Speculation data for the Small caps shows a marked decline to its Neutral range. This has taken quite a bit of pressure off the Small Cap iWave for this week as you can see on the graph above. Relative Valuation remains bearish in the small caps, but all the other components are now neutral.

Recent trade activity being mainly selling leads me to think we're doing okay. The S&P 500 and the Dow seem to want to advance while the NASDAQ Composite has stalled. This could be partly due to the small caps being at higher risk than the large caps. It could also be part of a shift of assets from the smaller cap end of the market to the larger end. Time will tell.

A first this week was the visit by a couple of wild turkeys around our bird feeders. I've seen them in the area, at the edges of fields and in the distance. My friends tell me they're extremely difficult to hunt as almost anything spooks them into running off. Well, these birds seem pretty tame getting this close to the house and being inside the city limits. This photo is taken from our kitchen window. These birds' heads are just about hip height to give you an idea of scale. Their foot prints in the snow are nearly 4" long by about 3" wide. One is slightly larger than the other and I'm not knowledgable enough to be able to guess gender.

REPORT - WEEK OF 12/05/2005: There's both good news and bad news on Small Cap Speculation this week. First the good news: There's only three stocks in the Best Performing list that are up over 100% this week. That's down from 6 last week. Now the bad news: One of them is up over 700% in the last 13 weeks! Oplink Comm. (OPLK) gets that honor. Wow, their sales, earnings, book value, profits, cash flow and dividends must have really perked up in the last quarter to justify such a rise! Or is this just blatant speculation?

By comparison, the best performer in Value Line's larger cap 1700 stocks is only up 72% this week. Shaw Group (SGR) gets that honor. It takes a 37% rise in the last quarter to get listed as a "best performing stock" while a 27% loss puts your company on the "worst" list. Over on the Best list there are a number of energy related stocks, some tech and software companies and even one airline. The Worst list is made up of one of the oddest assortments of stocks I've seen in over 20 years of monitoring this group. Calpine, General Motors, Dana Corp. American Italian Pasta, Tempur-pedic and Human Genome give a cloned person a bad, low energy ride in a car with worn out parts to go out to dinner and then to bed!

If it were my money, I'd be thinking of profit taking in the small caps and shifting to the larger cap stocks. While I wouldn't liquidate energy stocks, I wouldn't be adding to positions in that sector at the current prices. On the larger cap end, there's been very successful runs in Apple, Google and the like. I'm certain that if these had been AIMed, you would have already taken very nice profits with AAPL up 45% in 13 weeks and GOOG up 47%. Many of the smaller retail chains like JoAnn Stores (JAS), Bebe Stores (BEBE), Nautilus (NLS), Sharper Image (SHRP) and even Saks (SKS) have been taken down with serious sell-offs. It might prove to be a good time to look over that sector for good AIM candidates as they are discounted between 30 and 50% from just 13 weeks ago.

While discussing a broadly based ETF model I was stating that AIM's goal is to keep value at risk relatively steady during both rising and falling markets. It does so by selling off premium value above that risk amount and storing the proceeds in the form of cash. Conversely it back-fills our inventory value when market prices decline to keep us near our stated risk level. While I've usually presented AIM's activity in Stacked Bar Graph format and felt it did a pretty good job of showing this, it appeared there was possibly a better way of demonstrating this. So, I separated the Equity and Cash values into separate bar graphs for this new image:

REPORT - WEEK OF 11/21/2005 & 11/28/2005: We're being blessed with low speculation in the large caps again this week. That's not true for the small cap stocks, however. It continues to show an overbought condition not in evidence in the larger cap stocks. Valuations are not as healthy in the small caps either. It's quite possible that some of the speculative money that had chased Real Estate for several years is coming back to the stock market. While looking for a new investment in stocks, these dollars seem to be chasing what was last hot (small caps) rather than looking for value (better in large caps).

