Search This Blog

Thursday, October 29, 2009

Interesting Day at Working at Non-Production

"We all want progress, but if you're on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive." - C.S. Lewis

(Note that although this blog entry may be reaching you on Friday, I wrote this late Thursday night)

It was sort of an interesting day on Thursday. Today, I was actually at home and trading. On the trading front, I ended up down for the day, but only down $6.00 after commissions for the day.

But with the freedom that trading from home brings? Well, it also brings it's own very special sort of frustrations. If you want to become involved in this business, you have to be prepared for days like today. Watching the market for hours, entering an option trade, and then nothing.

I worked at creating a video all day as well. A "Traders Thoughts". It felt good to get out what I had at the time. Editing it. Compiling it. It ended up being a twenty minute video. I dunno. I watched it a few times.

But you know, there is sharing my own personal pain? And then there comes the line of "personal matters". So I watched it a couple of times more. And then I erased it. Sometimes the journaling of a blog can be, and should be a very public thing. Sometimes, I think, journaling should be a little bit of a private affair.

As well, I ended my relationship with Covestor. I had them delete all three of my accounts. It's not that I'm angry with them, or there was any frustration whatsoever. I just finally realized that I was trying to use a service to do something, that they were never set up to do. My investing efforts heavily rely on DRIP accumulation of more shares, in order to compound the yield. But Covestor can't track DRIP. In addition, I trade a lot of options, and futures, which again, Covestor can't track. It was seriously skewing all of the results as to my performance. I "googled" Airelon, and the first results were those skewed Covestor accounts. It's not really Covestor's fault. They just aren't setup, nor were they ever set up, to track that sort of market involvement.

It sort of upset me that I don't have a third party tracking me, but in the end, I decided that the Challenge Project is there for all to see, and measure the results, so that will have to be my 'public tracking'.

So in the end, I worked all day on Thursday, and got nothing accomplished.

Ah well. Some days just work out that way.

The Week in Review is tomorrow ...

Monday, October 26, 2009

Monday Challenge Project Summary: October 26, 2009

Previous Challenge Project Balances:

Investing Account Balance: $667.26
Stock / Futures Trading Balance: $1,521.21
Online Savings Balance: $150.30
Total Challenge Project Funds: $2,338.77


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 Challenge Project Trading Account.

Yeah, if you take a look at the graph below? You'll notice that last month, the Trading Account Equity Balance has remained sort of flat. So I'm going to show the trading account some love this week.

So after this weeks deposit, the Trading Account is $1,546.21. So how much does that leave us to risk? Money management? About $46.00. If I saw a trade where the liquidity was good (high enough volume) and the spread was nice and tight, and the risk was only about $46.00, I might take the trade. Of course, I'd be looking for at least a $92.00 reward, if not more.

This also reveals that we have to show some love to the Savings Account. Because with a balance of $150.30? That means that we only have $37.53 to contribute, if the Trading Accounts Drawdown Kill Switch got hit. So we can see some areas of improvement with the Savings Account as well.

In addition, as noted in the balances below, we're still a little short in the cash that we've reserved in the Investing Account to better Dollar Cost Average (D.C.A.) our existing positions with JNJ, MCD, and KO. So we'll need to give that account attention in future weeks as well.

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: $661.50
(YTD cash and equity up about 34% Return is about -2.8%)
  • 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: $1,546.21
(YTD cash equity up about 52.5%. Return on Capital is about 2%)
  • 3% risk tolerance gives us $46.38 to risk per trade
  • 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)
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.

Sunday, October 25, 2009

Week in Review: Buy Cheap ... (PODCAST)

"Solitude is strength; to depend on the presence of the crowd is weakness. The man who needs a mob to nerve him is much more alone than he imagines." - Paul Brunton

Welcome to the Week in Review!



Yes, here in Michigan, it's beautiful as we are in the 'peak color' season during the fall. The above picture it is actually taken from a friend of ours, during our weekend getaway in Pennsylvania. But it well expresses the colors we are enjoying in Michigan at the moment.

When I look over the markets, and I'm looking for something to buy? When I look for that which I can profit from? I don't look for those markets that are performing well. I look for markets that are not performing well. I look for markets that no one else wants any part of.

It's how I got the physical silver that I own for $9.00 an ounce. It's why I bought Morgan Stanley at $11.00.

Now how do I harmonize that idea, with the recent MCD purchase made in equities? I talk about that, within the Week in Review ... (Hint: The abbreviation is: M.M.P )

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)



Click here to Download this Podcast.

