WEEKLY NEWSLETTER ARCHIVES
for 1998


DISCLAIMER

I attempt to get good information and data on which I base my judgement of the market. However, if you have ever listened to any show on investing you know that it's all just opinion in the end. Same here. This is personal opinion about what I feel the market is doing. It relates to the method called Automatic Investment Management (AIM) but that's as far as it goes. I'm an individual, Not Licensed, Not Registered, Not Employed. Some of the stocks mentioned will be one's that I own and most I don't. If you enjoy the reports, good. Knowing something about AIM will make the reports more meaningful. Have fun, and happy investing.
IDIOT WAVE - Week of 12/28/98

Suggested Cash Reserve For New AIM Accounts Using:
Individual Stocks____________________39% Up 2 - Average Risk
Growth Stock Mutual Funds__________26% Up 1 - Average Risk
IW Risk Oscillator____________________"+8" - Rising Risk

  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 16.1 + 52 week Treasury Rate 4.51 =____ 20.61 down 0.5 Neutral
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 19.3 up 5.2 Bearish
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 5.0 up 1.5 Bearish
    (Divergence)
    % change, # of issues on NYSE & NASDAQ_______________-1.8 up 0.1 Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 12/21/98: This week's report is sort of a year in review for AIM and the IDIOT WAVE. It's been a very busy year with lots of trading in my own account and I'm sure yours as well. Here's the way the Newsletter saw the year unfold:

    1/5/98: NASDAQ Comp. = 1581; IW = 49% - just below the High Risk range. Gold was falling fast, Energy stocks were just as bad, and anything to do with Asia was looking awful. "As I've told you in the previous couple of weeks, when my Best/Worst Index drops into negative numbers, we're usually ready for a quick rally. Well, the week of Dec. 15th the index dropped below zero and has remained there for four weeks. The market, in fact, is starting back up a bit. Let's hope that the Best/Worst Index is right again! "

    2/23/98: NASDAQ = 1728.13; IW = 47%, New record high for NASDAQ.

    3/30/98: NASDAQ = 1823.62; IW = 49%, New record high for NASDAQ. "As of last Friday, the NASDAQ Composite Index was up over 16% year to date. Betterstill for those who enjoy larger cap stocks, the NASDAQ 100 is up over 22% YTD. It looks like so far this has been a large cap rally."

    4/06/98: NASDAQ = 1855.40; IW = 50% - High Risk, "Why is it that when a Bull Market is MATURING, most investor act IMMATURE?"

    5/11/98: NASDAQ = 1864.37; IW = 54% - High Risk, "I AIMed and hit a couple of Sells! When the IDIOT WAVE is showing high risk, I'm always pleased to be selling some of my inventory."

    6/15/98: NASDAQ = 1745.05; IW = 51% - High Risk,

    7/20/98: NASDAQ = 2008.76; IW = 50% - High Risk, "Hi/Low Logic is showing a bit of confusion as both the number of new highs and lows are quite large. This week, there's 356 new highs and 436 new lows simultaneously."

    8/24/98: NASDAQ = 1797.61; IW = 45% - Ave. Risk, "I probably forgot to mention that the only way the IW gets to a Low Risk reading is through market pain and suffering!"

    9/7/98: NASDAQ = 1566.52; IW = 43% - Ave. Risk, "Aren't you folks glad you have a Business Plan for your investments! I'm not saying that I was happy all week, but at least I knew that I was acting in a positive way for the long term potential of my account."

    10/12/98: NASDAQ = 1492.42; IW = 33% - Ave. Risk, "Personally, I think the IW was right in calling it a high risk market all the way through to August 10th. Now, with the lowest IW reading we've had in several years, should we trust its ability to again call the market? The brief answer is "YES!" "

    11/16/98: NASDAQ = 1856.56; IW = 28% - Low Risk, "I've already started to do "vealies" from this low base which feels REALLY GOOD. If Risk starts to rise, the IDIOT WAVE will tell us to start selling again and let our cash reserves rise with the risk."

    12/28/98: NASDAQ = 2163.03; IW = 39% - Ave. Risk, Well, it's been a very interesting year. First the Best/Worst Index calls for a short term rally and the market responds by rising to new record highs in the mid 1800s. Then it pauses before making its run to above 2000 mid-summer. The Idiot Wave calls out for caution and by August the market is coming unravelled. Finally bottoming during the first week of October a solid 12% below where it started the year and about 30% off its mid-summer highs the NASDAQ was bruised and beaten. October is also when the Idiot Wave signalled the first Low Risk period since October of 1990! Now with the NASDAQ up about 50% from its low point, the Idiot Wave is showing rising risk and asking us to reserve more cash each week.

    Many of us had our Cash Reserves depleted 2 to 3 months ago in what looked to many people like the end of the Bull Market. Now we've had a chance to sell shares and rebuild our reserves. AIM really is marvelous, isn't it? Thanks for sticking with me for yet another year. This is our second full year on Silicon Investor as a home for our bulletin board. It improves all the time. Over 14,000 visitors have found the AIM pages and 10,000 of them have read this newsletter in the last year! I find that very encouraging. Maybe we'll keep the bull market alive all by our selves!!

    <<<<<-----------AIM High And Keep Some Powder Dry!----------<<<<<
    Happy New Year, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 12/21/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________37% Up 1 - Average Risk
    Growth Stock Mutual Funds__________25% Up 1 - Average Risk
    IW Risk Oscillator____________________"+6" - Rising Risk

  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 16.6 + 52 week Treasury Rate 4.51 =____ 21.11 up 0.1 Neutral
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 14.1 down 1.3 Bearish
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 3.5 down 0.9 Neutral
    (Divergence)
    % change, # of issues on NYSE & NASDAQ_______________-1.9 up 0.2 Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 12/21/98: Tax selling hit hard last week. 193 New Highs on the Nasdaq with 391 New Lows. The bad got worse. Couple this with 2101 Nasdaq advances and 2823 and we see that it's a narrow piece of the Nasdaq that is making the index rise to new highs. The good news is that we're running out of days in 1998 so tax selling for this year should end soon!

    It's hard to believe that Amazon.com was below $70/share in the Fall after dropping almost 50% from a previous high. Now the book retailer is propped up over $300/sh. I don't know how much these folks make selling their books, CDs and other things, but I sure hope it turns out to be remarkably profitable. It has to be the Shipping & Handling that makes them all the money otherwise why haven't bookstores led the market place before?

    The first week of January will represent 13 weeks since the October low point. I'm going to be interested in looking back at that point and see just how much my various holdings have increased in value in that time. Many are up 50% and lots are up 100% since then. AIM was there to gather up shares when prices were low and has been here all along the way to take profitable dollars out of risk's way as the market has risen. It's hard not to like AIM when it acts so faithfully to care for our well being! AIM had me sell about 8% of the holding in SDS last week at $34-5/8 and also some shares of TWCUX at $34.06. Both these profitable sales served to keep the Cash Reserves for these holdings right at the IDIOT WAVE'S recommended levels. I hope you are having equal success.

    The account that I started last week for my college fraternity's funds using UOPIX as the choice for equity got off to a brisk start. It went up 5% each of the first two days that we've owned it and is now just 5% away from triggering its first AIM Sell! That would be fun! Considering that the money had been only earning passbook rates in recent times, this looks like quite an improvement so far! More later.

    The busy holiday times are here and to keep up with your AIM accounts, keep your Good Until Cancelled orders up to date. Like a modern day Scrooge, AIM will keep working even while we make merry! AIM will keep our "counting houses" running profitably, just like Old Scrooge and Marley would like!

    It feels quite a bit more like winter here in Wisconsin the last couple of days. I left for my 2 mile walk to work yesterday morning with the outside temperature in the mid 20s, headed home at 5:00PM with the dial showing mid teens and got up this AM with the temp at +1deg F. This is the first true cold snap we've had this year. Until just a week ago, we still had dandilions showing their heads in the lawns! Old Bud, our cat, gave me dirty looks this morning when I opened the door for him to go out. He took one sniff of the icy air and turned right around and headed for a warm radiator. He doesn't think highly of my abilities at weather control and blames me directly for poor prowling conditions.

    As we finish up another interesting and successful year of investing, I want to tell you all that I appreciate the email, both complements and questions, that has been coming constantly this year. Our AIM "habit" seems to be picking up momentum with lots of new users from all across North America and around the world. I hope this editorial each week has helped you keep focused on the important aspects of this business - having some fun!

    <<<<<----------AIM for Peace of Mind!!----------<<<<<
    Merry Christmas, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 12/14/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________36% Up 2 - Average Risk
    Growth Stock Mutual Funds__________24% Up 2 - Average Risk
    IW Risk Oscillator____________________"+9" - Rising Risk

  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 16.5 + 52 week Treasury Rate 4.51 =____ 21.01 down 0.61 Neutral
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 15.4 up 8.9 Bearish
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 4.4 down 0.1 Bearish
    (Divergence)
    % change, # of issues on NYSE & NASDAQ_______________-2.1 up 0.3 Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 12/14/98: You can feel the skiddishness of the marketplace. Between swords rattling in the House of Representatives and the Middle East, it's no wonder the averages are pausing. In the mean time the IDIOT WAVE has risen from 28% Cash Reserve recommended the week of November 9th to its current reading of 36% this week. I've easily matched the IW's rise in risk rating with sales to keep my Cash Reserve fully funded - but only in a portion of my portfolio. Many of my stocks have not risen enough to replenish their respective cash reserves. Worry warts and tax sellers seem to want me to finish out 1998 on something less than a spectacular fashion! Maybe that means the "January Effect" will be all the sweeter.

    A friend of mine bought shares of a Mexican Convertible Debenture this week for $0.38 on the dollar of face value. What's even better is that the bond was paying 8% at full value, so his effective yield is about 21%! Assuming that the company doesn't go out of business, or default payment on its bonds, he can afford to wait a while with that kind of yield. Dina is the company name. They make commercial busses. When I've done this sort of thing in the past, I've bought the bonds and an equal value in the common stock. That way I get a handsome yield overall and can AIM the common stock as it bounces around in price.

    This week I took over managing the "endowment fund" of my college fraternity. We bought a govt bond fund to produce an income stream and bought into Profunds Ultra OTC Fund (UOPIX) as a growth vehicle for the account. Current yield on the bond fund is about 10+% and UOPIX looks like an interesting choice for AIM. I'll periodically post how this account is doing.

    The big jump in the IDIOT WAVE this week comes with the "boomerang effect" of the market crunch earlier this fall. My SPECULATION measure, Veale's Best/Worst Index, measures the difference between the best and worst performers in Value Line. The week of October 19th brought the low reading of minus 4.9. That has always been a good short term bullish sign and was again this time. Now it's reading +15.4, well into the High Risk area. I'm less worried about this current reading, because if you count back 13 weeks, you know what sort of market it was then! If you look at theSPECULATION component of the IDIOT WAVE, you'll see that after each major dip (1987 and 1990) it has boomeranged back to high risk shortly afterwards. Also, this particular component can remain at high risk for long periods and if not confirmed by the other components, is relatively benign. Just the same, we'll be keeping a close eye on it during the next month.