November turned out to be a good month for VIEW. We had a healthy 2.5% gain in our retirement account which brings the total for the year to date to 5.1% overall. The month's winner was Technology (IYW) with a 6.1% gain and Healthcare (IYH) came in with the lowest gain of 1.8%. For the year to date, Energy (IYE) still stands out with a 20% overall gain including AIM's cash reserve while Consumer Cyclicals (IYC) actually shows a YTD loss of 0.4%. Several of these funds are nearing their next respective selling prices. This graphic courtesy of Stockcharts.com does a nice job of showing the sector differentiation:

And this grapic shows the cumulative effects of AIMing these sectors since September of 2002:

REPORT - WEEK OF 11/14/2005: Well, we only got a couple of weeks of relief in the Small Cap Speculation component. This week it jumped up enough to reverse the direction and turn that segment of the market bearish again. Large Cap Speculation remains calm for this week. Even so, both the market segments show a rise in overall risk. The best thing I can say for the recent action of the iWave is that it shows an increase in volatility that had been missing for a couple of years. This will eventually pay AIM users some profitable dividends, even if it is a bit unsettling.

Steve "Grabber", on IHub asked if I could compose a graph that showed the two parts of the Relative Valuation so we could see the effect of the FED's interest rate increases. This Stacked Bar configuration does the job nicely.

Here you can see the interest rate climbing over the last year while P/E had come down a bit. However, it's been a balancing act all the way. I believe the market's upside potential is being limited by this very component's current reading. It indicates that the market is currently fully valued. Not quite Bearish, but with little room to the bearish ceiling. Also of note in the graph is how clearly Relative Valuation spelled out a very bullish period in late 2002 and 2003. For those of you new to this newsletter, back then the iWave was giving very firm Low Risk readings. (See the Archives for that time frame)

The small cap end is in worse shape having a higher P/E. I still don't have enough data to fully qualify Relative Valuation of this segment, but with a P/E of 19.2 and 13 Week Treasuries near 4% it sure looks like it's over priced.

Clearly the markets need to earn their way out of this condition since we can't expect a lowering of interest rates any time soon. The only other choice is a correction to bring valuations back more toward the mean. Prudent levels of cash should be held to give your Purchasing Department the leverage it needs should the markets not have their year end rally. There is still a lot of divergent thinking among investors as evidenced by the Bearish reading of the Divergence component. Last week there were 556 New Highs simultaneous with 477 New Lows over the last 52 weeks. We have to ask ourselves, "Which group is right?" Mr. Fosback considered this a short term bearish signal.

REPORT - WEEK OF 11/07/2005: A choppy week of action with the indexes rising a bit more. As we see in the iWave components, there's some hand wringing going on with Divergent Thinking. We have a lot of new highs and lows simultaneously right now which shows the market's confused about what its next direction will be. It's the number of new highs that is swelling right now while the new lows remain pretty large also. This may be part of the year end "tax planning" selling that goes on. Sell the losers to capture losses to offset gains. Pump cash into the best stocks of the year hoping that they continue into next year. Window Dressing - so to speak.

Speculation is just about at its "Bullish" mark as of last week. I always feel quite comfortable under such a signal.

Even the Small Cap Speculation has fallen off dramatically in recent weeks.

So, with these two components under a lot of relief right now, we can see why the market is attempting to rally. The NASDAQ Composite is up over 6% already from its recent lows. The S&P500 is up over 4% from its lows, too. All in all the markets seem healthier now than they did before the last High Risk event. Moderate speculation and "neutral" relative valuation for the large caps may spell the beginning of a large cap rally that could extend to the next ceiling. My guess is that ceiling for the S&P 500 is going to be up around 1300. The NASDAQ Composite might make 2250 again before it tops out. Much depends upon how the current earnings reports come in.

REPORT - WEEK OF 10/31/2005: More good news as the iWave Risk indicators for both Larger and Smaller Cap stocks continue to be below their respective moving averages. In the mean time my own portfolio which had been suffering during the High Risk period is coming back nicely. The reports coming in on Investors Hub indicate that other AIMers are also getting some benefit from rising prices and some sales.

It is almost like there's too much too soon here. We'll have to wait to see how the various components of the iWave settle out over the next few weeks. We don't want to just see it head straight back into High Risk again.

We did add some shares of Sun Microsystems to the Warehouse this week. It seemed to be a good one to set up for AIMing as we watch David battle the Giant. Along with that we've had some buys that have occurred in the last week or so. We added to our GNSS and CBK holdings in recent times.

