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Monday, September 8, 2008

The "Don't Save Your Money" Fallacy. Please! Save Your Money!

Quotations of the Day:

"Work hard, live cheap, and save your money." - Edward C. Moroney, Jr.

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Challenge Accounts:

Investing Account Balance: $424.77
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Personal Trading Thoughts: It's Monday, brand new week. I hate to play this side of double bottoms. When we get this close. But Futures have the DOW up about 260 points (YMZ8 is the code). This sucks for pure stock traders, as it means a huge gap up. Many day traders may be looking to play the fade on the gap up, however I don't like to get near the market when this much news that is this monumental in nature take hold. With the Fannie / Freddie news? This market's volatility is increasing. Just last week we were more than 300 points down on one day. Now we're gapping up 260 points. As I said, for day traders? That's perfect. Remember this however, for longer term swing trades? The bad news remains. Employment stands at 6.1%. Core CPI inflation is 5.6%.

Personal Investing Thoughts: The Investment plan? Well, IF we take out the lower lows on the DOW? I'll be looking to be a buyer of another investing DRIP dividend stock when enough time passes (about two months from today), and we get 50% past the lower low. But as of the time of this writing? DOW Futures (YMZ8) is up about 260 points. So I don't see us taking out that lower low today. My DRIP remains on for all of the stocks that I continue to hold.

Welcome to another week. I've heard this a few times: "Whatever you do, don't save your money", that's not the way to accumulate wealth.

That's bologna. Absolute, and utter bologna. ... (video included)

Look at the Challenge Project numbers. Of all the money in the Challenge Project? The savings represents ... what? Three percent? (And no, that's not an accident) But my god, I want to stress - HAVE SOME SAVINGS!

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Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance:
Stock / Futures Trading Balance: $954.13
Online Savings Balance: $47.51

Total Trades: 6
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $56.63
Average Loss: $74.27
Accuracy Rate: 33%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $53.84

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 12 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.

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