DTE Energy (DTE)

Those who are long time blog readers know that I've been long DTE Energy (DTE) for some time now (soon would be two and half years) in my own personal dividend accounts. With some smart averaging down with this stock and through DRIP, I've built myself up a nice sizeable, profitable position.

As I'm very much about talking about my exits, as well as my entrances ... I wanted to put a brief note out that I'll be looking at selling off all of this stock in the near future.

The reasons are not that I feel anything is wrong with the company. In fact ... in the next two weeks, the reasons will become more clear.

Suffice to say at this point? I've built up some great profits, and I'm going to grab them.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Airelon's Trading Methodology (Series): Everything Must Agree (VIDEO)

"There will always, always, always be another trade ..." - Personal Axiom

I'm asked all of the time: "How do you trade?". And when asked, I freely share exactly how I trade. I've had videos here on the daily blog that reviews my own trades throughout the week, and discusses exactly how I trade. But the question will usually come up again and again.

I have discovered that it's best to put together "playlist series" that discuss topics that I receive inquires on a frequent basis.

So here I've begun a new playlist, or series, that discusses my own trading style and methodology. We've discussed a bit regarding the 'psychology' behind my trading methodology and money management, as well as how I approach trading each week, but looking to my edge first, and how I construct that edge.

Today, I want to talk a little bit about the different aspects of the edge and how they each relate to each other ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

A Brief Note ...

I know a few from Pittsburg and Pennsylvania were planning on meeting me in Akron on August 6th. Due to unforeseen events, I will * NOT * be in Akron from August 6th to 8th. I don't want anyone making the trip out that far to see me, only to find that I'm not there ...

Expect another blog update today regarding the continuing series that I began on my personal trading methodology.

That is ... if we don't have another tornado rip through here ... (The weather channel is predicting a 30% chance of, not a storm, but a tornado)

Did You Notice the Comments ...

... in yesterday's "Challenge Project" entry?

That's right ... there is a surprise on the way. I wanted to drop a brief note here ... juuusst in case you happened to miss it within yesterdays text entry. And as I mentioned in that entry, the more I plan for this "surprise"? The more excited I get about it.

And no ... I'm still not going to 'spill the beans' regarding this surprise. You'll just have to wait. It won't be too much longer though.

Suffice to say ... it's like I have always told folks: "Try to always put yourself in a win-win scenario"

Monday Challenge Project Summary: July 26, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $813.04
Trading "Sister" Balance: $1,944.63
Interest Bearing "Sister" Balance: $475.30
Total Challenge Project Funds: $3,232.97

Introduction:
The original video explanation of the Challenge Project that began with $500, is to be found here. The Challenge Project is basically a demonstration of a model that anyone could at least follow along with on a weekly basis. It is my attempt without cost, to help out the 'little guy' when it comes to investing and trading by providing an example, a 'model' as it were ... as run by myself as a professional trader with real money, in sub-accounts that I own; following my own three sisters portfolio management system; albeit modified a bit to operate with low funds. From time to time, I provide snapshots of the broker statements.

Rule No. 2 of the Challenge Project states that each month, we can divvy up $100.00 as we wish between the various challenge project accounts. We split up Rule No. 2, into weekly segments; or $25.00 a week.

For this week, the $25.00 weekly deposit is being transferred to the Challenge Project TRADING Account.

We're progressing to the $2,000.00 level of equity for the trading account. We have a bit more tweeking to do for the investing 'sister' as well, and continual tweeking to do for the sidepocket fund.

At this point, Rule No. 2 has been demonstrating and imparting the lessons of 'patience', and 'foundation building' for those that want to get started, but they don't have a lot of money. That lesson is almost complete, as the "foundation" of the Challenge Project, comes to a close, and we begin the next phase of building upon a "small account".

That being said, I also want to take this opportunity to say ... you'll see a bit of a 'surprise' for the Challenge Project shortly. I've said that a couple of times in the past, but this 'surprise' is on it's way. That's all I'm going to say for now ... so don't ask. :)

Suffice to say, and I'll leave you with this ... I'm getting more and more excited, the more I plan for 'it'. In fact, I was planning on waiting 6 months before I implement this 'surprise'. But the more that I plan for it the more I'm thinking I may scoot it up a bit, and make it much sooner.

Just stay tuned ...


