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Monday, October 19, 2009

Monday Challenge Project Summary: October 19, 2009

Previous Challenge Project Balances:

Investing Account Balance: $642.20
Stock / Futures Trading Balance: $1,521.21
Online Savings Balance: $150.30
Total Challenge Project Funds: $2,313.71

The original video explanation is to be found here.

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. Some time ago I stated that I may 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 Investing Account.

Yeah, yeah. I know. I made some statements last Monday, that I hadn't forgotten about the Trading account or the Savings account. And I haven't. But I wanted another contribution here to the Investing account.

The big news last week obviously for the Challenge Project Investing Account was the purchase and addition of McDonalds (MCD) for the Dividend DRIP holdings. This purchase was what we could call a 'nibble' for the low funded. Only 2 shares were purchased. The DRIP (Dividend Reinvestment Program) is turned on for MCD. But as I stated in the MCD purchase post, we need to have excess reserve cash right in order to better Dollar Cost Average (D.C.A.) that position, if the opportunity presented itself. We also need excess reserve cash to D.C.A. the positions in Coca-Cola (KO) and Johnson and Johnson (JNJ). And as it stands? We're a little short on reserve cash. We have cash there at the moment if it dipped. But not enough for all three stocks.

I think we have time. As soon as I bought MCD, we moved up $1.00 in share price. It's only two shares, so the advantage with that up move was not the increase in the stocks price. It was that it buys us time to build up our cash reserves for Dollar Cost Averaging (D.C.A.'ing) to reserve for McDonalds (MCD). As is noted below, with this week's deposit going to the Investing Account we are only short $62.59 on our reserved cash. That's only 2 and half weekly deposits. Plus, there is the $37.53 that we have available from the slush fund.

So I think we have plenty of time to build the reserve cash needed. The other trick of course, is that the Trading Account and the Savings Account needs some love from Rule No. 2. And if we manage to get the 'reserve cash' shortfall covered in the Investing Account? We still would have no money in that account to purchase another dividend, DRIP stock. So we'll have to figure out something so we can have another $200 on top of the reserve cash; for a purchase another dividend stock.

God I love this business.

Here are the new balances for each of the Challenge Project, after this weeks deposit ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $667.26
(YTD cash and equity up about 37.5% Return is about -1.8%)
  • 4.1377 shares of KO (DRIP on)
  • 3.0546 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP on)
  • Cash: $137.41
--$60.00 of this cash I reserve to D.C.A. KO
-$60.00 of this cash I reserve to D.C.A. JNJ
-$80.00 of this cash I reserve to D.C.A. MCD
-This leaves a -$62.59 shortfall for D.C.A. cash
  • Additional $37.53 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):

Stock / Futures Trading Balance: $1,521.21

(YTD cash equity up about 50%. Return on Capital is about 2%)
  • Additional $37.53 available from slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $150.30
(YTD cash equity up about 22.3%. Return on Capital is about 1.49%)
  • $37.53 for a Slush fund / Drawdown Kill Switch fund
  • $75.24 for a Base Savings
  • $37.53 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)

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

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

* * *

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 over 13 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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