What makes this even more difficult? Is to try to fight against the herd, and to do it publicly. Because when there is a wrong call, or a false move? The mob can become very, very vocal about my mistake.

But then again, that's the same mob that ignores money management principles; and believes that making money is this business is about "always being right"

* * *

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.

Friday, October 23, 2009

Investment Series: The Risks and "Risk Defense" (VIDEO)

"If a man is alive, there is always danger that he may die, though the danger must be allowed to be less in proportion as he is dead-and-alive to begin with. A man sits as many risks as he runs." - Henry David Thoreau

This video is part of a series I have entitled the "Investment Series"

Here is a list of the various entries in this series.

1) The Introduction to this series. It's just that. The introduction to the series overall. On this blog, I have a lot to say about trading, and trading for a living. This series purpose is to discuss investing, not trading.

2) Buy and Hold is not dead. It's something that's been bandied about in this economic downturn. I examine that line of reasoning in this entry.

3) The "Dogs of the DOW" approach. This is the kernel of my investment philosophy.

4) Investing Vs. Trading. I discuss the exact differences between investing and trading.

5) The importance of dividends. I am a dividend investor. I begin to examine dividends in this entry.

6) What Sort of Dividends?. I discuss the nature and type of dividends that I search for, as a dividend investor.

7) DRIP or Dividend ReInvestment Plans. DRIP's allow your dividends to begin to compound the returns on a single purchase.

8) Infering Bias - By Seasonal Factors. There are particular times of the year, that you may want to think about buying dividend stocks; so as to get the best price.

9) Infering Bias - by Dollar Cost Averaging. What is Dollar Cost Averaging, and how can it assist you to obtain a stock at a better price?

10) Infering Bias - Scaling. An entry dealing with the allocation of your accounts cash, and how to slide into positions.

Today we're going to expand on the last entry. We finished up the discussion about scaling, by stressing the need to always, always have excess cash, and how this can defend you against the very real risks of the capital markets.

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the exact entry ...)



Here is the link to the blog entry that I mentioned in the above video:

"Why Bears Always Have the Best Arguments" by Paul Kedrosky.

So again, the best defense is to have cash, and other cash flow businesses. As I mentioned in the above video? This is why I am also a trader.

* * *

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.

Tuesday, October 20, 2009

Investment Series: Infer Bias - Scaling Down and Up (VIDEO)

"There are no creeds in mathematics." - Peter F. Drucker

This video is part of a series I have entitled the "Investment Series"

Here is a list of the various entries in this series.

1) The Introduction to this series. It's just that. The introduction to the series overall. On this blog, I have a lot to say about trading, and trading for a living. This series purpose is to discuss investing, not trading.

2) Buy and Hold is not dead. It's something that's been bandied about in this economic downturn. I examine that line of reasoning in this entry.

3) The "Dogs of the DOW" approach. This is the kernel of my investment philosophy.

4) Investing Vs. Trading. I discuss the exact differences between investing and trading.

5) The importance of dividends. I am a dividend investor. I begin to examine dividends in this entry.

6) What Sort of Dividends?. I discuss the nature and type of dividends that I search for, as a dividend investor.

7) DRIP or Dividend ReInvestment Plans. DRIP's allow your dividends to begin to compound the returns on a single purchase.

8) Infering Bias - By Seasonal Factors. There are particular times of the year, that you may want to think about buying dividend stocks; so as to get the best price.

9) Infering Bias - by Dollar Cost Averaging. What is Dollar Cost Averaging, and how can it assist you to obtain a stock at a better price?

Today, I want to talk about the actual purchase of a stock, and how to slowly slide in, or scale into an investment position, when you are unsure of future market movements ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



Always, have excess cash after the purchase to better dollar cost average the position.

The next entry in this series will talk further on this idea, and discuss how to defend yourself against the very real risks of investing.

* * *

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 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.

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.

Sunday, October 18, 2009

Week in Review: The U.S. Dollar, Disinformation and the Pop Point (PODCAST)

"Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair." - Sam Ewing

"Disinformation: Misinformation that is deliberately disseminated in order to influence or confuse rivals" - Princeton WordNet Web

Welcome to the Week in Review!

There's a few things to talk about, after our usual "market review".

We'll talk about the U.S. Dollar. Therefore, the three charts I'm looking at while I am talking about the U.S. Dollar is the Daily Chart

(Daily Chart)

the 1 hour chart ...

(1 Hour Chart)

the 10 minute chart ...

(10 Minute chart)

What I'm waiting for? Is what I call the "pop point". And the way other markets are reacting to the U.S. Dollar? Well ... I talk about that in this "Week in Review" ...

