Lately I've been paying more attention to the times some of the stocks in each account is suffering, and some of the other ones are doing much better. AIM is designed, mostly, to take advantage of volatility of the market itself - having different stocks in each account just puts more of a safety feature on it. Often, especially when the market is going one direction for an extended amount of time (as it is now), some stocks, for different reasons, do poorly while others can do especially well. I've decided to play with the accounts and, as long as the distressed stock doesn't seem to be in actual trouble...in other words if it still is a fundamentally good company, then I have been taking from the rich stocks and investing in the poor ones. There really is no rule against this in the AIM book - the author says it's fine to trade out stocks, and I figure that includes trading between them. I haven't been doing this very much - only in more extreme cases, and I try to err (if I am erring) on the side of safety. Most of the time, so far, it is working beautifully. Most of the time when a stock goes way up, it doesn't stay there; and the same can be said for a stock that gets very depressed when the rest of the market is stable. Eventually, they tend to correct themselves.
I also have been bending the rule about doing updates only at the set time in the month. I usually monitor the accounts and if something happens where the account gets pushed way up or down suddenly, and it is pushed into the buy or sell area, I'll go ahead and do a transaction then. Now, I am diligent about waiting at least a whole month before doing any more, regardless of what the account does after that. Especially if the account dips suddenly for one reason or another. I've had a bad experience doing multiple transactions too close in time together. The market can go against you and suddenly there is no money to do anything. The month waiting period gives everything a chance to straighten back out. Sometimes it's hard to have to wait before doing another transaction, but it works for the better in the long run. Example: 2008 into 2009 - I think I talked about that experience in some of the earlier entries.
One of the other areas I have become a little more flexible in is when I am trading out a stock in my AIM For Dogs account. Now, I don't do this very often, but once in awhile I notice a well-known stock that is way below what I would have thought it would have been. If I have a stock in my account that has just raced up and I think it is out of gas, I'll trade it for one of these that seem low. For example, recently MMM (which I bought when it seemed low) ran up in price. I noticed it because I was looking at the list of Dogs of the Dow and it came up as a 'Small Dog.' That surprised me, because I never would have thought MMM would be low enough in price to be a 'Small Dog.' So I bought it, and a relatively short time later, it wasn't even in the DOTD list, because it had gone back up in price and their dividend yield was no longer that great. So, I was looking through the stocks on the Dow list and noticed Nike under $100 - like, in the eighties! That surprised me, so I traded the MMM for the same dollar amount of Nike, even though I hadn't even owned the MMM for a year. Now, this rarely happens, and though Nike wasn't (and still isn't) a Dog of the Dow, neither was MMM, so I figured it was ok. I know Nike will eventually get back up to it's normal levels - I figured I'd ride it back up!
It's a good feeling to do some of these extra curricular stunts with these stocks within the accounts, as long as the main, general rules of AIM are followed. I don't veer to far outside the rules, and I figure it doesn't matter too much, as long as it makes sense, and even if it went bad, the AIM way will generally protect things from really going south.
The reference to AIM is a book by Robert Lichello, How to Make $1,000,000 in the Stock Market, Automatically. The basic plan is to start with an amount of money, split it in half, use one for a pool of stocks or an equity mutual fund, and the other keep in cash. The same amount as each half should be kept track of, called the Portfolio Control, which keeps track of how the stock fund is doing, and is part of the formula. When the stock fund gets either below or above the Portfolio Control, or PC, by a set amount (the author suggests $100), a buy or sell signal is produced. Buy if it is down, sell if it is up. Also included is what is referred to as a 'Safe,' which is suggested to be 10% of the fund amount. This amount must be also overcome on either side to actually make a transaction. The Safe creates more safety in the strategy so as not to be trading too much. The PC is never adjusted, except when doing a purchase, which is an increase of 50% of the purchase amount. Also, the account should be updated no more than once a month. I have set up a spread sheet with these criteria and updated it every month since 2008.
Main account performance since 2008: +352.8%