There are quality stocks that can be purchased and AIMed with patience. We don't need next year's biggest gainer to build out our portfolios. Cyclical stocks which respond to market pressures like we've had in recent times do quite well with AIM and at a lower threshold of risk. Many mature industries have stocks that pay dividends while their share price floats up and down. Total return on these stocks can be quite good when combined with AIM's cyclical profit capture. Please keep these types of stocks in mind as well.

REPORT - WEEK OF 10/24/2005: For the first time since the week of July 22nd the Small Cap Speculation Index dropped to a neutral reading. It seemed as though it was stuck in the BEARISH range for good! While a 155% gain in just 13 weeks may not seem "mild" in speculation, it is way down from the 900+% gain that had been showing a week or so ago. We'll take improvement any way we can get it!

The P/E ratio of both the traditional Value Line and its small and mid cap edition dropped this week to also help bring about reduction in the overall risk reading. Of the six components (two shared by large and small cap) only one increased its risk level and only slightly. All the others were down nicely. This can be easily seen in the graphs above.

So, while we may not be through completely with this portion of the market's cycle, it appears that much of the down side risk has started to evaporate. And, it seems to have happened without too much total damage to the overall market. This cycle we saw two of the four components of the Large Cap I-Wave go to their respective Bearish levels at the same time. Three components were involved at various times. On the Small Cap end of the I-Wave, two were nearly continuously Bearish while there was a brief period with three components simultaneously Bearish.

So, what's next? Earnings are coming in on many companies right now, there's a change in the administration of the Federal Reserve Bank coming after the first of the year, energy costs are still way above last year and we're finally coming to the end of hurricane season. So, with that mix, I'm sure we'll see plenty of activity - whether good or bad it's hard to say. Still, we're now back to about the center of the Average Risk range for the larger cap stocks while the smaller cap stock risk is falling quickly. Risk should be easily managed by AIM going forward.

REPORT - WEEK OF 10/17/2005: Relief has started to arrive for the worrisome iWave Large Cap Risk Indicator. It dropped an impressive 11 points in just one week. Most of the improvement came from the Divergence component showing that everyone had decided the markets were awful. When they're all in agreement, no matter whether it's because they think things are great or awful, the results are bullish.

There was further reduction in the Speculation and Relative Valuation components as well. The cumulative effect is a relaxing from the high risk reading we'd had for 6 weeks.

Now, the Small Cap end of things has not responded to the Divergence improvement mainly because the Speculation in small caps continues at a scary pace. We'll have to wait and see if there's been some improvement with this week's data. In the mean time, it would appear that Large Cap is the better value right now.

There's been some discussion on the IHub Bulletin Board about variable SAFE and Min. Order settings. The idea was to examine what were the effects on Cash Burn Rate with different settings. I thought for the sake of learning, I'd start with some basics and then work through these various options. However, establishing a baseline seems to be necessary. To do this we calculated each buy price needed to satisfy AIM's minimum requirements with different settings. We also looked then at what was the lowest price/share for the last purchase and what the average cost/share was.

AIM Variation Studies

Settings	SAFE = 10% SV, Min. = 5% SV	SAFE = 10% SV, Min. = 5% PC	SAFE = 10% PC, Min. = 5% PC	SAFE = 10 PC, MIN. = 10% PC
Total Shares Purchased	2437 Shares	2491 Shares	2522 Shares	2579 Shares
Lowest Price/share	$5.43	$5.34	$5.19	$4.92
Next Sell Price	$7.16 (31.8% LIFO)	$7.05 (32.0% LIFO)	$6.80 (31.0% LIFO)	$6.90 (40.0% LIFO)
Portfolio Control Value	14813	14921	14910	14807
Portfolio Total Value At Last Buy Price	$13,727	$13,574	$13,398	13,160
Average Cost/Share After Last Buy	$8.004	$7.918	$7.808	$7.572

(PC = Portfolio Control, SV = Stock Value)

The first column is AIM "by the book" starting with $10,000 of stock and $10,000 of cash. All examples are started the same, only the settings have been modified. Second column gives us a few more shares by letting the minimum order size increase along with Portfolio Control's value. The third column links both SAFE and Min. Order to Portfolio Control. Finally, just for fun, we increased the Minimum Order to 10% of Portfolio Control to see what would happen.

