a "realized" capital gain.

Even though it's not being managed exclusively by AIM, my college alumni group's assets are growing nicely. This strategy was started after the Sept. 11th, 2001 attacks. I'm delighted with the new strategy's results since then. The account is up about 75% in just over 1.5 years. It's up 13.5% Year To Date, and up over 16% year over year. This graphic tells both the current story and our previous failed strategy's story dramatically.

UOPIX was chosen as the "growth vehicle" originally and AIM was being used to manage it. All went fine during the Bull market, but we were gobbled up by the Bear. The new strategy employs the Idiot Wave as a switching mechanism. In Low Risk times we switch about half the assets to UOPIX and AIM it through low and average markets. If we head back to High Risk, we bail out and head to the relative safety and income from ACG, a long term bond fund. If we get stuck in between, then we move half the value back to QQQ and use AIM (ACG is also managed by AIM). So far, so good.

Summer hasn't yet arrived in Wisconsin. That figures, however, I'm required to attend all the high school soccer games this time of year, so it has to be cold, wet and nasty! So much of the recent storm damage across the central part of the country went well south of us. We are supposed to start seeing some warmer weather over the next few weeks.

I hope all of you are finding a healthy growing season with your own portfolios as well.

REPORT - WEEKS OF 04/21/2003 and 04/28/2003: We managed to convert some Sunshine into Vitamin D for a great week in the Dominican Republic side of Hispanola. I don't expect any governmental overthrows from this year's travels. Once they heard I was coming for a visit, they cleaned up things before I got there! So, to try to make up for your having to wait an extra week to find out what's been happening with the Idiot Wave's risk assessment, we're writing a double report this week.

On 04/22 and 04/23 we shipped out inventory in IYC and IYG to new owners. Prices were $45.35 and $83.85 respectively. Nice to have a bit of profit building up. Then upon reviewing prices of the other AIM accounts we found that STKL was calling for another SALE along with GENE. Both, however, have adequate cash reserves already set aside from previous inventory reductions. So, we dug into the VIEW Tool Room to get out an adjuster that we've not used for quite a while. It's the "Vealie" Adjuster. Yep, that controversial device for inventory management and cash control. We applied it to both STKL and GENE and conserved shares and also boosted our next Buy Prices for new inventory. A more complete picture of the STKL story can be read HERE.

Today, near the market's open, we received a desperate call from a buyer looking to purchase 10% of our IBB shares in my IRA. After negotiations, he was willing to pay $57.15 for them.

Well, with all this positive activity going on at the Warehouse, why is the Idiot Wave as relaxed as it is? I think that we're stealthily moving away from the bottom of the Bear Market right now. No use disturbing the Beast while we try to make our escape. Market Breadth has been improving for some time. Advances have lead Declines most weeks since April 1st. New 52 week Highs have been outnumbering new Lows for about the same time. There's no measurable speculative wave hitting the markets yet and broad measures of Price/Earnings have remained stable. Throw in stable short term interest rates and we have what appears to be solid footing for a market advance.

A final measure of where the minds of Wall Street are is shown in my Zeal component. This one measures the net increase or decrease in the number of issues being traded on the NYSE and NASDAQ over time. As you can see, there's been more stocks disappearing from the exchanges for years than have been added.

Whether the Idiot Wave and its components are right or wrong, AIM's been doing its job in taking profits when it can. This is our main goal. I continue to use the IW to guide the size of my individual Cash Reserves for those stocks and funds that have BETA values greater than 1.0. It is my intent to use "vealies" throughout the Low Risk period once cash levels rise to or exceed the IW's suggestion. Once into the Average Risk range, we'll switch off the "vealies" under most circumstances and let AIM do the Equity/Cash allocations.

I anticipate VIEW's assets to step out nicely from previous months. I'll put up the summary graph next week for your review once the closing values for April are in. I sincerely hope your own Warehouses are doing well and showing gains for 2003 so far. By following the Business Plan that Mr. Lichello outlined for us back in 1977, we are beginning to see how AIM rebuilds a portfolio after a Bear Market. AIM isn't Modern Portfolio Theory, it's Modern Portfolio Practice!!!

