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Author: vortexcw Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 727  
Subject: Re: When your stock tanks. Date: 2/6/2002 5:59 AM
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Hello AlsoFussy,

When you are dealing with what I call "jojo stocks" the question is not if there is an effective "system" that can deal with them but whether or not you are prepared to gamble on any underlying solidity that might be there. The fact is that when stocks tumble so far as 90% or more no one can say anything sensible about it other than: Buy Low-Sell High!

A 10% value the stock may look good to buy but the next dat it may tumble again. Here is my suggestion: If the fundamenals do not show an immediate banktruptcy, "Go fot it" with an amount of money you are willing to gamble. It is nothing but a roulette, but with much better chances for winning. In the Cassino the odds never go beyond the matematical certainty that in the long run you will lose money. With stocks you have a good chance that they will cycle violently, and then you can apply an AIM-like strategy. hen you win. I do not pretend seriously that you should stick stricktly to the typical AIM-guidelines. Shoot from the hip, but keep some bullets for the mean guy at the end of the episode.

Investing 1/2 available cash(bullets) in this application will be an excellent strategy: as the stock price tumbles you get larger and larger lots of shares for less money, and that is precisely the power of AIMing, although you must realise that you are gambling and not merely investing at this point.

What I essentially say is that AIMing with solid stocks and funds and AIMing with Calamity STocks works exactly the same: you reserve some fire power to take advantage of the Dips and liquidate the gains at the Tops in a systematic way. The fact that with risky stocks you may loose some money is nothing new.

The way things are, sadly enough, is that non-gambling people who trust lying CEO's of big companies, like Enron and others, and thrust the brokers that peddle these stocks, risk losing their life's savings just the same.

Essentially my point is that using an AIM-like strategy works good at both extremes of the market: you will take advantage of the Buy-Low Sell High principle....systematically.

Conrad
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