Many more possibilities could arise but this test seems to indicate that linking either or both the SAFE and Minimum Order Size to Portfolio Control instead of the more variable Stock Value creates more efficient purchasing as indicated by the dropping Average Cost Per Share. The first three examples show LIFO gains from the last purchase that are essentially identical. It's only with the increase in the Minimum Order Size that we see an increase in the LIFO requirements to start recovering cash.

The discussion on the IHub Bulletin Board has also discussed increasing either the SAFE value or the Minimum Order Size on sequential Purchases. We can imagine that it will conserve cash and buy to deeper discounts, but we need to also learn what happens to average cost per share and also our Next Buy Price. I intend to study this further and report in future Newsletters.

REPORT - WEEK OF 10/10/2005: If last week's market action was a bit confusing to you, please don't feel as though you are alone! With 589 New Highs and 475 New Lows all in the same week it seems as though everyone's a bit confused about which direction the markets will go next. Looking at the Advance/Decline data for last week shows 909 advances on the Nasdaq and 858 on the NYSE. The Decliners numbered 2363 on the Nasdaq and 2639 on the NYSE. Here we see the breadth as turned quite sour.

The non-U.S. markets have done well in the last month or so but even they took a breather last week. While not off a lot, they have given back some of their peak values seen two weeks ago.

Where this will finally play out as far as index values are concerned is still just a guess. So far the indexes are off minor amounts from their peaks. However, the confusion in the market place has many investors worrying about 3rd quarter earnings reports. It seems the markets are looking for a reason to go down. The iWave has given us plenty of warning and Mr. Lichello's excellent model has again given us the luxury of substantial cash in reserve should we see a nasty snap back in the market place.

Personally I welcome an opportunity to put some cash back to work in the market place. Money market fund yields have improved so I don't mind waiting as much as I did a year ago. Now, if the prices will just fall enough to get AIM buying, I'll be smiling.

REPORT - WEEK OF 10/03/2005: Capstone Turbine is winding down. This has brought some relief to the Speculation component of our Large Cap iWave. While still near its own Bearish range, it is enough lower that we only have one component officially in the Bearish territory any more. Still, the iWave remains inside its own High Risk territory. Relative Valuation also dropped some this week which also helped reduce overall market risk.

The Small and Mid Cap markets are still under higher risk although there's been some internal component improvement this week. Relative Valuation and Speculation are both bearish along with the common component of Divergence remains bearish. We're watching this corner of the market very carefully.

This week showed some reversal of the recent selling trends we've seen in the non-U.S. Exchange Traded Funds. Latin America along with Asia and Japan have slipped back from their recent highs and our recent selling prices. So, again it would appear that Mr. Lichello's ghost was working in our favor to have us liquidating premium shares in the last month.

Last week there were again lots of new 52 week Highs and Lows simultaneously. This confused state won't last long. The market is attempting to sort out those who are bullish and bearish and will do so rather quickly. In the mean time we'll continue to see the market stalled. I'm being careful with my cash reserve and am sticking to a sequential buy pattern of only one buy in 30 days. So far this has kept the few stocks requesting purchases in good shape. I'm also still using 5% of Portfolio Control as my minimum order size. This makes each sequential buy a bit larger than the previous one. This also helps to improve the discounts needed on sequential purchases. I've been playing around with the idea of not doing any buying while the iWave is showing High Risk. However, I'm not yet convinced this is a constructive strategy. Some stocks appear more sensitive to market risk than others and may move to buying levels sooner than others.

Interest rates have come up enough that we're starting to see some improvement in yield from our Cash Reserves. It won't take much for the yield to exceed the average dividend of the market place. Value Line's Large Cap average yield for dividend paying stocks is 1.7% and for the Small Cap dividend payers, it's 1.8%. With money market rates now heading upward of 2.5%, this gives us some more reasonable return on this important component of our accounts. For a long time "cash was trash" with such low yields. Now we can smile a bit more when we look at our cash reserve levels.

REPORT - WEEK OF 09/26/2005: More expatriating of cash seems to be taking place as the nonU.S. Exchange traded funds rise again this week. All this while the U.S. indexes show only moderate support this week. The weekly data on Advances and Declines last week was very sad with decliners numbering twice advancers. Divergence soared, too, with new 52 week highs and lows both being substantial. We'll have to see how this week closes out.