    Several AIM trades were registered in the last week. Most were pleasantly profitable!

  • Sold 5% of VTSS at $44-7/8
  • Pulled a "vealie" for another 5% of VTSS
  • Sold 2% of VLSI at $13, about 73% LIFO gain
  • Sold 5% of CGNX at $18-3/8
  • Sold 5% of CGNX at $19-5/8
  • Bought 38% more ICA at $4-11/16
  • Sold 10% of JBL at $72-1/4

    The ICA purchase had been waiting for some available cash as that account had been fully "tapped" earlier this year. It's showing a loss and also negative cash reserve at this time. It's going to require some "healing" in the form of a firmer Mexican market for stocks.

    It would be nice if all the problems of the world would suddenly evaporate and leave us to tend to our various businesses. Then we wouldn't need anything like "portfolio insurance." Since that's unlikely to happen, our AIM program with its Cash Reserve will have to work overtime to give us reasonable consistency. Let's all try to keep our objectives in our sights and hope that our AIM is good.

    <<<<----------AIM for "Rational Exuberance!!!"----------<<<<
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 12/07/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________34% Up 3 - Average Risk
    Growth Stock Mutual Funds__________22% Up 1 - Average Risk
    IW Risk Oscillator____________________"+10" - Rising Risk

  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 17.0 + 52 week Treasury Rate 4.62 =____ 21.62 up 0.30 Bearish
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 6.5 up 3.1 Neutral
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 4.5 up 2.0 Bearish
    (Divergence)
    % change, # of issues on NYSE & NASDAQ_______________-2.4 up 0.2 Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 12/07/98: It would seem that AIM senses the rising risk as well as the IDIOT WAVE as it continues to sell more of the Warehouse's inventory. All four components rose in risk rating this week - pushing two into their own "bearish" territories. Relative Valuation and Divergence both are showing a hightened risk rating. Please note that the Divergence reading is usually "seasonally high" at this time of year. The reason for this is that as the tax year comes to a close, people tend to sell off their "bad" stocks to take losses to offset their gains in other stocks. This tends to push the number of New Lows higher. At the same time, these people will tend to buy into the hottest sectors and stocks with this extra cash and that usually drives the number of New Highs up simultaneously. (a side effect of this is that they might also, by chasing this years highest flyers, be setting themselves up for some more tax loss selling for next year!) This value should settle down at the close of 1998.

    Veale's Equity Warehouse managed to trim inventories nicely in the last week, keeping the Cash Reserves growing.

  • Sold 5% of FTCHX at $31.08
  • Sold 8% of BMY at $128-1/2, 45% LIFO gain
  • Sold 6% of VTSS at $43-1/16, 102% LIFO gain
  • Sold 7% of ASND at $59, 64% LIFO gain
  • Sold 10% of SEE at $48, 38% LIFO gain
  • Sold 5% of JBL at $65, 96% LIFO gain

    There were some "vealies" during the week, but I wasn't as good at recording them for this report as usual. The fat LIFO gains certainly make me smile. Those shares we bought back in September and October have turned into very profitable inventory indeed. With the Idiot Wave rising I'll have to give up the "vealies" and start to sell again to have my cash reserve keep pace. I guess I don't mind either way - my net worth is on the mend!

    It has been a very long time since we had updated the Idiot Wave graphs, but that was remedied last evening. If you haven't looked at it in a while, I think you'll be impressed with how well the IW did in calling this last market trauma. Take a look at the IW Components as well. You'll note that I've restructured the graphs to make them more read-able. I plan on some other improvements for them soon. Also, I should have time soon to update the Veale account graphs which have also been languishing for months.

    Back in October, it took only a 16.5% gain in 13 weeks to get a stock listed as one of the Best Performers in Value Line. This week it takes a 50.7% gain to make the same list! Is speculation heating up? It would appear so. Has it over-heated yet? No, this is still mild compared to other times in the market. I've found over the years that the market will tolerate long periods of very large short term gains before it gets nervous. Also, we have to remember that when we start the new year, it will be just about exactly 13 weeks after the worst of the market conditions. This tends to skew the graphs a bit. If you look at the Speculation component of the IW, you'll see that there's a bit of a boomerang effect after major market set-backs like we saw in '87 and '90. We'll keep our eyes on this and report back.

    The major indicies continue to lead the way higher. Our Small Cap. holdings are still lagging their Large Cap. siblings, however. This may also be part of the seasonal nature of ending the tax year. I'm hoping it might also mean a dandy January rally for Small Caps.

    <<<<<----------AIM to Moderate Market Risk!!!----------<<<<<
    Best regards, Tom Veale in Wisconsin

    IDIOT WAVE - Week of 11/30/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________31% Unchanged - Average Risk
    Growth Stock Mutual Funds__________21% Up 1 - Average Risk
    IW Risk Oscillator____________________"+5" - Rising Risk

  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 16.7 + 52 week Treasury Rate 4.62 =____ 21.32 up 0.1 Neutral
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 3.4 down 1.9 Neutral
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 2.5 down 1.0 Bullish
    (Divergence)
    % change, # of issues on NYSE & NASDAQ_________________-2.6 down 0.1 Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 11/30/98: I've made a change this week in how the ZEAL component is calculated. I've now combined the Nasdaq and NYSE issues traded. By doing so, we'll be eliminating the error caused by companies changing from NASDAQ to NYSE and visa versa. I've changed the weighting to compensate for this new feature. There's been a steady reduction of total issues available for trading for a long time. This is a bullish sign for the market in that the available investment money is concentrated into fewer and fewer issues. There were 9130 issues traded on both exchanged during the past week. Last April, there were 9532 issues traded in one week, so there's 4.2% fewer places for us to invest now than back then.

    Periodically I try to make small improvements to the IW's calculations. The Idiot Wave needs these tweakings to keep our AIM on target. This is the second change this year. I modified the RELATIVE VALUATION earlier this year to include the 52 week Treasury rate rather than the 13 week. I'll be certain to post these changes as they occur.

    Another solid week of AIM trading has added nicely to my growing Cash Reserves. As always, I'm keeping my "good until cancelled" orders up to date at the brokerage. This assures me that I'll get my designated trades even if I'm busy doing something else.

  • Sold 9% of JBL at $59
  • Sold 6% of WEHKX at $10.07
  • Sold 5% of CHIR at $24-1/4
  • Sold 2% of TWCUX at $33.51
    Much of my portfolio is hovering on the edge of its next sell prices. This is wonderfully comforting when the market decides to girate as it has in recent days.

    A bit of noise about the FED possibly raising "Margin" requirements managed to upset the market rather dramatically a the beginning of the week. We could almost pick the names of the stocks that were the most highly leveraged by watching which ones tumbled the furthest! It reminded me again of the funniest title for an investment book - the oxymoron of Mr. Fosback's STOCK MARKET LOGIC. Some days it's just hard to find any logic to what happens on Wall Street!

    We all must be doing something right! More people every week contact me with questions about starting AIM accounts. It seems that as investors become more "seasoned" the more they appreciate AIM's sensible approach to portfolio management. Plenty of investors were coated with "seasoning" during the mini-bear market we had this fall. If you know someone that would benefit from the AIM strategy, why not give them the gift of Mr. Lichello's book and one of the fine software packages for running AIM! It's not too late to get your holiday orders placed!! Take a look at the AIM Software options available!

    <<<<<----------AIM for Steady Growth!!!----------<<<<<
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 11/23/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________31% Up 1 - Average Risk
    Growth Stock Mutual Funds___________20% Unchanged - Average Risk
    IW Risk Oscillator____________________"+6" - Rising Risk

  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 16.6 + 52 week Treasury Rate 4.62 =____ 21.22 up 0.2 Neutral
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 5.3 down 2.4 Neutral
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 3.5 up 0.3 Neutral
    (Divergence)
    % change, # of issues on NASDAQ_______________________-4.0 down 0.2 Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 11/23/98: After a short bit of catching its breath, the market seems to be speeding ahead. As you would expect, the risk of being involved as measured by the IDIOT WAVE is also rising. Where just a few weeks ago my AIM trades for the week consisted of almost all BUYS, recently it's been almost the opposite. AIM has brought my cash reserve up 75% from its low point of early October! Percentages can be deceiving, however. Remember that I was almost tapped out of cash at the market bottom! Actually, as a percentage of total portfolio, the Cash Reserve bottomed near 5% and has now risen to 7.3%. This is most welcome as the risk rises. As you can see, I still have a long way to go to get my overall account up to what the Idiot Wave is suggesting for Cash Reserve.

    Some of my stocks have the luxury of already being fully funded in their respective cash accounts. This has allowed me to pull "vealies" to keep the AIM equity/cash ratio in balance and in concert with the Idiot Wave's suggestions. Here's the last week's AIM activity for Veale's Intl. Equity Warehouse:

  • Sold 4% of FTCHX at $30.30; 19% LIFO gain
  • Pulled a "vealie" on VTSS at $36-1/8
  • Sold 9% of ADCT at $29-1/2; 43% LIFO gain
  • Pulled a "vealie" on BMY at $118-3/8
  • Sold 4% of CSTGX at $28.01; 27% LIFO gain (my friend's IRA)
  • Sold 3% of TWCUX at $32.98; in several accounts, each about 18% LIFO gains
  • Sold 3% of VTSS at $38-3/8; 106% LIFO gain
  • Pulled a "vealie" on VTSS at $38-3/8
    (AIM had asked me to sell 6%, so I sold 3% and did a "vealie" on the remainder)
  • Bought 36% more STKLF at $ 25/32
  • Sold 5% of HQ at $25-1/2; 51% LIFO gain
  • Sold 5% of HQ at $27-3/4; 64% LIFO gain (second "good until cancelled" order tripped)
  • Sold 9% of SEE at $43-3/16; 55% LIFO gain
  • Pulled a "vealie" on VTSS at $39-5/8

    So my AIM Cash Reserves rose as a Total and as a Percent with all this selling. What surprises me is that many of my stocks still have not had their first AIM sells since the rally started in mid October. Although most of these other stocks have risen in value (like VLSI from the low $7s to $12) it's still not been enough to trigger AIM's Sell mechanism yet. In many cases it has to do with the fact that I didn't buy as much stock as AIM would have liked at the very bottom. This was because there wasn't enough cash to go all the way around!

    With the spectacular rise in some of the internet stocks in recent days, we can expect to see my SPECULATION index go back to High Risk soon. The excitement of the market's recent big mergers certainly is making things interesting. We need to see more "trickle down" to the smaller caps, however. The Russel 2000 is still 20% off its previous peak even while the DOW 30, S&P 500 and the NASDAQ Composite are all soaring. Are we ever going to get a Small Cap. Rally???