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)



Click here to Download this Podcast.

Here is the link to the article in which bank analysts were telling the public - not to follow the U.S. Dollar surge on August 13th, 2008.

Here is what happened afterward ..

(U.S. Dollar Arrow Marks
September 1, 2008 to March 2009)


What you should watch as I mention in the podcast; if you're looking out for another "inflation pop" ... is the markets. Not analysts. Not the news media. Even if there was no shady business going on? All of us involved in the capital markets are wrong. All the time. I was waiting for a pullback that never came.

So watch Gold as something that may lead the way? But then for real inflation, watch Oil and the Foods.

* * *

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 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.

Friday, October 16, 2009

Challenge Project Investment Purchase: McDonalds (MCD)

"You cannot afford to wait for perfect conditions. Goal setting is often a matter of balancing timing against available resources. Opportunities are easily lost while waiting for perfect conditions." -Gary Ryan

I've "done run out" (as we would say down south) of time in the Challenge Project Investing Account. The perfect setup would have seen me have about $400.00 in available cash before the purchase of another dividend stock. The problem there? Is that the markets do not wait for 'perfect setup'. They move how they move, and when they move.

And let's face it, we're not getting an equities pullback in October. We talked about this possibility, and what we would do about it.

Making money in the markets is not about predicting exactly what will happen. I've said that more times than I care to count. Participation in the capital markets is more like chess. In chess, you don't try to predict everything your opponent will do. You defend the center of your board, and plan for contingencies. You understand that while you have a primary strategy, you have to allow for flexibility while implementing that strategy.

So let's go over the last Challenge Project balances we had last week, for the investing account ...

Last Weeks Investing Account Balance: $653.84
(YTD cash and equity up about 35% Return is about 0.5%)
  • 4.1377 shares of KO (DRIP on)
  • 3.0546 shares of JNJ (DRIP on)
  • Cash: $239.12
-$60.00 of this I reserve to D.C.A. KO
-$60.00 of this I reserve to D.C.A. JNJ
-This leaves $119.12 for cash for new purchases
  • Additional $37.53 available from slush fund
Ok, so today I bought 2 shares of McDonalds (MCD) at $58.20. Therefore, the new balances look like this:

New Investing Account Balance: $642.20
  • 4.1377 shares of KO (DRIP on)
  • 3.0546 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP on)
  • Cash: $112.41
-$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 -$87.59 shortfall for D.C.A. cash
  • Additional $37.53 available from slush fund
So the cash that we would need in the event of a pullback in the stock market, is currently down by $87.59. And if you will notice I reserved more money to Dollar Cost Average (D.C.A.) my MCD position than the JNJ or KO positions. That is because MCD has a smaller "weight" in the portfolio than the other stocks. Therefore, if we get a pullback in the price of MCD, then a little more money would help properly weight that position.

So what about this negative "reserve" balance? Well, it should be noted that if we really need some more cash? We have the slush fund to draw from. And we still have $112.41 available at the moment. This means that at this moment we could have $149.94 to use.

But just as time worked against us? It can work for us.

Somehow, I seriously doubt the market will pullback significantly, before I can push up the cash balances on the investment account. I mean, think about it. I wouldn't be looking to D.C.A. my McDonalds position, until McDonalds was at least at $50.00. MCD hasn't been below $52.00 since May of 2009. I wouldn't be looking to D.C.A. my JNJ position until about $52.00. Again, we haven't seen $52.00 on JNJ since May. The same goes for KO. I would be looking to D.C.A. my KO position at around $46.00; which we haven't seen since June. And remember that as the stock price dips, the cash that we do have, buys more shares. So what I see on the proverbial 'chess board' at the moment ... is some time. $87.59 that I am deficient is only 3 1/2 weekly deposits from Rule No. 2 of the Challenge Project.

So. Where is the risk for the Investing Account at the moment? Time. Having enough time, to use Rule No. 2 to bump up the cash, so that we can properly Dollar Cost Average the stocks we own.

At the same time, I don't want to forget about deposits to the Trading Account. And I really don't want to forget about deposits to the Savings account, since any deposits to that account, bump up the amount available to the Investing Account through the slush fund.

To wrap this up .... why McDonalds?

1) Price. Of the dividend stocks that I've been looking at? It had not yet soared, so the price was right. The P/E isn't great at 15.46, but this is a near-large cap stock, it is McDonalds, and there are stocks out there that are a lot worse. As well, I'm already positioning myself to take advantage of a pullback. The dividend has been growing nicely.