I've had no newsworthy trades cross my desk and it appears both the Sales and Purchasing Departments are on vacation. Purchasing has been told to delay any buying until we see the iWave return to the Average Risk range or better. Discounts are expected to be better later on.

We now have two bearish components in the large cap area and one close enough to be essentially also there. In the small cap area we have three components warning us of needed consolidation. We remain cautious and thankful for the cash we've raised so far this year and the foreign diversification added over the last 12 months.

Please note the new AIM ETF page devoted to Non-U.S. based Exchange Traded Funds. While this group took a while to get rolling after we started our model, it is now moving ahead nicely. Japan is the latest contributor to Cash Reserve in this group.

REPORT - WEEK OF 09/19/2005: We continue to see Capstone affecting the iWave Speculation component this week. However, with three of the four components rising in the same week, we can't place the entire blame on it. Risk is high without CPST and is even looking higher in the Small Cap arena.

While all this risky business is going on here in the U.S. there appears to be quite a bit of activity going on outside the North American continent. We've had sales trigger with EWJ (Japan), EPP (Far East less Japan), EWU (England) and EWW (Mexico) in the last month. So maybe there's been a "continental drift" of money in recent times.

Also of interest to some investors is the rise in Precious Metals valuation. We model VGPMX, the Vanguard precious metals fund with AIM and occasionally post about it on our AIM BB at Investors Hub. After years of poor performance, precious metals have had an excellent run-up since when the market peaked in 2000. Take a look at this graphic and see how both Yellow Gold and Black Gold have done in that time frame. Also note the dismal performance of the S&P 500 Index Fund in the same period.

I noted this week that Australia has moved ahead of the Netherlands in readership and that Canada is closing in on 10% of our base of followers. The United Kingdom also continues to increase in total readership. Thank you all for your interest and your trust in both Mr. Lichello's model and my iWave risk indicator.

REPORT - WEEK OF 09/05/2005 & 09/12/2005: Only one of our stocks triggered a Buy recently. ADCT reacted badly to the news that it was again earning money instead of losing it! AIM knew what to do with this bad reaction and medicated it with CASH. In recent weeks we've seen sales in IJT and IYE in both our model accounts and in our real ones. IYH also tripped Sell trigger points. These sales represented approximately 5% of the positions while the ADCT buy was for an additional 10%. On the foreign front, we have had sales in EWJ and ILF, both for around 7% of the existing holdings.

As you can see, we've entered into Halloween a bit early this year. The I-Wave for both the larger and smaller Cap. markets is now firmly in the HIGH RISK territory. To understand just what ghosts lurk, maybe it is a good idea to look at the underlying components.

So, if we dropped Capstone from the database, where would we stand? Actually, it still wouldn't be a great picture. The I-Wave would be at 49% Cash indicated instead of 56%. That's an improvement, but only gets us one point below the High Risk territory. Based upon this, I'd say we should remain cautious about starting any new AIM investments at this time. I also, as a general rule, curtail any AIM designated Buys while the I-WAVE is showing High Risk. That is my suggestion at this time. Hold off on satisfying any of AIM's requests for buys and also hold off on starting any new AIM holdings until the market risk quiets a bit. With only one component currently showing BEARISH, we need to be on guard, but not exactly paniced at this time.

REPORT - WEEK OF 08/22/2005 & 08/29/2005: Not a lot of trading to report at the Warehouse. We did do some business overseas selling off 5% of our EWJ shares last week, but that's about it. Some activity has shone up in the AIM PIC list in recent weeks. Three sells and as many buys have tripped in the last three weeks. Money is leaving some areas of the market and searching for homes in new locations.

Market risk seems to have peaked right along with the markets themselves. It's nice to see a bit of moderation in both the indexes and our trusty I-Wave. While far from showing a return to "bargains" it is at least showing some moderation in risk. The P/E of both the larger and smaller cap sections of the market have come down in the last two weeks. Small cap speculation continues to be "high" but has also moderated. All four of our I-Wave components are now back to being "neutral" in their risk assessment.

REPORT - WEEK OF 08/15/2005: Well, the I-Wave graphs are getting a bit spooky even though it's months before Halloween. The Small Cap I-Wave is showing very high risk with speculation and relative valuation as the major reasons. The Large Cap I-Wave is rapidly approaching its own High Risk territory but is being driven by relative valuation only.