    I want to say hello to my good friend Carl, whom I've been trying to coax into trying AIM for years. He has recently (the last year) become computer literate and now even knows how to find these pages! Carl's selected two stocks which to AIM and is off to a good start. He's had one buy and a couple of profitable sells. Congratulations Carl!

    One more item - I made another attempt to reach Mr. Lichello last week. A Florida friend came up with a "newer" address and I've mailed an intro letter off to him. Let's keep our collective fingers crossed and hope we hear from him!!

    <<<<<<----------AIM To Manage Your Carefully Selected Stocks!!----------<<<<<<
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 11/16/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________30% Up 2 - Average Risk
    Growth Stock Mutual Funds___________20% Up 1 - Average Risk
    IW Risk Oscillator____________________"+8" - Rising Risk

  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 16.4 + 52 week Treasury Rate 4.62 =____ 21.02 up 1.08 Neutral
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 7.7 up 8.2 Neutral
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 3.2 unch. Neutral
    (Divergence)
    % change, # of issues on NASDAQ_______________________-3.8 unch. Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 11/16/98: Since the combination of the Idiot Wave and the Oscillator showed a Low Risk condition back during the week of October 12th, to this last Friday, the NASDAQ has risen about 25%. Not a bad call, eh? But what's this? The IW's given up its low risk status this week! And the Oscillator is rising quickly also. Obviously earnings haven't risen as quickly as the market, so our Valuation measure has signalled that we'd be paying much more for next year's earnings than we did when AIM had us busy buying over the last couple of months.

    The other two components showing Neutral are the Speculation and Divergence measures. This week Read-Rite shows its skills with a score of 133.7% rise from just 13 weeks ago. By comparison, NovaCare numbed up its investors with a drop of 61.2% in the same period. We're starting to see a speculative imbalance here. In the Divergence measure, there were 179 new highs and 178 new lows last week - almost perfect balance! Unfortunately too high a value to keep this indicator bullish.

    This week's BARRONS had an article titled BOOMERS' TIME BOMB on page 57. It relates to the demographic shift that will start to become apparent over the next decade as the "boomers" start to retire. The article asks who we expect to sell our equities to when we need cash in retirement. It suggests that the stock market may not be user friendly for a while after that point in time. It makes interesting reading, but unfortunately doesn't happen to offer us the ultimate solution to this problem.

    During last week's market consolidation, my own account fell quiet with just a couple of trades taking place:

  • Sold 4% of CGNX at $17-1/2
  • Sold 8% of ADCT at $27-1/16; 45% LIFO gain
  • Pulled a "vealie" on JBL at $55-15/16

    In the rapid pace of change the market has had recently, I neglected to keep my "good until cancelled" orders on the Buy side up to date. Some if this may have been subconciously intential, since my cash reserves had been drawn down so low recently. This became embarrassingly apparent when my OmniQuip stock (OMQP) cycled from my last sell point of $15.25 to around $12. I had a "gtc" order in at about $9-1/2 left over from a couple of Sells ago. I quickly changed the order to $11-7/8 where it should have been now, but alas, it was too late. The stock had been at $11-3/4 earlier in the day, but never visited those levels again before running back up over a dollar per share. The lesson is that we should really keep these orders up to date!!!

    My email has been very busy and interesting as people find AIM and inquire about getting started. Mail from as close as 1-1/2 hours away by car to overseas mail from England have arrived in my email box recently. Thanks for all the kind words and continued interest in AIM.

    <<<<<<------AIM for Consistent Portfolio Growth!!------<<<<<<
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 11/02/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________28% Unchanged - LOW Risk
    Growth Stock Mutual Funds___________19% Unchanged - LOW Risk
    IW Risk Oscillator____________________"0.0" - Steady Risk

  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 15.5 + 52 week Treasury Rate 4.24 =____ 19.74 up 0.9 Neutral
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ -0.0 up 4.1 Bullish
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 1.9 up 0.4 Bullish
    (Divergence)
    % change, # of issues on NASDAQ_______________________-3.6 down 0.3 Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 11/02/98: A Second Low Risk week indicated by the IDIOT WAVE, but notice the change in the IW Oscillator. It's indicating that the Wave is stopping its descent. Well, at least we've come to a nice low value for our accounts. I've already started to do "vealies" from this low base which feels REALLY GOOD. If Risk starts to rise, the IDIOT WAVE will tell us to start selling again and let our cash reserves rise with the risk.

    To confirm what's been going on, here's a list of the last week's AIM activity in my accounts:

  • Sold 7% of SDS at $32; 28% LIFO gain
  • Bought 8% more BSX at $45
  • Sold 5% of CHIR at $22; 22% LIFO gain
  • Pulled a "VEALIE" on JBL at $48-1/2
  • Pulled a "VEALIE" on VTSS at $33
  • Pulled a "VEALIE" on JBL at $53
  • Sold 4% of MXF at $12-1/2; 32% LIFO gain
  • Sold 14% of OMQP at $15-1/4; 63% LIFO gain
  • Pulled a "VEALIE" on VTSS at $35-5/16
  • Sold 4% of WEHKX at about $9.76
  • Pulled a "VEALIE" on ANCFX at $29.14
    Those "vealies" have effectivly said "Let it ride!" as far as the accounts go. Until the price rise has diluted the Cash Reserve to something under what the IDIOT WAVE is suggesting, I'll continue this practice. Of course, if the IW starts to rise, this will also let me start selling again.

    With the NASDAQ up about 25% since hitting a recent low point, we have to recognize that risk is rising, too. If we subtract the IW Oscillator value from the Idiot Wave reading from two weeks ago (IW = 30, Oscillator = -10) we would have a low point of 20% Cash Reserve indicated for our AIM stock accounts. Well, our reading this week is 28%, so you can see that our fearless Idiot Wave is telling us that we need a bit more caution.

    Most of my mutual fund accounts are already nearing their first AIM Sell points. One did this week, but it already had more cash than the IW was requiring, so it got a "vealie" instead. This is the first time I've had the opportunity to use the "vealie" strategy from a "low risk" market point in time. Mostly I've done them when the market and my stock prices have been near their high end, not recovering from a bear mauling. I'm very pleased with the results so far.

    Mention was made in this week's BARRONS magazine that mutual funds will be selling for their own "tax loss" accounting. The article was on Page 27. It indicated that it could actually bring on an early "January effect" by selling the dogs off early and then letting the sell pressure off. After all, the institutions do most of the trading on the exchanges, so this makes some sense. Interesting article.

    I hope you all are getting your own chances to raise cash for your AIM accounts as this recovery continues. It's certainly pleasant after the bashing we took earlier. It wouldn't hurt to evaluate your portfolio for those things that you feel are best for long term AIM accounts. If you aren't confident of your stock's future, maybe this rally is a good thing to use for some "reallocation."

    <<<<<<----------AIM for Asset Allocation!!!----------<<<<<<
    Best regards, Tom Veale in Wisconsin

    IDIOT WAVE - Week of 10/26/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________28% Down 2 - LOW Risk
    Growth Stock Mutual Funds___________19% down 1 - LOW Risk
    IW Risk Oscillator____________________"minus 6" - Falling Risk

  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 14.6 + 52 week Treasury Rate 4.24 =____ 18.84 up 0.1 Bullish
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ -4.1 up 0.8 Bullish
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 1.5 up 1.0 Bullish
    (Divergence)
    % change, # of issues on NASDAQ_______________________-3.3 down 0.3 Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 10/26/98: FINALLY!!! We have just witnessed the IDIOT WAVE falling from HIGH RISK to LOW RISK in just 13 weeks. Painful as some of that time was, think how much more painful it would have been to have sold out at a loss, or sold out at a gain and then be faced with a fat tax bill!! Instead, AIM guided us through what seemed like the end life on Planet Earth to a profitable conclusion. 2/3rds of my AIM portfolios show profits at this time. If I liquidated the portfolio it would generate a 36% profit overall. Cash Reserve is limited, but is starting to grow. It stands at 6.4% of Portfolio Value. That's pretty darned close to 100% invested, but up from the low point of about 5% set a few weeks ago.

    AIM's kept me busy the last week:

  • Sold 8% of JBL at $44-1/4; 49% LIFO gain
  • Sold 3% of OMQP at $12-1/2; 35% LIFO gain
  • Sold 4% of CGNX at $16-1/8; 42% LIFO gain
  • Sold 3% of OMQP at $13; 40% LIFO gain
  • Sold 4% of IDTI at $6-3/8; 44% LIFO gain
  • Sold 8% of JBL at $48-1/4; 55% LIFO gain
  • Sold 9% of VTSS at $32-9/16; 75% LIFO gain
    Now, I'll admit that the cash sat around earning a measily 5% for a long time before it was put to work. Please take some time to see how well it worked for AIM and I once it was redeployed. Those LIFO gains are REAL, and most of them happened in less than a month. Now that cash can afford to "rest" at 5% again until needed. Thank you one more time, Mr. Lichello! The Cash Reserve is like a Fire Department. When there's no fires, it seems like a waste, but with a 3 Alarm like we've just been through, it sure is nice to see how well it works!

    Many of my stocks have not yet returned to their 26 week Moving Averages. Several are still at half their previous highs. It's hard to believe that we could already be selling with the prices still so low. However, remember that AIM is a Proportional Control Device. The bigger the moves the bigger the action.

    Isn't it nice to see all those green Bullish and Low Risk readings at the top of the page? I must again state that Low Risk does not mean NO RISK! Please don't get greedy now and not follow AIM's sell market orders. It's necessary that we rebuild our cash reserves as quickly as we can. So place your Sell Orders on a "good until cancelled" basis and let them happen. There will still be lots of shares left to sell at higher prices. Our Equity Warehouses are running along smoothly now. We have plenty of inventory and demand is building nicely. All we need to do is make sure we ship on time!!

    Again this week I want to congratulate those of you that have just seen your first deep AIM cycle. Like many a "learning experience" it probably didn't seem very pleasant at the time, but you'll look back on it favorably. Thanks for sticking with AIM and me.

    <<<<<----------AIM For Fiduciary Responsibility!!----------<<<<<
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 10/19/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________30% Down 3 - Average Risk
    Growth Stock Mutual Funds___________20% down 2 - Average Risk
    IW Risk Oscillator____________________"minus 10" - Falling Risk

  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 14.5 + 52 week Treasury Rate 4.24 =____ 18.74 down 0.89 Bullish
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ -4.9 down 2.7 Bullish
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 0.5 up 0.2 Bullish
    (Divergence)
    % change, # of issues on NASDAQ_______________________-3.0 down 0.3 Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 10/19/98: The IDIOT WAVE is signalling the lowest risk conditions for our market since the Gulf War. In case you're not counting, that's 8 years ago! Please remember that Low Risk doesn't mean NO RISK! However, it sure means that the money we have in the market has a much better chance of going up in value than down at this point. Note that the IDIOT WAVE is just on the lowest edge of the Average Risk range. It was one tenth too high to get a true low risk signal this week. But look at the components! All four are now showing Bullish signals. This has ALWAYS signalled the arrival of excellent conditions for starting new AIM accounts or for averaging down.

