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Monday, December 14, 2009

Monday Challenge Project Summary: December 14, 2009

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $751.26
Trading "Sister" Balance: $1,596.21
Interest Bearing "Sister" Balance: $175.30
Total Challenge Project Funds: $2,522.77

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. 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.

Aha! We've covered the shortfall for the cash needed to Dollar Cost Average (D.C.A.) all open dividend positions. If you note the balances below, we have $12.41 left over. So basically ... we have some breathing room. While we are on the topic of "The Investing Sister" account, the next "tasks" to perform is to build up the cash for a new purchase, while simultaneously building up the "reserve balances" for dollar cost averaging. In other words, instead of having $60.00 to reserve our position in Coca-Cola (KO)? Get the Challenge Project to a position where it has $118 to dollar cost (D.C.A.) our position in Coca-Cola (KO).

But the main story with the Investing "sister" account? Is that we have breathing room, and flexibility for any eventuality.

So now, moving forward? No we can begin to focus on the Trading account once again. This also means focusing on the "savings sister" since any increase on the savings accounts simultaneously strengthens our ability to have multiple trades before we run the risk of the "drawdown kill-switch" being hit.

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: $779.91
(YTD cash and equity up about 60.58% Return is 4.64%)
  • 4.1377 shares of KO (DRIP on)
  • 3.0779 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP if now OFF)
  • Cash: $212.41
-$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 $12.41 cash available
  • Additional $43.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $1,596.21
(YTD cash equity up about 57.5%. Return on Capital is about 2%)
  • 3% risk tolerance gives us $47.88 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%)
  • $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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