Rising interest rates along with P/E levels on both the smaller and larger cap stocks is presenting a ceiling that will be the limiting factor for the markets in the near term. Earnings reports will need to show significant improvements to bring the P/E levels back down. That would allow the markets to move out of this trading range.

We're keeping an eye on the IPO market as well. It can suck speculative cash out of the traditional markets and thereby leave them with no change for many months. So far we're not seeing enough IPO activity to concern us even if BARRONS this week says that market is BOOMING. Well, I think it is just barely keeping up, personally. If they want to call it a boom, that's their business.

This time last year the I-Wave was giving us a healthy report with a low risk signal. The S&P 500 Index is up about 9.5% since that signal was given. The NASDAQ Composite is up an impressive 16.9% over the same time frame. I hope your own portfolios are doing as well. The I-Wave again proved to be a good guide through this rather torturous market. Now that it is nearing a high risk signal, I hope everyone is paying close attention again.

REPORT - WEEK OF 08/08/2005: Again this week we had selective selling going on at the Warehouse. The action was in Energy as we sold shares in each of 7 different accounts we manage. This made our warehouse manager happy as the room on the shelves was needed for the expanding Greenback inventory. I also took note that a precious metals mutual fund that I track triggered an AIM Sell this week for 5% of the equity. This is the second sale this year and the third one since adding to inventory in 2004.

As you may have noticed, we saw a bit of a "topping out" in both the NASDAQ and the S&P 500 last week. Whether this is the where we see a consolidation start or whether it pushes the extremes a bit further is as of yet unknown. There's some upside to the Large Cap that hasn't been yet exploited, but it appears the Smaller Cap stocks are starting to show the strain. I put the "raw" data back into the Small Cap I-Wave this week. I'd hesitated to do so because of its erratic nature, but now that I've added it, feel that it adds some strength to the conviction that this part of the market has gone as far as it can for now. Consolidation at this point would be health. If it runs up higher before consolidating, then the risk of a bigger correction looms larger.

While I have been keeping the data for less than a year in several foreign Exchange Traded Funds, recently there's been some activity. So rather that wait for more data to accumulate, I'm going to be building a separate page for these non-US ETFs. Here's an example:

REPORT - WEEK OF 08/01/2005: Although Veale International Equity Warehouse continues to enjoy a healthy selling spree we've not lost track of where the I-Wave is headed. Both the Large and Small Cap markets are showing increasing signs of stress. So, all sales are welcome! This week we've seen sales in ILF, IYH, EWW, EWG, ADCT and in our PIC List virtual account sales in CGNX and APCC.

If you're starting new AIM accounts look at the risk trend on the above graphs. If you're maintaining AIM accounts, think about your overall liquidity compared to the I-Wave's suggested levels. While the Large Cap market might yet have some gains ahead, it appears that the Mid and Small Cap end is playing itself out more quickly.

REPORT - WEEK OF 07/25/2005: While we have been enjoying a lot of Sales activity at the Warehouse, we've also been keeping a close eye on our I-Wave Market Indicators for signs of stress. Of note is that both the Large Cap and Small Cap markets are showing increasing Bearishness in their respective Relative Valuation components.

Both of these indicators give me the impression that we're nearing a short term market top with little or no room for significant upside expansion of the major indexes. As in the musical "Oklahoma", ....they've gone about as fer as they can go..... It will require an interest rate reduction (highly unlikely), for corporate earnings to advance to lower P/E, or a market set-back to lower average P/E to get back into balance.

The large and small cap markets are being treated differently by investors and speculators. Currently there's very low Speculation showing up in the larger, more established end of the stock market while the smaller cap stocks are showing considerable Speculation.

From these two measures it would appear that the Small Cap end of the market is currently showing a higher overall risk profile than the large cap end. This is summarized in the I-Wave graphs above for each market cap group. It may turn out that the small cap market can stand a bit more speculation and higher Relative Valuation, but it also appears that the opportunities presented to investors in August and September of 2004 are long since gone. Please exercise caution if you are starting new positions and let AIM help you raise your cash positions in existing portfolios.

The other two components, Divergence and Zeal, are shared by both the large and small cap I-Wave summaries. These are telling us that, for now in these measures, there's no concern.