    I hope you can sense my enthusiasm, because I'm feeling better about the market today than for a long time. I don't believe that all the world's problems have been simultaneously solved. I do believe that in recent weeks, the majority of those problems have been used to discount the prices of many equities to very attractive levels. It's a good time to put money where we find the best possible fundamental values.

    Reviewing my SPECULATION index, I find this week some sample numbers:
    Best Performers, Last 13 Weeks

  • #1 - Marquette Medical, up 73.2%
  • #41 - Cleco Corp., up 18.5%
    Worst Performers, Last 13 Weeks
  • #41 - Modis Professional, down 61.9%
  • #1 - Danke Business Sys., down 73.2%

    Let's compare those numbers to the end of July:
    Best Performers

  • #1 - Amazon.com, up 207.2%
  • #41 - MediaOne Grp, up 30.2%
    Worst Performers
  • #41 - Wallace Comp., down 39.8%
  • #1 - Samsonite Corp., down 68.1%
    In the second set of numbers, if you add the values of the best performers and subtract the worst performers from them you end up with +129.5. This equates to a high risk reading. Now do the same with the most recent numbers shown above. Your total should be -48.8. Any time this value is negative, it's indicating a bullish environment. In other words, if the good guys are better than the bad guys, it's bearish; if the bad guys have been worst than the good guys, it's bullish!

    The last item of our four components of the Idiot Wave to finally give a bullish signal is the RELATIVE VALUATION figure. This week we got a double gift with the drop in the Value Line P/E ratio AND a reduction in the 52 week Treasury coupon rate. This pleases me greatly to see a bullish signal finally after all this time.

    Just a few trades to report for this week's AIM/Newport efforts:

  • Sold 5% of JBL at $40-1/2
  • Sold 6% of ASND at $46-7/8
  • Sold 5% of VTSS at $29-3/8
    NOT A SINGLE BUY TO REPORT!! I think this must be some kind of recent record!!!

    Please let AIM guide your accounts back to healthy cash reserves. Remember that this may not be the end of the bad times, but just part of an interim trading range which will define the actual bottom. If we can nip a few buys and sells over the next quarter, we'll be very happy when the actual rally gets going. In the mean time, I'm delighted to have positive Cash Flow here at Veale's International Equity Warehouse. Congratulations to all of you who have been sticking with AIM, Newport and me through this recent ugly market. You'll be pleased you did. Thanks once again Mr. Lichello!!!

    <<<<<<--------AIM To Benefit From Market Volatility!!!---------<<<<<<
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 10/12/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________33% Down 2 - Average Risk
    Growth Stock Mutual Funds___________22% down 1 - Average Risk
    IW Risk Oscillator____________________"minus 8" - Falling Risk

  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 14.9 + 52 week Treasury Rate 4.73 =____ 19.63 down 0.4 Neutral
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ -2.2 down 5.5 Bullish
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 0.3 down 1.0 Bullish
    (Divergence)
    % change, # of issues on NASDAQ_______________________-2.7 down 0.2 Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 10/12/98: As a prelude to this week's report, I thought we should take a moment to look back to when the IDIOT WAVE started signalling High Risk this last spring. Here's what was reported that week:
    "REPORT - WEEK OF 04/06/98: Why is it that when a Bull
    Market is MATURING, most investor act IMMATURE?
    Here's the statistics:
  • Dow Industrials - 52 week low - 6392; 52 week high - 8986; % change = +40.5%
  • NYSE Composite - 52 week low - 389; 52 week high - 583; % change = +49.9%
  • NASDAQ 100 - 52 week low - 790; 52 week high - 1233; % change = +56.1%
  • NASDAQ Composite - 52 week low - 1204; 52 week high - 1855; % change = +54.1%
  • S&P 100 Index - 52 week low - 358; 52 week high - 538; % change = +50.3%
  • S&P 500 Index - 52 week low - 738; 52 week high - 1122; % change = +52.0%
    A large part of the gains shown above occurred just since
    the first of the year. Is this a "buying frenzy?" Is every
    company's earnings up 40% to 50% for the last year? Have
    interest rates come down enough in the last year to justify
    the rise in Price/Earnings multiples?"


  • Personally, I think the IW was right in calling it a high risk market all the way through to August 10th. Now, with the lowest IW reading we've had in several years, should we trust its ability to again call the market? The brief answer is "YES!"

    If we subtract the IW Oscillator value from the IDIOT WAVE itself, we end up with a reading well down into the Low Risk area. Risk seems to want to continue to fall, and as many have discovered there's some pain involved in the reduction of market risk. We may not have reached the bottom, but we're much closer than we were just a few weeks ago. The IDIOT WAVE has been kind enough to confirm that much of the excesses seen back from April through mid-summer have been removed.

    Only 19 new highs were reached on the NASDAQ last week. That's out of 5598 issues traded. Realize, if you will, that there were simultaneously 2201 new lows registered! This gives us one of the lowest DIVERGENCE readings we've ever had. This is usually a short term bullish sign. Advances numbered just 760 issues while 4413 issues declined on the NASDAQ.

    "Looks like Bear Poop,
    Smells like Bear Poop,
    Tastes like Bear Poop.
    Sure glad we didn't step in it!"

    I'm always happy to see the SPECULATION reading in negative territory. This signals an over-sold condition. That's one of the sure ways to eliminate excesses from the market - SELL EVERYTHING!!! That's exactly what institutions and non-AIM investors have been doing for over two months. We AIMers have been there to bargain shop all the way. We may not see new highs in our favorite stocks for a while, but we should see a return to more normal valuations in the near future.

    RELATIVE VALUATION needs only to fall 0.13 and it will bring this last component of the IW into the Low Risk area. I like it when all four components confirm Low Risk. It's never been wrong when this has occured. The "average" P/E for Value Line has fallen 20% since the end of July and interest rates are still falling. This is extremely good news, looking forward.

    Here's what happened at Veale's International Equity Warehouse this last week:

  • Bought 7% more ANCFX at $26.08
  • Bought 11% more LMVTX at $23.15
  • Bought 10% more SEE at $27-7/8
  • Bought 11% more SFR at $7-3/16
  • Sold 7% of my JBL position at $40-3/4
  • Bought 16% more HQ at $14-5/8
  • Sold out of AIT at $50-13-16
  • Sold out of SBC at $43-5/8
  • Bought 20% more ADCT at $18-11/16
  • Bought 10% more CSTGX at $22.14
  • Bought 35% more FTCHX at $23.15
  • Bought 20% more BMY at $88-1/2
  • Bought 9% more BSX at $47-1/4
  • Bought 18% more SDS at $25-1/2
    The cash generated by selling out of AIT and SBC allowed me to continue buying a bit more stock. Both of these baby bells have held up quite well during the fiasco on Wall Street, but my feeling is that the $$$$ will do me more good buying more shares of the stocks that are at the biggest discounts.

    A quick check of my account shows it down about 22% for the year to date. For the month of September, the account was up just slightly. My IRA has done better with break-even performance YTD and up just a bit for September. Inside my IRA, the Cash Reserve has fallen by 1/3 and now stands at 21% of that AIM portfolio value. New buy orders for more TWCUX in my IRA have been placed at $27.80.

    So, my advise for now is to get those "Good until cancelled" AIM Sell orders placed! We don't want to miss a chance to capture a bit of CASH if the markets are feeling generous. Remember, we may have to churn some trades in a range before the market starts to track upward again.

    >>>>>------AIM For A Quicker Recovery!!!------->>>>>
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 10/05/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________35% Down 1 - Average Risk
    Growth Stock Mutual Funds___________23% down 1 - Average Risk
    IW Risk Oscillator____________________"minus 4" - Falling Risk

  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 15.3 + 52 week Treasury Rate 4.73 =____ 20.03 up 0.2 Neutral
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 3.3 up 2.7 Neutral
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 1.3 down 0.2 Bullish
    (Divergence)
    % change, # of issues on NASDAQ_______________________-2.5 down 0.4 Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 10/05/98: For over 10 weeks the IDIOT WAVE has been declining in value, meaning that market risk has also been on the decline. As you've seen for the last several weeks, I've been sticking to my AIM/Newport program and have attempted to do all the buying that it's asked me to do. With only a few exceptions, almost all of my AIM activity for the last quarter has been buying. As I reported to the Bulletin Board this week, my overall Cash Reserve has dropped from about 32% in January to 16% in mid August, to about 6.5% at the beginning of this week. (it was 50% Cash Reserve overall in October of 1995) Still the Buy signals keep coming!

  • Bought 50% more GENE at $2-1/2
  • Bought 4% more VTSS at $23
  • Bought 11% more VTSS at $21-1/4
  • Bought 7% more ASND at $36
  • Bought 10% more ADCT at $20-5/8
  • Bought 41% more HQ at $16-15/16
  • Bought about 5% more TWCUX in 8 separate accounts at $28.07
  • Bought 19% more VTSS at $18-5/8
  • Bought 7% more ASND at $34-3/4
  • Bought 10% more SDS at $30-1/4
  • Bought 22% more BSX at $48
  • Bought 11% more CGNX at $11-3/8
  • Bought 10% more BMY at $96
  • Bought 18% more SDS at $24-7/8

    Lots of orders, lots of negative Cash Flow for the Equity Warehouse. Those of you that use Newport Programs know that each time we buy or sell, we have to call our broker and adjust our next buy and sell prices. So, not only did we record all these trades, but we adjusted our "good until cancelled" limit orders for every one of these stocks. The best news is that the Sell prices that AIM/Newport now calculates for us is dropping.

    Not since October 16, 1992, when the NASDAQ stood at 637, has the Idiot Wave shown as low a risk reading as it is right now. Although we're not to the LOW RISK end of things yet, we're closing in on it. Certainly when this week's statistics are added in we'll be that much closer. Today, Wednesday, the NASDAQ tested its recent low of 1499 and, unfortunately, didn't hold there. It closed the day at 1462.6 down 48 points or 3%. It's these breaking of barriers that usually upset the Technical Analysis folks. As you know, here at Veale's International Equity Warehouse, our motto is:

    "We Buy from the Scared and Sell to the Greedy!!"

    With everyone talking about inflation, deflation, Fed. Funds rates, recession, depression, ejaculation and impeachment, it's a bit distracting! Since I have no way to really judge all those things and their possible consequences, and we're getting rather lean on Cash Reserve, we'll just be sticking to our AIM Business Plan.

