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Monday, November 16, 2009

Monday Challenge Project Summary: November 16, 2009

Previous Challenge Project Balances:

Investing Account Balance: $680.86
Stock / Futures Trading Balance: $1,571.21
Savings Balance: $175.03
Total Challenge Project Funds: $2,427.10

The original video explanation of the Challenge Project that began with $500, 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 Challenge Project INVESTING Account.

Normally, I probably would have applied rule no. 2 to the trading account. The reason why, is that the equity curve is slowing up, and I would like to see that curve continue at the same rate of increase.

But we have some Dollar Cost Average (D.C.A.) reserve shortfalls to cover yet in the Investing Account. In effect, with the slush fund in effect, those shortfalls are covered. But I still want the cash there to cover those shortfalls with actual cash. Because after that, we have to work on increasing the amount that we reserve to D.C.A positions. It will not remain at simply $60.00 to $80.00 a piece.

After this is accomplished, we also have to build cash for another investment purchase.

But I won't forget, nor abandon the trading account or the savings account when it comes to rule no. 2. I have really concentrated on "straightening up" the investing account lately, and only in rare cases have we applied rule no. 2 to the trading or the savings account. Now that the investing account is in a little better position, you'll probably see me 'even out' the deposits; although I will still favor the investing account. There's a lot of work to be done with that account.

So in actual practice, I would imagine that in coming weeks, you will see that rule no. 2 will be applied twice to the investing account, for every one time that it's applied to the trading or the savings account.

Remember, the DRIP Dividend ReInvestment Plan for McDonalds is OFF

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: $710.82
(YTD cash and equity up about 46.5% Return is about 1.40%)
  • 4.1377 shares of KO (DRIP on)
  • 3.0546 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP if now OFF)
  • Cash: $162.41
-$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 -$37.59 shortfall for D.C.A. cash
  • Additional $43.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):

Stock / Futures Trading Balance: $1,571.21
(YTD cash equity up about 55.0%. Return on Capital is about 2%)
  • 3% risk tolerance gives us $47.13 to risk per trade
  • Additional $43.00 available from slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $175.30
(YTD cash equity up about 42.5%. Return on Capital is about 1.49%)
  • $43.00 for a Slush fund / Drawdown Kill Switch fund
  • $89.30 for a Base Savings
  • $43.00 for Emergency Savings
Savings Account Balance 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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