REPORT - WEEK OF 04/14/2003: Late last week my favorite Mexican Construction company, Empresas ICA (symb. ICA) made a nice run in stock price and tripped one of my Good Til Cancelled orders at $1.28/sh. 5% of inventory left the warehouse for its new owner.

I've mentioned in the past my interest in Convertible Bonds that various companies occasionally offer. I've not found any recently that were all that appealing, but even so, it might be worth mentioning the tactic. When researching stocks for my account I usually take note in Value Line of the company's capitalization structure. If it mentions a "convertible bond" as part of its debt, I'll usually look in the S&P Bond book (at my library, but you can also request one from your broker) to see how the bond is doing. Let's say the company sold a 2010, 5% convertible bond in 1980. 5% in today's interest environment is pretty good even if back then it was paltry. Let's also assume that the company in question has suffered along with the economy and its current stock price and earnings are depressed. Guess what happens to the Bond price? Yes, it will usually also be depressed. You may be able to buy that same bond for a nice discount from its face value. If it currently sells for $70 but will mature at $100 (its "face value), you can realize a 40% capital gain along with the effective yield of over 7% for the remainder of the bond's life. If called early, you will usually get the full $100, but might miss the interrum interest.

While fiddling around with Convertible Bonds, I also took a look at a relatively new Closed End Fund from Calamos, CHI. Calamos Convertible Opportunity and Income Fund will trade like other Closed End Funds (CEFs) in a range around its Net Asset Value. While a bit pricy right now, its current yield is also nearly 9%. For those interested in Income and looking for something different from a Govt. Bond Fund, this one might be worth putting on a Watch List for the future.

Other than my "penny stocks" most of the rest of my inventory is treading water right now. No specific market trend has developed in recent weeks. As long as we aren't making "lower lows", it would appear that the Idiot Wave is correct in its assesment of general market risk. Having the IW solidly in the Low Risk area gives me confidence that we'll have more AIM generated Selling going on in the future.

REPORT - WEEK OF 04/07/2003: A quiet week at VIEW. Only one sale made and no purchases. We managed to sell 5% of our IYH inventory at $51.12 the other day to a happy customer.

I spent time this week building a new page for my Exchange Traded Funds I'm now using in my Retirement account. You can see this page by looking at "Mutual Funds for AIM" which includes the six ETFs and the one Closed End fund I'm now using. I've parallel accounts running for my children, wife and her IRA as well as my own taxable account. They all are set up the same and have almost identical Hold Zones now that all have been running about three months or more. It's interesting to watch them fall into sync. Here's one for you to review:

In reviewing these sector funds it becomes more and more apparent that we're in a tight, but stable trading range. It's good to see that AIM's able to do a bit of good work on most of these in here. I should mention that IYC, IYE, IYG and IYH also pay small dividends. That can't hurt our total return.

The Idiot Wave also seems to think we're at a low, but stable point with the NASDAQ and Dow 30 stocks. The geopolitical situation has made for enough volatility that traders should again start to smile. Sure as shooting (pun intended!), as soon as the geopolitical situation seemed to be resolving itself, the Markets turned their attention to Economics! Earnings, which haven't been discussed on CNBC in three months, were suddenly the topic of interest! Well, predicting earnings isn't any easier than predicting the outcome of war, so we should continue to see excellent volatility for our AIM accounts.

Uncle Sam's birthday is next Tuesday, so I would imagine things will be a bit quiet around the bulletin boards as people finish up their taxes. In years past there's also been a bit of added volatility at this time of year while investors raise cash to pay tax, add money to their retirement plans before the 15th and possibly invest the proceeds of any tax refund they receive. So, we'll see how the week unfolds.

REPORT - WEEK OF 04/01/2003: Continuing on the theme of last week's post, we have had trades in two more of our Low Priced inventory items. Both STAKE Technology and Genome Therapeutics shares were hits for our customers this week. Both managed Sell trades with very healthy profits attached.

GENE has done marvelous things for my portfolio at various times. Although it fell on hard times after the Bubble burst, it is now appears to have found a trade-able range for VIEW.