In the past I've mentioned that the best signals from the I-Wave have come when all four components are in harmony. This time they're not. However, they are showing us signs of internal stress - sort of like a "Magnaflux" test in metallurgy. We'll watch these closely in following weeks.

REPORT - WEEK OF 07/18/2005: The Warehouse continues its Summer Sales Event with new orders arriving quite frequently. Two of our inventory items were hot sellers this week each with double sales.

Cognex's stock was added as an inventory item back May of 1996 and has remained a popular item with our customers ever since.

Genesis Semiconductor's stock was added more recently in October of 1999, was wildly popular through the end of 2001. We ended our activity with this stock from December of 2001 through January of 2003. At that time we fired up the AIM engine and got the machinery rolling again.

As you can see in both cases Mr. Buynhold's decision to "let it ride" was not necessarily the most solid he's made. In both "real time" AIM portfolios from my account AIM has turned moderate performance into very good performance during the ownership and management. It is this exact sort of stocks that Mr. Lichello first designed AIM back in 1977. The method continues to turn in better results with moderated risk when owning cyclical company stocks such as these.

REPORT - WEEK OF 07/04/2005 & 07/11/2005: Another useless attack on innocent people was perpetrated by fools. When will they ever understand that with the same amount of effort and planning put toward something of productive nature would bring about much more beneficial change for all?

For investors this time the surprise was the resilience of the markets and the increased determination of those attacked to do what is necessary to end this waste.

Gain in the various market segments was enough to trigger a "real" sell in my GNSS holding and "virtual" sells in the PIC List stocks (ELX and MTW sold, IVC bought) and in the 13 Sectors portfolio a large sale in IJS. Let's hope Osama was Short the market the day before the attack and lost his ass.

This seems like a rather short report for a two week condensed version, but that's about all I have to say this week.

REPORT - WEEK OF 06/27/2005: The PIC List and the 13 Sector virtual portfolios have both been updated recently. You should find some of the results interesting, I'm sure. While neither is setting the world on fire both have been holding their own in a tough market.

This has been a quieter week around VIEW. The warehouse manager says that the CHY inventory has all been counted and put on the shelves. We hear there's interest growing already. With a pause in both the NASDAQ and S&P 500 indexes seeming to be prelude to the long holiday weekend in the U.S. not much occured. We'll have to see how the rest of the summer goes as Vacation Time kicks into high gear.

REPORT - WEEK OF 06/20/2005: Well, just a week ago I was talking about the Large Cap risk level rising while the Small Cap was falling. This week Small Cap played Catch-up rising 4 points in just a week. So, now risk appears to be spread out more evenly across the entire market. Both Large and Small Cap areas' P/E remained steady this week but we are seeing a surge in Speculation in the Small Cap arena. This accounts for the big jump this week. Personally I welcome a bit more speculation in the market place. At this point it would seem "healthy" to have a bit more.

As the risk has been rising our Warehouse has been busy reducing inventory. This week we had sales in EWW (Mexico ETF), EPP (Far East ETF) and JBL. All sales were executed, as usual, at a profit determined by AIM's internal formula. Much more of our inventory is nearing a point where we'll be selling portions. Even if this proves to be nothing more than a bit of Summer Rally, it is still fun.

I mentioned on the Investors Hub AIM Bulletin Board that after nearly 20 years of using ACG as my main source of living expense income I've sold out of it and moved the dollars to a corporate convertible bond fund (CHY). It is my current thinking that CHY has less downside risk and greater dividend stability than does ACG. I will continue to use AIM to manage this bond fund just as I did with ACG. In my early days of ownership of ACG I attempted to trade the small price swings that it had. However, I found that this very long cycle area of the market (long term bonds) had large price swings that trended for as much as 2-4 years. So, why start buying when the price is down a small amount when we know it will probably continue to drop for a very long time? Why not just let near standard AIM settings wait out the big drop and then scoop up the better priced higher yielding shares nearer the bottom of the cycle. My primary mission with this part of my portfolio is Dividend Capture not Volatility Capture. By doing so, I also could shrink the Cash Reserve level of this AIM managed holding to a bare minimum of 25% to 30% during price peaks.