    When we see stocks like BMY off 25% from recent highs we know that this is more than just a "sector shift" going on. This is what it takes to cook the fat out of the marketplace. Well, the burners are on HIGH! As I've noted in earlier newsletters, there's a good number of stocks in my portfolio that have stopped falling in recent weeks. Since my AIM Equity Sponge has soaked up almost all of my available cash, it's nice to see some stocks stop falling in price!

    AIM to Time your Purchases Correctly!!!
    Best regards, Tom Veale in Wisconsin

    IDIOT WAVE - Week of 09/28/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________36% Down 2 - Average Risk
    Growth Stock Mutual Funds___________24% down 1 - Average Risk
    IW Risk Oscillator____________________"minus 11" - Falling Risk

  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 15.1 + 52 week Treasury Rate 4.73 =____ 19.83 down 0.04 Neutral
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 0.6 up 4.6 Neutral
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 1.5 up 0.6 Bullish
    (Divergence)
    % change, # of issues on NASDAQ_______________________-2.1 unchanged Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 09/28/98: The IDIOT WAVE continues to drop indicating even lower risk for new and existing investments. Although we are still seeing large price swings, the averages have been making weekly progress. NASDAQ's Advance/Decline ratio has been positive for three weeks now which confirms the market's better mood. The IW Oscillator says that we still have further declines in risk to experience if the components stay where they currently are.

    A better mix of AIM trades was experienced this week:

  • Sold 6% of JBL @ $35-1/4 (47.6% LIFO gain)
  • Sold 4% of CHIR @ $21 (41% LIFO gain)
  • Bought 10% more CGNX @ $13-1/8
  • Sold 7% of JBL @ $37-7/8 (58.6% LIFO gain)
  • Bought 13% more BSX @ $55
    So for the first time in several weeks, the Warehouse had a positive cash flow. I won't mind if the trend continues! As you can see, AIM managed to turn some handsome profits relative to recently purchased shares. Those dollars were deployed right at the gloomiest part of the recent correction and are already being profitably returned to the safe keeping of the Money Market Funds. Thanks AIM!

    Although some stocks are rising back up (yes, even Amazon.com) many are still at or near lows not seen in a very long time. If you and AIM did your work accumulating shares, chances are you'll also get a chance to do some AIM related selling in the future. Good Until Cancelled limit orders to sell are a great way to assure yourself that those first sales will take place even if you aren't looking at that moment.

    All in all, it looks like I may be able to put the GUT WRENCH back in the tool box for a while. I always enjoy putting that tool away!

    >>>>>-----AIM To Buy Stocks At The Right Price!----->>>>>
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 09/21/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________38% Down 3 - Neutral
    Growth Stock Mutual Funds___________25% down 2 - Neutral
    IW Risk Oscillator____________________"minus 11" - Falling Risk

  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 01/15/88
  • Historical Average since 1982 - individual stocks = 41%, mutual funds = 27%
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 14.6 + 52 week Treasury Rate 5.27 =____ 19.87 up 0.2 Neutral
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ -4.0 down 3.1 Bullish
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 0.9 up 0.4 Bullish
    (Divergence)
    % change, # of issues on NASDAQ_______________________-2.1 down 0.3 Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 09/21/98: The last time the IDIOT WAVE was this low was in 1995. The NASDAQ Composite Index stood at about 800 and was about to rally to a point over 25% up by the end of that year. The NASDAQ hasn't fallen below 1000 ever since. Yet a reading of 38 is just below the historical average for the life of the IW since 1982. With the IW Oscillator at minus 11 this week, it shows that risk is still shrinking.

    The biggest contributor to this week's risk decline comes from my Best/Worst Index which measures Speculation. WMS Industries is the Best performer in Value Line's universe of 1700 stocks this week with a gain of 73%. This is while MedPartners has LOST 77.9% of its value in the same 13 week period. Well if the biggest winner and loser were just about a wash, what about the rest of the lists? Consider the fact that it now takes a 54+% LOSS to get on the Worst Performers list while it takes just about 19% to be listed with the Best Performers. This shows how big the imbalance is. Everybody's bad, nobody's good! Sounds over-sold to me; how about you? The Best/Worst Index has been quite good at calling out bullish turns. A reading of minus four is decidedly bullish.

    During the last week, AIM kept me busy:

  • Bought more ICA @ 5-1/4
  • Bought more VTSS @ 23-5/8
  • Bought more WLV @ 24
  • Sold (hurray!!!) some JBL @ $34-1/2 (44.5% LIFO gain in just two weeks!)
  • Bought more OMQP @ $10-1/2
  • Sold some APCC @ $37
  • Bought more VLSI @ $7-9/16
  • Bought more IDTI @ $4-7/16
  • Bought more CGNX @ $13-3/16
  • Bought more STKLF @ $0-15/16
    VTSS has a bad week last week giving me a chance to add to my position for the second time recently. AIM managed to improve Cash Flow a bit this week by selling a small amount of inventory. I'm looking forward to lessening the burden on many of the Warehouse's shelves while adding to the Cash Reserves of the Veale Savings and Loan!

    What's longer that Gone with the Wind, has fewer characters, no plot and boring dialog? The clinton deposition. Why is Wall Street so worked up about this? Do they expect to see Perry Mason there? For better or worse, the next two years are "Lame Duck Session" for w.j. clinton. I don't think this means the end of the world, after all, we've already had 6 years of a benign presidency. Personally I'm tired of the daily soap opera "Days of our president!" What about Iran? What about Hurricane Georges? Why waste any more of the American people's time on a Lame Duck? Think of the quality people that run our favorite companies. These folks have had to make more decisions in tougher competition than any Washington Bureaucrat. They've continued to be innovative, cost conscious and productive in the face of a world of competition. Thank goodness Industry works with a different standard than does the Federal Government. Long live the American Industrialist!

    There, I feel better!!!

    With the IDIOT WAVE at 25% for mutual funds, I'm looking forward to a long string of tax free "vealies" before I have to sell any of these recently purchased shares. Most of the diversified mutual funds that I own have about 25% Cash Reserve left in their accounts. This week's Value Line update has the section on foreign country closed end funds. Most of the ones listed are selling at about 30% discounts to their Net Asset Values. It may take some time for the countries and these funds to start back up, but the prices are certainly more attractive than a year ago. My two country funds, Mexico Fund (MXF) and Hong Kong Fund (WEHKX) are WAY OFF previous highs. The whole group of foreign funds should be studied. There's still risk of currency problems in many places and many of the funds are trading at discounts to NAV for good reasons.

    >>>>>>----------AIM to Beat the Buy/Hold Investor!!!---------->>>>>>
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 14.4 + 52 week Treasury Rate 5.27 =____ 19.67 down 1.7 Neutral
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ -0.9 down 9.5 Bullish
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 0.5 up 0.1 Bullish
    (Divergence)
    % change, # of issues on NASDAQ_______________________-1.8 down 0.2 Bullish
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 09/14/98: The Value Line P/E ratio was SLASHED this week from 16.1 to 14.4 as their data base finally started to catch up with reality. When combined with the 52 week Treasury rate (new this week - replaces 13 week interest) to give us the RELATIVE VALUATION, we see that it has fallen out of the Bearish area for the first time since September of 1996! I, for one, am breathing a sigh of relief. And I bet you thought it was stuck in there!! The reading this week puts it close to the bottom of the Neutral range for that component. Just a little shove and we'll have all four components showing Bullish for the first time in over 8 years!

    Again, with Value Line's data base catching up with the market, my Speculation measure - the Best/Worst Index - has fallen into the Bullish area. If V-L used today's price for the Best Performer it would be even lower. However, they still show Amazon.com at $88 when it's really at about $79. Even so, it's still up either 86% or 108% in the last 13 weeks, depending upon which number you use. Compare that to Samsonite which is down 78% in the same period and you see that SPECULATION has been washed away in a flood of SELL orders for now.

    Next is the DIVERGENCE measure. With 23 new highs two weeks ago and 31 new highs this last week, it hasn't been exactly a run-away bull market the last few weeks. Compare those numbers to the 2412 and 989 new lows (respectively) the last two weeks and we get a feel for why the NASDAQ Hi/Low Logic Index is now Bullish. As you can see, there was nearly NO divergent opinion about the market recently. If the market starts to recover, we'll see this number start to rise again.

    Finally we have ZEAL. This measures the level of IPO activity to tell us whether the market can absorb these new issues. If we have a declining number of issues then dollars tend to concentrate into the remaining stocks. That's what we've had most of this year. This is a good long term Bullish indicator.

    I've been spreading the remaining Cash Reserves around my portfolio where I how it will do the most good. A few of my stocks have continued to fall in the last week - VLSI and CGNX in particular. I've added shares there and in my SEE account. There's lots of talk about hideous tax selling that will occur before year's end as people sell off their losers to offset gains taken earlier in the year. This does happen and can extend the length of time for a recovery to take hold. In a brief conversation with my broker, he says that for the last two weeks their office has handled mainly SELL ORDERS, with the exception of my account and a couple of others where he's using AIM as his guide for his client's benefit. I know I'm contrarian, but I didn't think I was THAT unique! I have to admit, with my account down in value by 23% in the last month, I've had moments when I've questioned AIM's guidance and my stock picking abilities! Well, I've not lost faith, and hope you haven't either!

    As you may have noted in the above boxes, I've changed the risk statement from Low/Ave./High to what I'll be using now which is Bullish/Neutral/Bearish. I hope this will make things clearer! Also note that if we were to subtract the IW Oscillator value from the current IDIOT WAVE reading, we'd actually be in the Bullish territory (formerly Low Risk). I hope you appreciate the fact that we've only had this occur briefly in 1982, and in 1988, and significant Bullish readings in 1987 and in 1990. So, if we get to a Bullish reading, it will be only the 5th time in 16 years and the first one since 1990. Tune in next week for the latest!!!

    >>>>>>>>>>-------AIM to Sleep Well!!!-------->>>>>>>>>>
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 09/07/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________43% Down 1 - Average Risk
    Growth Stock Mutual Funds___________29% down 1 - Average Risk
    IW Risk Oscillator______________________"-7" - Falling Risk

  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 02/15/88
  • Historical Average since 1982 - individual stocks = 40%, mutual funds = 27%
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 16.1 + 13 week Treasury Rate 4.93 =____ 21.02 down 0.73 high risk
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 8.6 down 0.8 ave. risk
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 0.4 down 0.2 low risk
    (Divergence)
    % change, # of issues on NASDAQ_______________________-1.6 down 0.1 low risk
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 09/07/98: Aren't you folks glad you have a Business Plan for your investments! I don't know how many notes I read on Silicon Investor by folks that were SELLING their stocks last week because of the terrible conditions. Nothing like locking in your losses!! AIM makes much more sense than that. I'm not saying that I was happy all week, but at least I knew that I was acting in a positive way for the long term potential of my account.