STKL is certainly one of the best performing stocks I've had in my porfolio for the BEAR market. It has moved contrary to the market almost the entire time. Profits are piling up and the entire trade history is available for your review.

There are other stocks in my inventory that are settling into trade ranges profitable for AIM. As time moves forward we should see more trading going on at VIEW. My Exchange Traded Funds have been quiet for a few weeks, but I expect to see them start bouncing more as well.

REPORT - WEEK OF 03/24/2003: That was quite a week, last week. The Dow 30 was up 8.4%, and the NASDAQ and Russell 2000 both climbed over 6%. Not bad for a week's work. Then there was this Monday! It looked like red paint had spilled on my ticker page! But when it was all done, I found I didn't even have to get out my Gut Wrench to make any adjustments. With palpable levels of fear surrounding the markets, the Idiot Wave giving us a healthy Low Risk signal, should we not be picking our best opportunities and satisfying AIM's buying desires?

Our Relative Valuation component of the Idiot Wave is at an all time low point since starting to collect data in 1982. It is there because of a very low short term interest rate along with a relatively low P/E indicated by Value Line. Current reading for Relative Valuation is 14.94 (a combination of 13.8 P/E and interest rate of 1.137%). Note how far below the Neutral range this has fallen.

Confusion which had dropped the previous period is back on the rise after last week's activity. On the NASDAQ the number of new 52 week highs still slightly lags the number of new lows. Both are relatively high values, so my Divergence component is back to signaling Bearishness.The theory is that the market direction is confused if there's both lots of new highs and new lows simultaneously. Well, that is what we're seeing. So, volatility and trendless market reversals are the current rulers of the day.

Only one Sale was made by VIEW's marketing department last week. A peculiar stock I've owned since around 1995 had been a good AIM stock in the past, but I'd "deactivated" it some time ago because of cash constraints throughout my account. A string of good news events got me interested in re-vitalizing this older foreign AIM item around the first of the year.

AIM triggered activity with a purchase at $0.80/share near the end of January. AIM was kind enough to have us let a few shares go at $1.20 a week ago (50% LIFO gross gain). If this turns out to be the new trade range for the stock, we can handle it. If it's the start of a new trend, then we are prepared for that as well.

There was some discussion about "low priced stocks" recently on our AIM Users Bulletin Board and ICA certainly falls into that category. It is difficult to find good companies in the low priced end of the market, but if one can, AIM certainly can have fun with them.

I went back to boycotting Television News after being offended by the stupidity of the reporters, analysts and commentators. I'm back to getting my news by reading articles On-Line. Right now my favorite site is the BBC's "At A Glance" site. There I can catch the headlines without much commentary. If I care to read more in-depth coverage, it's also available there. Let's all collectively keep our wits about us as the Televisions try to overload us with their spewage.

REPORT - WEEK OF 03/17/2003: The week started with an Ultimatum. The Idiot Wave's plunge into Low Risk had challenged the BEAR to try to do some more damage. The BEAR has been ruling the market place for so long that most short term traders don't remember ever seeing a BULL.

As much as I've preached about not watching Television during the "Diplomacy" phase of the US-Iraq confrontation, I have to confess giving in to my voyeuristic tendencies since Monday. As much as I fear for the lives of the innocent, it is a personal belief that a boil needed to be lanced. I hope now the healing process will be swift and without complications.

To give you an idea of just how far the overall market risk has dropped I'd like to review the "Cumulative Idiot Wave" graph with you. Remember that no specific value has any meaning for this graphic, but the trend certainly has great weight.

This from TRIMTABS is the kind of thing that adds to my feeling we're nearer a market bottom than most people realize:

My best suggestion is to stay tuned to this station over the next few years or so and see if you can begin to trust something with a name as absurd as The Idiot Wave. Beyond that, please remember that your overall portfolio activity with AIM is as good a barometer as you can find. If you're buying, then chances are the market is over-sold. If you are selling shares, guess what? Yep, chances are the market is heading toward being over-bought. The IW, if you use it for nothing else, should be able to confirm what is happening in your portfolio.

