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Monday, December 21, 2009

Monday Challenge Project Summary: December 21, 2009

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $783.94
Trading "Sister" Balance: $1,596.21
Interest Bearing "Sister" Balance: $175.30
Total Challenge Project Funds: $2,555.45

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 SAVINGS Account.

This weeks deposit to the challenge project savings account will help us to begin firming up our foundation for both the challenge investing and challenge trading accounts. However, since we've done a lot of maintenance with the investing account, the account that will truly benefit by attention to the savings account, will be the trading "sister" account.

As it currently stands, one loss in the challenge trading account hits the "draw-down kill switch", and the account needs to stop trading. So as we've done a lot of work to show some "love" to the investing account over recent months, that now we can begin to focus on the trading and the savings accounts. Because any increase to the "Challenge Savings Sister" account automatically firms up that account, and the "reserve" for the challenge trading account.

Switching gears here for just a bit, I also seemed to have forgotten to mention that not only was a dividend paid on the McDonalds (MCD) stock last week, but I also received a DRIP purchase for the Coca-Cola (KO) stock. Here is a picture of the confirmation ...

(Click to enlarge)

So this means we've accumulated over 16% of another share of Coca-Cola (KO) stock since the time of the purchase, by engaging in DRIP.

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: $775.07
(YTD cash and equity up about 59.35% Return is 3.22%)
  • 4.1665 shares of KO (DRIP on)
  • 3.0779 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP if now OFF)
  • Cash: $213.51
-$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 $13.51 cash available
  • Additional $50.00 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 $50.00 available from slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $200.30
(YTD cash equity up about 62.75%. Return on Capital is about 0.25%)
  • $50.00 for a Slush fund / Drawdown Kill Switch fund
  • $100.30 for a Base Savings
  • $50.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)

Total $500 Challenge Project Balance: $2,573.58

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

The above chart of the total challenge project funds is just a bit off, although it is accurate. Does that sound contradictory?

Allow me to explain ...

When I moved the Slush / Emergency Fund Account around a month or so ago, the old account was deleted out of my tracking software; Quicken. The tracking software is what generates most of the above graphs. I could no longer include that account into my graphs, since I deleted the account from Quicken. Therefore, since that account in Quicken was deleted, any graphs that are created do not reflect the Slush / Emergency Fund as it existed in previous months.

I have recreated the slush / emergency fund as an account in Quicken when I moved the account over to ThinkorSwim. Therefore, the above chart is showing a large "spike" up in the last month, on the last bar. This is simply due to Quicken now tracking all $200.30, into one month; from that move ... instead of the "gradual build" that the slush / emergency account has experienced. After those funds post up, then I will be displaying another "snapshot" of broker confirmations ...

I just thought I should explain, if you were curious about that last bar on the "Total Challenge Project Funds" graph. 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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