    What to do to maintain sanity in a week like last week:

    Tom w/Bag of Salmon Filets from Lake Michigan

    GO FISHING!!!!!
    Just for curiosity, here's last week's buys and what they're at this week:
  • Bought more VTSS @ $26-1/8, Today $32-1/8 - up 23%
  • Bought more ANCFX @ $26.02, Today $27.40 - up 5.3%
  • Bought more JBL @ $29-3/4, Today $30 - up nil
  • Bought more CHIR @ $14-7/8, Today $16-3/8 - up 10%
  • Bought more GSF @ $7-15/16, Today $8-5/8 - up 12%
  • Bought more HQL @ $9-5/8, Today $10.312 - up 7.1%
  • Bought more HQ @ $21-7/8, Today $23 - up 5.1%
  • Bought more IDTI @ $4-27/32, Today $5-1/4 - up 8.4%
  • Bought more LMVTX @ $42-3/4, Today $46.26 - up 8.2%
  • Bought more NERX @ $2-15/16, Today $3-1/16 - up 4.3%
  • Bought more OMQP @ $11-3/8, Today $12-7/8 - 13%
  • Bought more SFR @ 7-7/16, Today $8-13/16 - up 18%
  • Bought more ADCT @ $22-3/4, Today $27-1/4 - up 20%
  • Bought more JBL @ $23-7/8, Today $30 - up 26%
  • Bought more VLSI @ $9-3/16, Today $7-13/16 - DOWN 15%
  • Bought more CGNX @ $14-5/16, Today $13-7/8 - DOWN 3.1%
  • Bought more CSTGX @ $ 23.15, Today $25.37 - up 9.6%
  • Bought more TWCUX @ $27.85, Today $30.13 - up 8.2%
  • Bought more TWCVX @ $9.06, Today $9.69 - up 6.9%
  • Bought more WLV @ $30, Today $28-1/4 - DOWN 5.9%
  • Bought more ASND @ $35-3/4, Today $45-1/8 - up 26%
  • Bought more MXF @ $9-7/16, Today $9-3/16 - DOWN 2.7%
  • Bought more GSF @ $7-11/16, Today $8-5/8 - up 12%
  • Bought more WEHKX @ $6.79, Today $7.60 - up 12%

    Considering how awful the week was, I'm relatively pleased that just 4 stocks are down from my last purchase price. Remember that during the week, the NASDAQ lost 4.46% and the DOW lost 5.11%. One week is a bit short for judging whether we've won the war, but at least we won the last skirmish!

    Only one other time in all the history dating back to 1982 have there been fewer New Highs on the NASDAQ relative to the total number of issues traded there. That was the week of November 20th, 1987. This week only 0.4% of the issues hit new highs. A whopping 42% of the issues hit new lows!!! It doesn't appear there was much divergent opinion about the market last week! Again this last week, if Value Line was up to date with their data base, my Speculation index would look quite different. It shows 8.6 only by including Amazon.com as the Best performer, up 193.8% at $127. However, since it's not there any more, that data is somewhat "tainted." Using the second best performer (Yahoo) my Best/Worst Index drops to a negative 3.9 - a low risk reading. Of note, if we substitute that value into the IDIOT WAVE calculation, the IW drops to 42 for the week and the IW Oscillator drops to minus 12. So, it would appear that we have more of a risk contraction to be seen in the next few weeks.

    Many of my stocks may need considerable time to recover to the point where they will be selling some shares again. I guess if I'm looking at LIFO gains while I wait, that's not all bad. I hope you all did as well with your purchases last week.

    Bob Norman noted that NEWPORT added Idaho and Iowa to its list of States with users this week. That brings the number of States to 34 plus the District of Columbia where AIMers are active. I believe California still leads the way in total number of NEWPORT users. With cool fall breezes starting to blow through Wisconsin, it's none too soon to start thinking about an AIM Users Seminar in some warm, sandy place!! Now, if the market were to rise about 25% I could probably afford a ticket to..............

    >>>>----------AIM to Buy the Valleys and Sell the Rallys!!!---------->>>>
    Best regards, Tom Veale in Wisconsin

    IDIOT WAVE _ Week of 08/31/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________44% Down 1 _ Average Risk
    Growth Stock Mutual Funds___________30% Unchanged _ Average Risk
    IW Risk Oscillator______________________"_5" _ Falling Risk

  • All Time High _ individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low _ individual stocks = 19%, mutual funds = 13%, week of 02/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 16.7 + 13 week Treasury Rate 5.05 =____ 21.75 up 0.01 high risk
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 9.4 up 1.6 ave. risk
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 0.6 down 0.8 low risk
    (Divergence)
    % change, # of issues on NASDAQ________________________1.5 unchanged low risk
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT _ WEEK OF 08/31/98: Friday was bad, Monday was worse. It looked like the pain would never end. Well the pain killers kicked in on Tuesday and I think most folks feel a bit better. I'm not convinced the sell_off is over. The stocks I've been waiting on to fall _ the large caps and big name stocks _ gave up a bunch on Monday, but they turned right around and regained a huge percentage of their Monday losses on Tuesday. They needed LypoSuction and had just started treatment, they didn't need a quick trip to 31 Flavors the next day!!

    Out of Nasdaq's 5746 stocks traded last week only 39 hit 52 week highs! A whopping 1809 stocks hit new lows!!! Both numbers are impressive, Mr. Fosback's Hi/Low Logic formula calculates out to be one of the lowest values I've recorded in my data base from 1982 to the present! Value Line's data tends to be a little behind "real time" so Amazon.com is still shown to be up 190% at $129/share. As we know, this number doesn't hold water any more. Without AMZN's influence on my Best/Worst index, it would have fallen to a negative 1.9 (low risk). Maybe by next week, the data will reflect this. In the mean time, please remember that stocks need to only have a 13 week gain of 26+% to make the BEST list while it takes a loss of 48+% to make it onto the WORST list. The IDIOT WAVE will tell us when the true low risk period has begun. Risk is less than a few weeks ago, but it still hasn't fallen to the "average" value of 40% cash suggested for Stocks. Please reserve appropriate CASH amounts if you are starting new AIM positions.

    Well, how did AIM and I react to all this ugly news? Okay, here goes:

  • Bought more VTSS @ $26_1/8
  • Bought more ANCFX @ ???
  • Bought more JBL @ $29_3/4
  • Bought more CHIR @ $14_7/8
  • Bought more GSF @ $7_15/16
  • Bought more HQL @ $9_5/8
  • Bought more HQ @ $21_7/8
  • Bought more IDTI @ $4_27/32
  • Bought more LMVTX @ $42_3/4
  • Bought more NERX @ $2_15/16
  • Bought more OMQP @ $11_3/8
  • Bought more SFR @ 7_7/16
  • Bought more ADCT @ $22_3/4
  • Bought more JBL @ $23_7/8
  • Bought more VLSI @ $9_3/16
  • Bought more CGNX @ $14_5/16
  • Bought more CSTGX @ $ 23+? in my friend's IRA
  • Bought more TWCUX @ $27.85 in 9 separate accounts
  • Bought more TWCVX @ $9.06
  • Bought more WLV @ $30
  • Bought more ASND @ $35_3/4
  • Bought more MXF @ $9_7/16
  • Bought more GSF @ $7_11/16
  • Bought more WEHKX @ $???

    That pretty well takes care of the last few days!!! I'm sorry I can't report the percentage purchases in this report, but I'm writing from home and don't have the data here. Some of the prices I don't have here either. Not every purchase was as large as AIM would have liked me to make. I allocated my Cash Reserve as best I could. This was the most aggressive buying I've done since 1987.

    I mentioned in the Silicon Investor thread that brokerages had been hit hard. They traditionally don't do anything but make money in their retail businesses under such circumstances. Brokers like AG Edwards and Raymond James Financial are primarily retailers. As we've seen in many other sectors, there's guilt by association. These stocks should recover nicely assuming market volume doesn't dry up.

    As you are learning (if you haven't been through a big sell_off before), AIM does its first buys at a nice discount, but they are small trades. Once the prices drop significantly, then AIM really kicks in and does serious buying. For me, it's been serious enough to just about tap my overall cash reserves dry. I still have quite a bit of cash left in my Mutual Fund accounts, but even after yesterday's buying, AIM's begging me to spend more. This is typical of AIM as it "pumps the brakes" in a rapid decline. With almost all mutual funds we're stuck not knowing just what price we're going to get until after the close of business. It's impractical to try to out_guess just how far a price might rise or drop, so we'll just have to complete the work later (if the price stays down).

    I chanced to listen to CNBC for a short time during the lunch hour today. I've never heard such double talk! The condensed version is "All Bets Are Off!!!!" Some think the FED will lower interest rates, some think it won't. Some think the selling is over, some don't. If I hadn't been eating lunch, the time would have been completely wasted. Personally, I think today the market was celebrating president clinton's leaving the country! It's a reunion of old friends dating back to the early '70s, after all.

    I'm still concerned about the upcoming Labor Day Weekend. The market's short term traders like to sell off speculative positions before long weekends _ especially if there's political or economic tension around. I'd say there's plenty of that. After the holiday, I believe cooler heads will prevail. We AIMers will be renamed the "Cool Hand Club!!!" If you are tapped out of cash, remember that you and AIM have done good, efficient buying. If we miss the ultimate bottom by some small percentage, it won't make much difference in a few years. If it's the end of life on Planet Earth, then it really doesn't matter, does it? As you can see from the above list of purchases, I firmly believe that AIM is acting as a good fiduciary, purchasing agent and inventory control manager. It takes guts to stick with any program that's this seriously Contrarian. If the market has made your head spin, just think how the poor person feels that was 100% (or more!) invested in mid_July!! AIM guided you safely to a hefty cash reserve, now let it guide you towards a fully stocked Equity Warehouse.

    >>>>>_________AIM for a Faster Recovery!!!__________>>>>>>
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 08/24/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________45% Down 1 - Average Risk
    Growth Stock Mutual Funds___________30% Down 1 - Average Risk
    IW Risk Oscillator______________________"-6" - Falling Risk

  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 02/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 16.7 + 13 week Treasury Rate 5.04 =____ 21.74 up 0.07 high risk
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 7.8 up 4.8 ave. risk
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 1.4 unchanged low risk
    (Divergence)
    % change, # of issues on NASDAQ_______________________-1.5 unchanged low risk
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 08/24/98: The IDIOT WAVE peaked in mid May at 54% Cash Reserve being recommended for individual stocks and 36% for Mutual Funds. I guess by now, there's many of you that wish that your overall cash reserves had been that high back then. I know I feel that way. My poor tech stocks were already so battered that the reserves were wholly inadequate for this most recent slide. However, it's nice to note that the IW's recommended reserves are finally settling down.