REPORT - WEEK OF 03/10/2003: The stress levels are nearly as high as they can be for most active traders. Dark clouds hang heavily over everyone's portfolios. World markets are generally way off their normal levels. Even posting on the AIM thread had slowed down. At the same time, Mr. Lichello's book seems to still have some appeal to new readers. I have been getting lots of emails from people who have been finding their way here via search engines from all corners of the world. Welcome to all the new readers.

We are also seeing new participants on the AIM thread as more newbies find their way there. Questions are being answered by our usual panel of coaches. I thank you all for your high quality, thoughtful help for these new AIM users.

I've been feeling a bit frustrated in not getting a lot of trades recently. However, when I studied my February statement I found that my portfolio was actually UP slightly for the month. Maybe that's why I've not seen much buying or selling activity. I have a full complement of Limit Orders placed to catch any movement that goes beyond my Hold Zones for my inventory. In the mean time our faithful Idiot Wave shows us that the markets are becoming rather heavily Over-Sold again. This has come to be a signal that a brief rally may be ahead. I've been able to trade the rallies we've seen from these Low Risk times successfully. I hope you, too, will have the chance to profitably turn some inventory the next time the markets rally. It doesn't seem to matter whether these rallies are "bear market rallies" or any other sort. AIM gathers in what value it can with each cycle.

Relative Valuation, the component consisting of Value Line's P/E and the 13 week Treasury rate, has again dropped to a near term low point.

Speaking of Speculation, that component is rapidly normalizing after its recent spike.

Market participants are confused. When this occurs we see some stocks hitting new 52 week highs just when others are hitting new lows. Such divergent thinking is typical of a market that has no specific trend.

Finally, there is a continuing decline in the number of issues to be traded on both the NYSE and the NASDAQ.

So, you can see why both the Sales and Purchasing Departments at VIEW are getting excited. The Over-Sold condition gives the Purchasing Dept. leverage when doing some buying. Because of their fine work, the Sales Dept. can offer good and profitable inventory when we have customers interested. All in all VIEW is set for doing business no matter which direction the market turns next. I hope you all are in as pleasant a situation.

REPORT - WEEK OF 03/04/2003: Another week and the markets are weak! A rise in our "worry" component, Divergence, this week gives us a new component in the Bearish camp while two remain solidly Bullish and one dropped to Neutral. The Best Performer in Value Line is a small company, Caminus, that was recently picked for acquisition, so I've taken it off the list and replaced it this week with XM Sat. It's risen 135.4% in the last 13 weeks but is not up as much as the buy-out priced Caminus which is up 280+%.

I've not had a single AIM trade now in several weeks. Several of my stocks are near their Buy prices while others are hovering nearer their respective Sell prices. So, I've been here twittling my thumbs and waiting.........

You've probably already heard that the NASDAQ is out-performing the Dow 30 this year so far. This is a switch from the last few years! It was March of 2000 when the Investment Ball of Twine started to unravel. For three years now the NASDAQ has been unravelling faster than the Dow or the S&P500. Maybe this is some kind of cross-over point we're seeing. Could it mean the end of the NASDAQ Bear Market? I don't know about the rest of you, but I'm ready to see something else besides declining values!

I was playing with Snakes recently (Cobra replica race cars, that is). I think this photo proves that I finished

Number One!!!!

I'd hate to have to give up pretending to be a Stock Guru to go back to pretending to be a Race Car Driver. However, if we don't get some action soon, boredom will "drive" me back into the garage!

REPORT - WEEK OF 02/24/2003: It doesn't appear that the markets are going to get out of their own way any time soon. Investors' hands are raw from all the wringing. I did a quick check and found that there is a very low spoilage rate on my inventory, so a bit of a wait isn't going to hurt things much.

Amazing how much press the Ultra Bears get when the market isn't moving. Much like the TV News, if there's no headliners, CREATE SOME! That seems to be the case here.

I checked my IRA which was re-started last September and find it to be profitable by 1.5% - even though 5 of the 7 components are showing slight losses on a Per Share basis. Interesting. I have had five trades so far in that account. Those were sales during the short rally in Oct and Nov. The captured profits have done well to stem the tide of bearishness since then. As much as I'd like to see some buying in that account, alas, the prices will have to still drop further.