With the more traditional AIM settings for ACG, I bought heavily into the 1990 slump, sold into the '93-'94 rally, bought heavily into the '95 bond bear market, sold into the 1998 peak and again bought heavily into the late 1999 - 2000 bottom. Once again as the price/share headed upward of $9/share in 2003 we were again net sellers of this fund. No buying has yet been done since that time. So, since 1986, there have been three periods of AIM directed selling and three periods of buying. Along the way, so as to keep my income rising to match my living expenses I rebalanced my overall portfolio taking profits from my "growth" side of the account and doing significant additions of the bond fund in harmony with AIM's lowest price buying. On one of these occasions I increased my bond fund holding around 33%. This meant that my income for living expenses rose accordingly since it was profit money from zero dividend growth stocks that funded the purchases.

In all the time since 1986 when I started off as a private investor it has been my goal to not touch Principle for living expenses. It has been my effort to have an income portfolio that was large enough to support my family and a growth portfolio that would help the overall account keep up with inflation. For the most part I've accomplished this goal even if the last five years have been tough ones for the "growth" side.

REPORT - WEEK OF 06/06/2005 & 01/13/2005: The I-Wave is telling us the Tale Of Two Markets this week. While the Large Cap risk had risen for several weeks, the Small Cap had been in descent. The Large Cap I-Wave has risen in harmony with the S&P 500 while the Small Cap has been moving somewhat opposite the direction of the NASDAQ Composite. I might have to find a new scale for this smaller cap item if this persists. In the short history of the Small Cap indicator it would appear that it generally moves in harmony with the Nasdaq Composite.

We're very near some selling activity again at the Warehouse. Several items we inventory have approached proper sell points. We're hoping to close those deals soon.

Several AIMers reported their monthly and YTD performances on the IHub AIM Bulletin Board recently. I think all would concur that it's been a tough year for making money. Those trading individual stocks seem to have had more activity than those with Exchange Traded Funds, but there's been greater stability with the funds. So, individual stocks have scored higher on the "Volatility Capture" end of things.

Interest in AIM on several fronts is improving. This will be good for all involved.

REPORT - WEEK OF 05/16/2005 Thru 05/30/2005: From the Shoot Yourself In The Foot Department, it has taken me far longer to recover from a recent computer malfunction than I ever thought. I was very confident in my methods of backing up my W-98 machine and thought at most I'd have a week or two of data to repeat if there were a problem. Well, when the hard drive started to fail, I thought it wise to "ghost" it one last time in case it wouldn't light up again the next day. In doing so, I corrupted my mirror hard drive's FAT tables. All the data was there, it was just in a unsearchable form.

When I looked at the Build Date of that computer and saw that it was a 2000 model year, I decided to buy a new machine and move to XP as a platform. This involves work on its own. Several of the ancient software items I've used for up to 17 years just plain didn't want to be as happy in XP without a lot of fiddling around. I also bought a "data recovery" software which worked pretty well. It will scan a disk and create huge lists of what's stored on the drive. They're not in any particular order, but if you want to recover all your spreadsheets, you can "search" just for those files extensions and it will collect all the bits and pieces.

So, nothing important but time was lost in the process. If I'd not attempted one last backup, it would have gone as planned and I'd still be using the W98 machine. So, half the work would still have to have been done. In the mean time I've upgraded platforms, hardware and added some cute little gizmos like a USB remote hard drive and floppy drive.

The I-Wave for Large Cap stocks had a few weeks of rising risk and still sits just above the long term average value for that indicator. Not much excitement there, and it's too early to see if it's a trend. Considering the general improvement in the S&P500 during May, it should be no surprise that we'd see a little bit of rising risk. At this point, the leader for the indicator is our Relative Valuation component. It's the closest to its own Bearish territory and needs to be watched closely.

The Small Cap I-Wave shows a slow decline in risk over several weeks. This brings the indicated Cash level for that index below 50% for the first time since late 2004. While we've not yet assigned Low, Average and High Risk values yet to this new addition to the site, we can feel pretty well assured that if it's asking for over 50% Cash, it doesn't think it is the BOTTOM of the market cycle! I plan on gaining more historical data to flesh this out a bit and see if we can establish its normal 80% data range and its 10% extremes on both the bullish and bearish sides.

As always, we've continued to have very good discussions on the AIM Users bulletin boards at IHub. The latest Millennium Post Grub Winner was TooFuzzy! Congratulations for being a part of adding another 1000 posts to our board.