    I probably forgot to mention that the only way the IW gets to a Low Risk reading is through market pain and suffering! We've been getting a small taste of undercooked Bear meat just recently. Believe me, it's no better when cooked well-done! I've noticed the harmony in many publications recently. They're all singing the hit-tune "I told you so." Amazing how clear all the signs are now that the market's given up considerable premium.

    Why, then, would the IDIOT WAVE be dropping in its assessment of risk? Doesn't it understand that the world is on the brink of disaster? First of all, 45% Cash Reserve as a recommendation is hardly indicating "Happy days are here again." Since 1982, the average value of the IW has been about 40%, so we're still high of that mark. It's dropping fast, but still needs to fall below 30% before we feel that we're in a true Low Risk environment for new investing and for existing accounts. The last time was in late 1990.

    What would it take to get the IW to a low risk reading? Zeal would have to remain the same, Divergence can't rise, Speculation has to drop to negative values and we still need to shed quite a bit from the Relative Valuation reading. Just eliminating Amazon.com from the Best Performers list in Value Line would take Speculation to -3.8, well into its Low Risk area, so this isn't where the problem lies. Relative Valuation seems to still be the culprit. Well, what has to happen to get that value to low risk? Do we really want to know? Low risk for Relative Valuation is when the number falls below 18.5; it's currently at 21.74 so it has to decline by 3.24. Let's assume that it all came from the 13 week interest rate reading - can we really expect 13 week Treasury bills to fall to 1.8% interest? Okay, then how about the Value Line P/E? Could we anticipate it falling from its current level to under 13.5? The last time we had P/E's that low was 1995. Does that mean the last three years in the market have been pure fluff? Maybe. If so, then the DOW would have to fall to about 6850 (about 27% below the previous high) or there'd have to be a surge in earnings. Lower fuel costs could help earnings this year. Will it help enough? Of the DOW Industrials or the S&P 500, how much of their total cost is related to energy?

    So, maybe a combination of things could get the job done. A bit better earnings from low energy costs, maybe a dip in interest rates and a good old fashion rout in the market!

    The only graceful way I can see for the above to happen is if money slowly starts to shift (for value reasons) to the smaller cap. stocks. A stampede will just disembowel one end of the market to feed the other. I don't anticipate the masses giving up on "momentum" investing, so I'm not expecting anything graceful to occur.

    What has been more common for the IDIOT WAVE is for it to cycle from average to high risk and back rather than dropping from high risk almost straight to low risk. So, if we have it continue to drop to the middle of the Average Risk range, then maybe we'll see it stablize. If the components stay right where they are, in a few more weeks we'll be in the middle of the average area. Just think how smart we're all going to look when we get back to our first Sell Point in our AIM accounts.

    I'm now getting AIM buy signals for which I don't have indicated Cash Reserves. This is the first time in about a decade that my accounts have been drawn this far down. Only my mutual funds have plenty of available cash. In the 1987 crash, mutual funds fell an average of about 30% from their summer highs. Funds that work good with AIM fell nearly 40%. So, let's use what's left of our cash reserves as wisely as possible. It will mean all the sweeter recovery.

    >>>>>>----------AIM for Financial Security!!!---------->>>>>>
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 08/17/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________46% Down 2 - Average Risk
    Growth Stock Mutual Funds___________31% Down 1 - Average Risk
    IW Risk Oscillator______________________"-9" - Falling Risk

  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 02/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 16.6 + 13 week Treasury Rate 5.07 =____ 21.67 down 0.74 high risk
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 3.0 down 0.9 ave. risk
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 1.4 up 0.1 low risk
    (Divergence)
    % change, # of issues on NASDAQ_______________________-1.5 unchanged low risk
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 08/17/98: Each year I use the annual mutual fund issue of Forbes Magazine to create the list of Mutual Funds that seem to be good companions for AIM. That issue is now out at the news stands. It will be a while before before I update that report, but you can get a head start by looking through the lists now!

    Isn't it nice to see how quickly the Idiot Wave reacts to market situations. After slowly rising along with the market earlier this year, the last few weeks have seen it drop rapidly from the 50s to 46 this week. To non-AIMers, the last few weeks felt like getting too close to the fires of hell, but we know that it was just the excess fat burning off some of the pudgy stocks. Also encouraging is the IW Oscillator showing that risk is dropping quickly.

    If we eliminated Amazon.com as the lead stock on the Best Performers list in Value Line, the Speculation Index would have already dropped into its own low risk area. Indeed, Amazon's 135% rise in the last 13 weeks is way ahead of the number 2 stock, which is up just about 75%. Samsonite is still lugging around a 77.3% loss for the last quarter. It takes a drop of 48.9% to get your stock listed on the Worst Performers list but only a gain of 21.5% to make the Best Performers. See how this imbalance displays how Speculation has disappeared recently?

    My own buying slowed this week to just three stocks. I'm getting buy signals in two mutual funds and will answer those pleas for more $$$ yet this week.

  • Bought 42% more ICA at $6-15/16
  • Bought 21% more MXF at $12
  • Bought 20% more OMQP at $12-7/8
    Most of my portfolio has stablized and isn't demanding more cash. Some stocks ran out of cash a while ago and if I'm going to buy more, I'll just have to take cash from some other stock. From these levels, I have quite a way to go before I start selling shares again.

    The number of new highs on the Nasdaq remains very small this week while the new lows are still very high. This helps the Divergence indicator to remain in the Low Risk area. The number of new lows should start to taper off as the market bottoms out.

    From the email I've been receiving, it would appear that AIM has done a great job of reducing anxiety among its users. I'm glad that it has been a good guide so far on your investment journey. AIM's not easily distracted by news from Wall Street or Washington, D.C. or Moscow or anywhere for that matter. Luckily, AIM's not suffering from any "critical lapse in judgment" such has befallen the President of the US. Maybe he should AIM to clean up his act!!

    >>>>----------AIM for Financial Stability!!---------->>>>
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 08/03/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________50% unchanged - High Risk
    Growth Stock Mutual Funds___________33% unchanged - High Risk
    IW Risk Oscillator______________________"-2" - Falling Risk

  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 02/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 18.1 + 13 week Treasury Rate 5.05 =____ 23.15 down 0.33 high risk
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 13 up 6.5 high risk
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 2.2 down 2.6 low risk
    (Divergence)
    % change, # of issues on NASDAQ_______________________-1.5 unchanged low risk
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 08/03/98: Okay, so which are we to believe?? The two High Risk Components of the IDIOT WAVE or the two low?? At least there's change going on - measurable change. First, let's look at why our Speculation measure jumped so much this week. It all rests on the shoulders of one big strapping Amazon(dot com)! The piranha are in schools around Marian the Librarian after her transformation into Wonder Woman, the Amazon Queen. They have driven this stock up 207.2% in just 13 weeks in a feeding frenzy!! How much more profit can they rip away before they realize the bones have been picked clean? By contrast, the Second Best stock in Value Line's Best Performers list is only up a measily 85% in the same period!! The rest of the Best and Worst lists fairly represent the nasty market as we know it and aren't showing anything quite that glamorous.

    The rather convincing arguement that the Big Bull is temporarily stumbling was not missed this week by the IW's Divergence component. As more and more investors become seriously concerned about the general health of the market, the number of new highs on the NASDAQ has evaporated from 356 the week of 7/17 to only 129 this week. The number of new lows swelled to 811 this week. Not much divergent opinion there!! With so many new lows, this has to be starting to tap heavily into most AIMers' Cash Reserves.

    Some days it feels like one is standing in front of a moving freight train. My piddly little orders did nothing to slow the momentum (negative) that the market showed all day. Up and down my screen were negative moves. What confounds me is that many stocks should now be viewed as bargains, but so far there's been no buying support in these smaller cap stocks. The few green arrows I had on my ticker today had to work hard to actually go up today!

    It's not as though we weren't warned by the IDIOT WAVE. Only three out of the last 17 weeks has the IW been out of the High Risk area, and then just barely. It's interesting to note that the week in early April that the IW turned High Risk, the NASDAQ stood at 1855. Today it's nearly unchanged from that value. In the mean time, the NASDAQ did hit an all time closing high of 2008 or about 7% above its present level. Easy come, easy go for the non-AIMer. If AIM was fast on its feet, it realized some profits since April. That's much nicer than giving it all back.

    Jeff Weber has started another AIM chat site. It can be reached through his web site. You will need to register, but there's no fee at this time. I've only had a chance to register so far. I'm interested in seeing what the chat area has to offer.

    >>>>------------AIM for Peace of Mind!!!!!------------>>>>
    Best regards, Tom Veale in Wisconsin

    IDIOT WAVE - Week of 07/20/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________50% up 1 - High Risk
    Growth Stock Mutual Funds___________33% up 1 - High Risk
    IW Risk Oscillator______________________"+4" - Rising Risk

  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 02/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 18.4 + 13 week Treasury Rate 5.11 =____ 23.51 up 0.32 high risk
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 7.7 up 3.6 ave. risk
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 6.1 unchanged high risk
    (Divergence)
    % change, # of issues on NASDAQ_______________________-1.6 unchanged low risk
    (Zeal)

    IDIOT WAVE - Week of 07/13/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________49% unchanged - Average Risk
    Growth Stock Mutual Funds___________33% up 1 - Average Risk
    IW Risk Oscillator______________________"+2" - Rising Risk

  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 02/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 18.1 + 13 week Treasury Rate 5.09 =____ 23.19 up 0.26 high risk
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 4.1 down 2.8 ave. risk
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 6.1 up 0.9 high risk
    (Divergence)
    % change, # of issues on NASDAQ_______________________-1.6 up 0.1 low risk
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 07/13/98 AND 07/20/98: I bet you folks would like me to take more time off! The NASDAQ rose 6% and the DOW rose 3.4% while I was gone! You are all allowed to send cards of appreciation to me! The market must like it when the old worry wart is out of town and not watching the news. As you can see from the above statistics, our Idiot Wave is back in the worry zone this week after just three weeks vacation. Equity prices are rising faster than earnings, so the P/E is rising. Hi/Low Logic is showing a bit of confusion as both the number of new highs and lows are quite large. This week, there's 356 new highs and 436 new lows simultaneously.

    Amazon.com and Sunbeam share opposite ends of Value Line's Best and Worst Performer's rainbow for the last two weeks. This week Amazon.com is up 141.7% while Sunbeam is off 67.1%. Although this shows a bit of imbalance, it's still within my defined limits of what's "average risk" regarding speculation.

    According to the news this morning, much of the increase in the DOW, S&P500 and NASDAQ can be attributed to a handful of stocks. As if to confirm this, IBM reported earnings in line with expectations, its price rose about $8 per share and the DOW rose 35 points! Then, Merck announced that their earnings growth might slow and suggested to analysts that they temper their enthusiasm regarding their stock. This triggered a bunch of reductions in ranking for Merck from strong buy to buy and from buy to hold. The DOW then retreated to negative numbers, even while IBM continued to do well. Amazing!