The geopolitical game of "Good Cop/Bad Cop" seems to still have some play time left. I continue to avoid Television News as much as possible. I hope some of you will let me know when the world is again all settled down and happy. I would hate to miss that. Some how I think that the Idiot Wave will let me know in its own subtle way.

It was good to see the P/E ratio of Value Line back below 15 this week. That always helps the IW to remain happy. With interest rates pretty much stuck where they are for now, our Relative Valuation component remains very bullish.

The Speculation component remains bearish this week. It has retraced its steps from an exceedingly high level in January, but has stubbornly refused to go back to Neutral or Bullish status.

Our other two IW components remain as they have been - one Neutral and one Bullish. So, overall the IW is hovering near the low end of its Average Risk range. Considering how worried people are about the economy, geopolitics, nuclear war, price of petrol, and all the other clouds it's amazing that the IW's so cooly confident of its risk assessment.

Remember. The TV Terrorists aren't your friends. They're just there to sell you on some advertizing. As I've said before, if the "news" doesn't make it to a weekly publication, then it wasn't worth your time. Try fishing, carving, crossword puzzles, checkers, dominos, car restoration, chess, backgammom or jigsaw puzzles. Any of them will do more for you than watching network news.

REPORT - WEEK OF 02/17/2003: Our UOPIX buy last week came in at $9.94 and added about 12% to our position. The purchase helped lower our next target Sell price to about $13.50. On the opposite side of the equation we dined on a bit of Stake Tech, selling 5% of our position at $3.60. You can review the entire history of my AIM investment in this company.

I'm pleased to see the Idiot Wave track back down to where I feel it should be. It was only the knee jerk reaction to the October lows that caused it to spike. In a way it was telling us "too much, too fast" and that's worth heeding even if it's a temporary thing. As mentioned last week, I'm not sure that many of the more conventional market risk indicators or commentators will agree with the Idiot Wave's assessment, but historically it's been quite accurate.

Idiot Wave Components:

A bit of a surprise to me last Friday was the nice 2+% rally that occurred just before a "long weekend." Many times before a three day weekend the markets will sell off as traders don't like to leave their money exposed to uncertainty. Considering all the political turbulance around the globe it makes it all the more of a surprise. Could this portend a change in sentiment?

REPORT - WEEK OF 02/10/2003: Almost across my entire portfolio we're closing in on buy signals. Where I have cash I'm starting to execute the buys as they are signalled. And on those rare occasions where we get a Sell signal, I'm accomodating AIM as well. We added shares of SDS, GNSS and IYC recently. At the close of today we'll have added 10% to our experimental UOPIX account. We last sold some shares at $14+ and are now getting a chance to buy them back at sub-$10 per share. This particular portfolio is being traded partly by AIM, but "Timed" or "Switched" by the Idiot Wave. While a departure from the more strict halls of AIM University, it does more fully utilize the IW's correlation with the NASDAQ and N-100 Indexes.

The Booggie Man still is haunting the general market. This makes most of us impatient in that we have nothing to do but sit and watch. However, if you think about it, that's what we do most of the time anyway. We already know what the news event will be that will drive this market either up or down. So, until that event happens, we can only tend to our inventories and hope the news is swift and good.

As a demonstration of how just one of the four components can drive the entire IW calculation, take a look at my Speculation Index.

REPORT - WEEK OF 02/03/2003: The markets remain unsteady in the face of hearings at the United Nations. Everyone around the world seems to be holding their collective breaths. Nobody knows just what dirty laundry needs to be aired or whether the U.N. hearings will be the place where full intelligence will be revealed or just enough to keep tensions high without sources being divulged.

Some areas of the market have been quite jumpy recently. Telecom equipment stocks have both been bad and good on alternate days. Technology seems to also be involved with this nervousness. This has allowed Veale International Equity Warehouse to acquire some special inventory in IYW at $31.50. The spoilage rate is very low on this item, so we feel good about adding to our holding here.

This week the Speculation component started snapping back to a more normal level. This is currently the only component of the Idiot Wave to be in "Bearish" territory

My favorite bond fund has continued its dramatic rise and is now up more than 10% in the last quarter.