Here are the new balances for each of the Challenge Project accounts ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $818.59
(YTD the account is +2.435% YTD Return is about +1.175% Continuing Yield is approximately +6.96% in cash dividends and additional shares of stock)

• 6.2367 shares of KO (DRIP on for 4.2367 shares)
• 5.13 shares of JNJ (DRIP is OFF)
• Cash: $181.49
  

-$3.73 of this cash I reserve to D.C.A. KO
-$13.86 of this cash I reserve to D.C.A. JNJ
-This leaves $163.90 cash available

• Additional $118.00 available from slush fund

Investing Account Balance Since Inception
(Can be Enlarged):

Stock / Futures Trading Balance: $1,969.63

( YTD cash contributions, equity and return up about 23.39 % )

• 2% risk tolerance gives us $39.39 'at risk' levels
• 3% risk tolerance gives us $59.03 'at risk' levels
• Additional $118.00 available from drawdown / slush fund
  

Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $475.30

(YTD cash equity up about 137.3 % Return on Capital is 0 %)

• $118.00 for a Slush fund / Drawdown Kill Switch fund
• $239.30 for a Base Savings
• $118.00 for Emergency Savings

Savings Account Balance Since Inception:
(Can Be Enlarged)

Total $500 Challenge Project Balance: $3,263.52

Total Challenge Account Growth Since Inception:
(Can Be Enlarged)

We'll be back to the Challenge Project next Monday.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Week in Review: One Profit Does Not a Thesis Prove (PODCAST)

"Leave the Prediction to God" - Personal Axiom

Welcome to the Week in Week in Review podcast!

It was a profitable week. But I don't really feel that I can claim a "victory" in the market I was trading. Why? I discuss that in the following podcast, as I review all of the capital markets ...

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)

Powered by Podbean.com

Click here to download this podcast.

And by the way? A big thank you to everyone for making this the number one "trading" podcast at Podbean ...

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Johnson & Johnson (JNJ) Hedge

With the news lately of the lawsuits surrounding Johnson & Johnson (JNJ) products? I'm doing a couple of things to protect myself. I wrote some of this in an issue of "Airelon's Market Tactics", but as this impacts the challenge project, I will mention them here; albeit a bit modified.

This recent slide in Johnson & Johnson (JNJ) stock began with some complaints at a plant regarding “smudge and dirt” (I'm not kidding) around a piece of equipment at one of their plants. While that does not sound serious, in a “clean” environment ... it can be. The news quickly slid into discussions of 'deaths, but deaths that cannot be linked to Johnson & Johnson products'. I'm always in risk control mode. And all I know is that we've gone from a discussion of smudge and dirt in a clean room, to a discussion of death.

I really wouldn't care to be left holding a sizable position in Johnson & Johnson (JNJ) while the image of a dead child is paraded across the television set for the entire nation. No matter how unrelated to product, it's still being discussed in the same sentence in the press. And in today's world, image and perception is enough to convict.

Now in order to place my next comments in context, it may be wise to review a “Week in Review” podcast that I published some time ago … when I had a subscriber of the daily blog ask me what “I” would do, if I were a long term BP Investor. In that podcast, I described an option strategy for BP investors that could have saved them a bundle (Those 30 puts, after this bounce we've experienced in BP? Are still worth 2.91 up from 0.25). I'm going to lay out something similar here for Johnson & Johnson (JNJ).

Now the first part of the strategy, for larger accounts, I've already accomplished. I'm not talking about “Airelon's Market Tactics” now, but larger accounts. I'm turning off the DRIP. The dividend probably won't be paid until September 8th, but it's something that I need to do. I also bought a little more Johnson & Johnson (JNJ) at these levels on larger accounts. I am after all ... a dividend investor and we don't know what the future will bring. We could get a serious bounce at these levels. Johnson & Johnson (JNJ) after all, has been sitting on a mountain of cash and could weather this storm easily.

But I'm not stupid. As I said, we don't know what the future will hold, so I'll also be looking to hedge this position with put options. What is my 'breach' level? At first I thought I'd start buying these options at $56.00 but at this point, I'm going to go ahead and start buying them at a break below the region of support around $57.00.

Johnson & Johnson
(Weekly Chart)

Which option? The October 50 Puts, which as of right now, are going for about 0.48, or $48.00. How many? I'll purchase 2.5% of the existing Johnson & Johnson (JNJ) position in put options.

Again, these comments are in regards larger accounts.

What about the Challenge Project? First … again, the DRIP is off. That's just for starters and housekeeping.

Next, look at the exposure. $293.95 worth of Johnson & Johnson (JNJ). To put this in context … Johnson & Johnson (JNJ) could be wiped off the face of the planet tomorrow, and we're only talking about a trip to the store for groceries.

That goes back to my comments a few months ago regarding 'weighting' my sisters according to the economic environment we find ourselves in.

Regardless, the DRIP is off. The position itself is so small, that I cannot see buying a hedge to protect such a tiny position. But I may consider seriously beefing up the 'investing sister' account in the future, either through rule no. two, or some other measure. Stay tuned for details on that route.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.