    I've not caught up with the trades that have gone on in the last two weeks. I'll post those later. A good time was had by all the participants of the Watkins Glen and Elkhart Lake races during the last two weekends. I came home with no cuts or bruises on either my body or my '53 XK 120 Jaguar. That makes for a pretty good vacation!!

    There's now over 5000 posts on the AIM bulletin board! We seem to be gathering some steam and bring more new and old AIMers into the group. Thanks to everyone for their participation!

    >>>>>>----------AIM - the Business Plan for Investors!---------->>>>>>
    Best regards, Tom Veale in Wisconsin

    IDIOT WAVE - Week of 07/06/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________49% unchanged - Average Risk
    Growth Stock Mutual Funds___________32% down 1 - Average Risk
    IW Risk Oscillator______________________"+1" - Rising Risk

  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 02/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 17.8 + 13 week Treasury Rate 5.13 =____ 22.93 up 0.21 high risk
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 6.9 up 6.3 ave. risk
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 5.2 up 0.2 high risk
    (Divergence)
    % change, # of issues on NASDAQ_______________________-1.7 down 0.2 low risk
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 07/06/98: Of particular note this week was that the Value Line Best Performers list has a pile of former residents from the Worst Performers list! Here they are: DIGI, RPC, GNT, IDXX, ADCT, MYL, and ASND. All of these stocks had stood in the corner as bad boys during the last year or so. Nice to know that they don't all go out of business! Not all stocks on the Worst Performer's list are necessarily great buys, but we can assume that there's been quite a bit of fat trimmed if they are there.

    Recently AIM and I added more SEE, IKN, UWW and OMQP shares to my inventory and sold a few shares of VTSS. I performed vealies on a couple of mutual fund accounts as well. I'd sure like to be following the market higher right now, but my own portfolio seems stuck in the Buy mode!

    I had the delightful experience of having lunch with fellow AIMers Steve and Andy on Monday. Steve was here visiting relatives (Andy is one) from Texas and drove to Port Washington for a visit. Steve and Andy have both worked at AIM for a number of years after seeing Mr. Lichello on TV over a decade ago. However, both had let it go for lack of an easy way to handle it. In more recent times, Steve has been corresponding with me and "lurking" at S.I. while getting back up to speed. He'd devised many similar "adjustments" to AIM to solve some of its bull market peculiarities. Great minds must work alike!! His own examples looked like great AIM stocks.

    I'll be in upper New York State for the next few days. I'm heading there on Wednesday to race at Watkins Glen for the first time. I'm quite excited about racing on a track with so much history. I've been reading about "the Glen" since before I had a driver's licence. So, if I don't get your email answered right away, please forgive me! If you live in the area, you might just want to take a camera and head to the races as there's supposed to be a really great collection of former Formula 1 cars coming along with the usual group of sports cars and other racers.

    For midwesterners, the following weekend, we'll be racing at Elkhart Lake, WI in the Brian Redman Historic Races. They usually collect about 500 race cars there for that event. Definitely a Photo-Op!!

    My AIM/Newport orders are all in place for while I'm playing hookie! Wish me luck!!

    >>>>>----------AIM for Financial Independence!!!--------->>>>>
    Best regards, Tom Veale (Piloto Loco) in Wisconsin

    IDIOT WAVE - Week of 06/29/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________49% down 1 - Average Risk
    Growth Stock Mutual Funds___________33% Unchanged - Average Risk
    IW Risk Oscillator______________________"-3" - Declining Risk

  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 02/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 17.6 + 13 week Treasury Rate 5.12 =____ 22.72 down 0.32 high risk
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 0.6 down 5.9 ave. risk
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 5.0 up 2.0 high risk
    (Divergence)
    % change, # of issues on NASDAQ_______________________-1.5 unchanged low risk
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 06/29/98: After 12 long weeks of the IDIOT WAVE being in the High Risk area of the market, it's a relief to have it fall off enough to lower our risk rating for the market. During that period the NASDAQ fell about 4 percent, but it also gave up nearly 10% from its peak to the period's closing low. Thanks again can be given to this market psycho-barometer's measuring of "irrational exuberance."

    Market P/E as measured by Value Line has now eased quite a bit. Interest rates seem to want to remain on the low side, so maybe we'll work our way out of the over-valued state the market has enjoyed recently. A year ago, the 30 year Treasury notes were selling with a yield of 6.69% whereas this year, it's down to 5.67%. The lower interest rates go, the easier it becomes for the market to support the lofty P/Es.

    The Amazing Amazon.com tops Value Line's Best Performer's list showing a heady 85% gain. Not bad considering the period was almost all in the IW's high risk area. Unfortunately, no similar rays of sunshine fell on Sunbeam Corp. as a photon torpedo knocked its share price down 73.2% in the same period. These numbers help to bring the SPECULATION index down to its lowest level since early February - near the beginning of the new year rally.

    Only a few trades have passed AIM's approval since last week's report:

  • Sold 4.3% of my position in TWCUX @ $33.67
  • Bought 5% more GENE @ $4-7/8
  • Bought 50% more SEE @ $36-1/2
  • Bought 10% more OMQP @ $17-15/16
    The huge drop in SEE prompted a rather large increase in my position. I've owned this stock for years and they've done some rather interesting things to keep themselves growing and profitable over that period. The most recent acquisition brought them sales larger than their own. It appears as though it has also brought them some new headaches to solve. That part might take some time, but AIM and I have plenty of that.

    It's nice to have my IRA's mutual fund hitting new highs along with some of the market averages. TWCUX had been a bit sleepy for a while, but really got a good run going after the first of this year. It's up about 22% since January first including the Cash Reserve. That's performance and safety combined nicely by AIM. AIM is really a simple hedging strategy.

    I'm guessing that within three weeks we'll have our 10,000th visitor arrive here and read the weekly newsletter. Nearly 15,000 visitors have accessed the AIM Users Group home page, so 2/3 of them stick around long enough to read this letter. That's not a bad ratio.

    I heard from our fellow AIMer in India recently. He says that the country's nuclear tests nuked his portfolio as well. AIM has now used up much of his cash reserve and he's beginning to wonder how long he's going to have to wait for a recovery. I know the feeling! I vividly remember the last 2-1/2 months of 1987! I hope your wait isn't too long!

    >>>>>>>---------AIM for Portfolio Risk Management!!--------->>>>>>>
    Best regards, Tom Veale in Wisconsin

    IDIOT WAVE - Week of 06/22/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________50% down 1 - High Risk
    Growth Stock Mutual Funds___________33% down 1 - High Risk
    IW Risk Oscillator______________________"-3" - Declining Risk

  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 02/15/88
    (Click for further EXPLANATION)
  • IDIOT WAVE COMPONENTS:

    Value Line P/E ratio 17.9 + 13 week Treasury Rate 5.14 =____ 23.04 up 0.11 high risk
    (Relative Valuation)
    Veale's Best/Worst Index ______________________________ 6.5 up 4.6 ave. risk
    (Speculation)
    NASDAQ Hi/Low Logic Index__________________________ 3.0 unchanged ave. risk
    (Divergence)
    % change, # of issues on NASDAQ_______________________-1.5 down 0.2 low risk
    (Zeal)

    Special Note: Our Bulletin Boards are now accessible for FREE in a Read Only fashion.

    REPORT - WEEK OF 06/22/98: Some days things seem just a bit clearer than others. As I walked along the bluffs above Lake Michigan on my way to work this morning, I could see at least the 26 miles from Port Washington to down town Milwaukee. It's also clear that the SPECULATION component of the Idiot Wave is starting to heat up again. It intrigues me that I'm buying so many stocks these days, yet my Ultra Fund (TWCUX) has me selling at an all time high value! I must pick different stocks than they!

    Here's my AIM trades since the last report:

  • Bought 20% more SEE @ $49-3/8
  • Bought 3% more VLSI @ $15
  • Bought 18% more MXF @ $14-3/8
  • Bought 10% more IDTI @ $6-7/8
  • Bought 10% more NERX @ $5
  • Bought 10% more OMQP @ $18-3/4
  • Bought 10% more JBL @ $31
  • Bought 5% more GENE @ $5-7/8
  • Bought 5% more CHIR @ $16-1/2
  • Sold 4% of my holding in VTSS at $29
  • Sold 13% of my holding in ADCT at $34-7/16
    At least I ended that list with a couple of sells! The Cash Drain seems to be able to swallow any greenbacks I throw at it. AIM has been busy making room for all the new shares in my Equity Warehouse and Veale's Savings and Loan (a subsidiary of VIEW) has made sure there are loan reserves to pay for all the stock!

    Good Guys are the Great Guys this week showing a 132.1% gain in just one quarter. I didn't check to see if it's a buy-out or just good news. The second best was only up about 90% which makes me think something unique is happening at Good Guys. Like an old pillow, Boston Chicken has been losing its feathers for some time. It currently has lost 69.5% of its shareholders' equity value in the same quarter. The rest of the lists of Best and Worst Performers is in pretty good balance right now.

    The NASDAQ Advance/Decline data has improved in the last week. However, it still shows that the market average is advancing on a relatively small number of issues' price improvement. As of a week ago, the market was still not convinced that a rally might happen. New NASDAQ Highs only numbered 175 while New Lows stood at 683. Since there's very little DIVERGENCE in opinion about the market direction, we can consider this a slightly bullish reading for the short term.

    We'll soon be in the 5 digit area of readers of this weekly report! Thank you all! New email comes in all the time from new quarters. I had a great letter from a fellow in Germany that's just getting started with AIM. I'm happy to say his English is better than my Deutsch!!

    I'm re-reading Mr. Lichello's book right now as a refresher. I had forgotten how many really great quotes there are in there! Here's one of Titanic proportions:
    "When too many of a ship's passengers attempt to flee in the same lifeboat, the liveboat will sink. There's nothing wrong with the idea of a lifeboat. It works fine - until too many people attempt to clamber aboard."
    I had missed that opening remark by Mr. Lichello on each of my previous readings. That's exactly the problem with a "Stop Loss" order. Those of you that have been stopped out of a position and not received the amount you expected know just what he means in this quote.

    >>>>>>>>----------AIM for Profits!!!---------->>>>>>>>
    Best regards, Tom Veale in Wisconsin
    IDIOT WAVE - Week of 06/15/98

    Suggested Cash Reserve For New AIM Accounts Using:
    Individual Stocks____________________51% down 1 - High Risk
    Growth Stock Mutual Funds___________34% down 1 - High Risk
    IW Risk Oscillator______________________"-7" - Declining Risk

  • All Time High - individual stocks = 56%, mutual funds = 37%, week of 08/14/87
  • All Time Low - individual stocks = 19%, mutual funds = 13%, week of 02/15/88
    (Click for further EXPLANATION)

    IDIO