We should probably be carefully monitoring Book to Bill ratios over the next few months to see if we can determine when an actual recovery of measurable proportions has arrived. It's been very hard to discern just where the economy is improving. As mentioned last week, I'll also be keeping a close eye on the Relative Valuation component of the Idiot Wave as a separate view of how corporate America is doing.

REPORT - WEEK OF 01/27/2003: It seems that CNBC and short term traders are more concerned about the market place than long term players. Each time the the market dips, Chicken Little is out there screaming that the Dow will fall to 800 and the NASDAQ to 200. Then, miraculously, the markets stabilize and even recover some of their intra and inter day losses. It appears much more likely that we're stuck in a trade range than teetering on the edge of some precipice.

Again this week I'd like to suggest that your blood pressure, sanity and disposition will all improve if you find a way to change your lifestyle so that NO TV NEWS is included in your daily regimen. It would appear that we are going to be bombarded by speculation for weeks to come. Why not just wait to read about what really happens in a good weekly news magazine? Then your brain won't be saturated with speculative nonsense. TV NEWS is one of the greatest sponsors of Terrorism. So, do your part and boycott TV NEWS.

One single component of the Idiot Wave is causing the entire index to rise very close to the High Risk range. The 13 week comparison that is the basis of the Speculation component causes this. The reason I include both the "raw" and "smoothed" data is to help reduce these peculiarities. Certainly both the Raw and Smoothed data for the Speculation index are in their Bearish range, but looking at the smoothed Idiot Wave composite shows that we're not yet to the middle of the Average Risk range for it.

A better place to look for evidence of either over-heating or a break-down in the markets is the Relative Valuation component.

In one of the accounts I manage the ACG bond fund tripped yet another sale at $8.61. These small sales do diminish the income from the account, but also build up the purchasing power for the account. Since I'm retired and have no source of earned income, I can't fund future purchases out of current pay checks. This somewhat mandates that I take profits with AIM's advice when they present themselves. Total return remains very good even with this small sale. I'll attempt to keep the Cash Reserve percentage for this AIM holding at or about the 30% mark as time moves forward. This should allow enough purchasing power to buy all the way to about $6.00 per share and still have a bit left for bargain shopping.

REPORT - WEEK OF 01/20/2003: My "Idiot Wave" shows some rising, but relatively moderate risk. Relative Valuation is bullish and so is Divergent Thinking and Zeal.

I don't think we can directly compare the situation now to 13 years ago. First, the market was reacting badly to an interest rate hike in August, 1990. At the same time, Saddam &Co. decided to annex Kuwait without asking nicely. This took the general markets down rather severely through October. After that they remained in a tight trade range but managed to recover between 5% and 10% before the first bombs were dropped in Jan. of 1991. It was at that point the markets turned upward. As the "war" raced ahead, the markets kept getting better.

Of the four components of my Idiot Wave, one recognized the indecision showing from the 1990 October lows through the first bombing. It was my "Divergence" index. The market participants were pretty equally divided between bulls and bears regarding the Gulf War right up to the time it became "active." As soon as the participants knew that the war was real, they became much more uniformly bullish. Amazing.

This time it is much less clear. This time the World's not just shooing the Iraqi's back to their own turf, but are looking to attempt to change the entire governing body of a very large piece of real estate. Yet, this time Divergence seems more sure of what will happen - even when the outcome is much less sure.

Well, I didn't name my market risk indicator the Idiot Wave for nothing. Who knows what the idiots will do? Still, looking at the overall picture, we see the market at a relatively low risk threshold as we travel through this uncertain time. My IW doesn't directly take into account political or economic news. It really doesn't care what causes speculation, confusion, or valuation to change, it just monitors these things and gives us summation.

Market risk has been rising, but so have market prices. One is expected if the other is occurring. As bad as things were from a risk point of view in early 2000, the average market participant was pretty happy through March of that year. The IW dropped out of High Risk, but never signalled a Low Risk event until after the attacks on the WTC and Pentagon. (That low risk event was very short-lived.) As ugly as things seemed to be then, it was actually a good time to be buying stocks. The Idiot Wave seems to be always taking the contrary view of things. We would have eventually made it to the low risk event of this last summer and fall, even if the attacks had not happened. If anything those events just delayed the inevitable market bottom, they didn't create it.

