The Better
The system will help you with all types of stocks. It will not always give you the highest profit on your investment. If a stock always goes up, up, up, then the AIM system will not give you as high a return as if you put all your money into the stock (The lump-sum approach). As many books, articles and magazine show, most lump-sum investors never know when or how to sell. They think the stock will go up forever.
Remember the saddest words and investing are: "paper profits". If you ever hear somebody say: "Why that Amalgamated widgets stock I bought went from $5 a share to $60 a share. Why I made over $50,000 in profits". Ask this lump-sum investor where he stands a year later when Amalgamated widget is selling at $3 a share. Usually the lump-sum investor still owns the same number of shares, is in a state of shock, and is bemoaning how could this wonderful stock go down so far but assuring you that it will return to its lofty heights. So what? He still won't make any profits. Try paying your bills, sending your kids to college on paper profits. You need real profits and that is what I'm going to give you.
Korea Fund – up, up, and away
The Korea Fund is a closed–end and fund that trades like a stock. Since we all know every time we go into a store that half of all the stuff in the store says made in Korea, (well it was true in the mid-90s I guess now we would say it's all made in China) we have a vague idea that Korea is doing well economically and they still are. And we are right. As I write this, I'm living and working in Seoul, Korea for the US government. This was in the late 1980s around the time of the Korean Olympics. With their hard work ethic, Koreans have caused a remarkable turnaround in the country destroyed by a war less than 40 years earlier.
Investors have figured out to. The stock has gone from $14.37 a share in October 1984 to $70.37 a share in July 1987 for an increase of 489%. Now look at the graph of the Korea Fund a page or so ahead in the free Adobe Acrobat version. As you can see, the stock lay dormant from November 1984 to November 1985. Remember that nobody will tap you on the shoulder and give you guaranteed winners. Starting in December 1985, the Korea Fund took off and it has yet to stop as of July 1987.
Now looking at the graph, you can see that the system didn't make you as much profit as the price of the stock gained. The green highlight is the difference between the system’s profits and the percent increase in the stock price. That's because the system was selling shares and giving you real profits, take the vacation profits, do any darn thing you want profits.
Now look at the blue highlights and you see the system profits (amount over your initial $10,000 investment). The system hasn't done too badly. Your initial $10,000 is now worth $29,288 or a 192% increase. You have made good profits in less than three years and still have the potential for more profits. Unlike the lump-sum investor, you have steadily reduced the number of shares you own. Your shares owned have declined from 464 shares to 201 shares. You've taken your profits in cold cash. You've won this round. A downturn won't hurt you as much. I can tell you that by 1993, the Korea Fund did have a downturn into the $15 range. Again study the graph in the spreadsheet in your Adobe Acrobat free book. Understand how they work and why they work and then they can work for you. Learning this system will beat the financial odds provide the money to live your future the way you want to. Work for yourself and you'll always have a good boss.
Also I put in the added profit feature I told you about earlier. I readjusted cash to the 2/3 stock – 1/3 cache ratio I showed you in Chapter 2. I recommend you do it at least once a year. I took the extra cash and bought more shares – 140 more shares in September 1986. After the first year in September 1985 there was no excess cash to buy more shares with.