So, yes, the markets could revisit the lows of October, but I currently don't see a massive decline beyond that in the making. After market events like we've had, there's going to be a very high Wall of Worry which will be scaled very slowly. Profit takers will hamper any strong rally going forward. This is true no matter what happens with the U.S. and Iraq. Only the news media will care much. After all, a good old-fashioned war is the best "reality TV" one can imagine. We, who care about what goes on beyond our borders would do well to promote a boycott of television news and daily publications. We should take a News Holiday. If whatever happens isn't noteworthy enough to make the weekly news magazines, then it isn't worthy of our attention in the first place. TV is just the "Circus" part of "Bread and Circuses" that seems to be forced more and more upon the world.

AIM did some work this week on inventories.

Some of these accounts are very new. It's nice to see them getting some activity so soon. I look forward to many more times seeing these accounts turn over some inventory. It appears that the market movement in this trading channel is large enough for us to enjoy some occasional "round trips."

REPORT - WEEK OF 01/13/2003: Market internals looked pretty good last week. There was a very slight increase in the number of Issues being traded on the NYSE meaning some of the sleepers have awakened. Advances outdistanced declines by healthy margins on both the NYSE and the NASDAQ. New Highs were way ahead of New Lows. All that good news probably means we'll have a small rest period for a week.

Speculation continues to be Bearish - the only component of the Idiot Wave that is. It was just thirteen weeks ago that the NASDAQ bottomed, so we're still seeing some knee jerk reaction to that. Still there were 18 out of 41 stocks listed in Value Line that were up more than 100% in the last quarter. The best (Nortel Networks) showed a 228% gain in that time frame. It now takes a rise of over 75% just to get listed on the Best Performers list in Value Line. It took only a 17% gain last October to get your stock onto this list. To fully understand this knee jerk reaction, let's look at Nortel. It started 2002 at about $7.75 and managed to drop to a low of $0.43/share. Now it's risen tremendously from its October lows but is still about 70% off its 52 week high. So, yes, those who bought NT back when it was under a buck a share have done well and could be considered "speculators", but those who bought it a year ago and are down 70% could be considered "losers!" Okay, who's right? Those who averaged down have had the best chance of building for future success. We'll be keeping a very close eye on the Speculation component over the next month or so.

The Shipping Dept. was busy this last week with lots of small orders being filled.

I'm pleased to see the IShares sector index funds starting to get some activity. As I've mentioned, I've eliminated diversified mutual funds from our warehouse holdings and have replaced them with Exchanged Traded Sector Index funds. I hope to be able to extract more frequent volatility capture with AIM by the change. These first few trades bode well for the future. I restarted two accounts after doing a complete account reconciliation. The new trade ranges should provide some activity with these older investments. It's always painful to sell some shares of my favorite bond fund. Looking back, this last sale provided a LIFO profit of just 16%. What is interesting is that total return on this sale, if we include the three years of dividends it's paid, rises to 54%. Not a bad way to supplement one's returns. In this case we didn't do much in the way of volatility capture (just four purchases and five sales in 3 years) but collected a handsome yield while we waited.

It is interesting that as the Press seems to be mounting a loud campaign with anti-war material (which should be confusing to the market participants) we see less divergent thinking in the last week than the previous weeks. I also noted this week in TrimTabs that December looks like it will close the month with positive cash flows into growth stock funds for the first time in quite a while. Net inflows to mutual funds of all kinds was about $11 Billion. It would appear that the Press is at odds with where the money flow seems to be going.

We have passed the 7000 Post mark at the AIM Users Bulletin Board. All that posting in just under 12 full months. That's an average of about 20 posts a day! Thanks to all who made it a great place to converse, learn and have fun.

REPORT - WEEK OF 01/06/2003: Two Thousand and Three has started off to be an interesting year with plenty of price movement on any particular day. This bodes well for those of us nearing AIM designated Trade points. As much as potential war and nuclear nonsense seem to be in the news, the level of uncertainty isn't as high as we would expect. My Divergence component sits in the middle of its Neutral range. It's a spooky component that can race from one extreme to another in short order, but right now is just yawning with disinterest.

Speculation has been rising as predicted. This is more a timing issue than true speculation. The Value Line data I use for this component compares prices to 13 weeks ago. That happened to be where we saw the NASDAQ bottom out. So, any comparisons to that time will tend to look pretty good.

There seems to be no motivation to expand the number of issues being traded on either the NASDAQ or the NYSE. Hence we've seen my ZEAL component sitting in the Bullish end of things for a very long time. This goes along with the thought that 2003 might be a big year for mergers and acquisitions.

Finally, the real reason that the Idiot Wave has remained at Low Risk for so long is displayed best with the Relative Valuation component. We look at the broad Value Line P/E ratio and add to that the 13 week Treasury rate and come up with a value that looks to be historically very bullish indeed. It would take a major rally in the markets to take this back even to the Neutral zone.

Each of these components needs to be watched and weighed with the others. If Speculation gets out of hand, we'll start to see it in Relative Valuation as well. Right now we're okay. Divergence will settle down whenever we get a break in the seemingly endless barage of bad news on the Television. I think Zeal is safely in the Bullish zone until the average P/E rises. No use taking companies public when we can't get a decent multiple of earnings as a price!

I got a kick out of this week's Value Line "Best Performer." It has risen 196% in thirteen weeks. Well, I thought I should see just what was so special about Amkor Tech. AMKR, on October 18th, 2002 was reviewed by Value Line. That's almost 13 weeks ago. Here's what Value Line had to say,

REPORT - WEEK OF 12/30/2002: What a year to review! We started it off with the Idiot Wave in High Risk and ended with it way down at Low Risk. Since Low Risk events are so rare, this one is of interest to me. Never before have we had a Low Risk event that included so many things happening at once. We have short term interest rates at a very low level, historically. We have now been essentially "at war" since 9/11/2001. A recession, that had its roots sprouting before the New Millennium, hung around way too long. An economic recovery, although weak, is being generally ignored by investors. Corporate acquisitions and mergers are on the rise as "capitalization" of companies is way off from just a few years ago. Many possibilities arise from these relative "bargains." Reports of poor holiday sales abound at the same time talk of huge traffic jams occurring at shopping malls around the country. Changes in mutual fund cash flows seem to indicate the end of their bleeding even as investor confidence is as low as I've seen it. The previous 12 months have shaken even the most stalwart of long termers.

It looks as though the year is going to end with
- NASDAQ Composite - DOWN approx. 32%
- Russell 2000 - DOWN approx. 22%
- New York Stock Exchange - DOWN approx. 21%
- Dow 30 "Industrials" - DOWN approx. 18%
The Idiot Wave spent 12 of the first 26 weeks of the year in its HIGH RISK zone. The rest of the time it was above Average risk all but two of the weeks (the last two). During that time the NASDAQ fell about 17%. That's quite different from the second half of the year. Only 5 weeks of the second half were spent with the IW above the Low Risk level and all 26 weeks were below Average risk. The NASDAQ fell an additional 6.4% during the last half of the year after recovering from its lows of early October. Surely the two halves of the year are different.

Well, what might we expect from 2003? I can tell you that I'm always glad to have a New Year start with the Idiot Wave showing Low Risk. It's only happened twice before since 1982 (1988 and 1991). Both times gave us very nice rallies in the coming year. Companies are doing their best to get in good financial shape. Those various leaders who are involved in the current war are doing their best to resolve the problems they see. A general feeling that the worst might be over for the stock markets seems to be materializing. Quick profit taking in any rally should keep speculation under control. Rallies and consolidations should give AIM users multiple opportunities to profitably trade their accounts.

That's as good as I can predict. Sorry not to be more precise. My own portfolio has been rearranged to the best of my abilities. My cash reserves are sparse, but usable. My bond funds are paying nicely and have given me some profit opportunities during 2002. They should be ready for when the FED starts to raise interest rates again.

We successfully managed to move our Bulletin Board from Silicon Investor to InvestorsHub. This brought with it a new energy as so many silent readers became contributors. Thank you all for your efforts. Thank you all for remaining polite and thoughtful during a very troubling year in the stock markets.