2) Survivability. The dividends stocks that I'm interested in purchasing right now? Have nothing to do with where I see 'the hottest growth'. It's where I see survivability in this economic depression. And somehow? I don't see people stopping their eating of Big Macs anytime soon.

* * *

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 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.

Wednesday, October 14, 2009

My ThinkorSwim Platform Setup (VIDEO)

"The five essential entrepreneurial skills for success are concentration, discrimination, organization, innovation and communication." - Michael Faraday

A couple of weeks ago, I moved the Challenge Project Trading Account to ThinkorSwim as my brokerage.

At the same time, I've received not a few requests, to demonstrate how my platform is setup within my trading brokerage. For those that are new? A trading platform is the software that a brokerage offers to install on your computer, that allows you to interact with various capital markets on an electronic basis. Usually these 'platforms' are customizable.

So I'm going to combine both of those subjects. I will discuss the trading platform setup that Icius helped me customize some time ago for other accounts. As the Challenge Project progresses, you'll see this same setup in my Trading videos ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



* * *

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 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.


Share

Tuesday, October 13, 2009

Participation Through Profit Taking, Part II (VIDEO)

"To get profit without risk, experience without danger, and reward without work, is as impossible as it is to live without being born." - A. P. Gouthev

Some time ago, I think it was last year, I mentioned I was purchasing some Morgan Stanley (MS).

When it comes to investing, factors will change, where eventually, you have to worry about making a profit. Of bringing home the profits. One way to do that, is to receive straight cash dividends for the stock that you have purchased. Another way to do that, is to exit the investment.

So what are my thoughts with that investment I made with Morgan Stanley (MS), last year? I discuss that in the following vlog entry ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



It should be noted that at the time this video was made? Morgan Stanley (MS) was sitting on it's support of the 10 period moving average on the daily time frame.

* * *

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 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.

Monday, October 12, 2009

Monday Challenge Project Summary: October 12, 2009

Previous Week Challenge Project Balances:

Investing Account Balance: $619.36
Stock / Futures Trading Balance: $1,521.21
Online Savings Balance: $150.30

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.

Now by this point, we have beefed up the Challenge Project Investing available cash by a great deal. But there is more work to do here. Here is a pie chart of the Investing Accounts holdings as of this most recent deposit:

Our cash in the Investing Account of the Challenge Project now represents a little over one third of the total holdings. As I have made note every week? I wish to reserve about $120.00 of this cash to better Dollar Cost Average (D.C.A.) either my KO or my JNJ holdings should the ability and opportunity to do so presents itself.

Therefore, if I wanted to purchase a new dividend D.R.I.P. stock? I would only have $119.12 for that purchase, and nothing left over in reserve if the opportunity arose to better D.C.A. that position. With only $119.12 available, I cannot properly weight and match the new purchase, to the stocks that I already own.

Even if this was not the case, and I wanted to use the total $239.12 cash in the account for a new purchase? I would still wish to have cash in reserve, after said purchase. We also have to look to possible market conditions in the future. What if we were to experience a long overdue pullback in the equity markets? We'd want excess cash to take advantage of such a situation. As the Investing Account begins to grow, excess cash at all times becomes more and more critical. This is why I say that for the Challenge Projects Investing Account? We still have more 'work' to do, when it comes to bumping up the cash levels of the account.

Now, I also need to say that I haven't forgotten about cash for the Trading Account and the Savings Account. In future weeks, we'll be using Rule No. 2 to add a bit to both of those accounts as well.

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: $653.84
(YTD cash and equity up about 35% Return is about 0.5%)
  • 4.1377 shares of KO (DRIP on)
  • 3.0546 shares of JNJ (DRIP on)
  • Cash: $239.12
-$60.00 of this I reserve to D.C.A. KO
-$60.00 of this I reserve to D.C.A. JNJ
-This leaves $119.12 for cash for new purchases
  • 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 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.

Friday, October 9, 2009

Early Week in Review: Participation through Profit Taking (PODCAST)

"The key is not to prioritize what's on your schedule, but to schedule your priorities." - Stephen R. Covey

Welcome to the Week in Review!

Yes, it is an early "Week in Review". We still have a days worth of action left to go. But as the next 48 hours will be jammed packed for myself in my own daily schedule? I thought I would put out the "Week in Review" a bit early.

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)



Click here to Download this Podcast.

* * *

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 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.

Tuesday, October 6, 2009

Trader, Know Thyself (PODCAST)

"The best poker players ... fold a lot" - Personal Axiom

I just recently started following Don Miller's blog. Don has some fascinating insights. What it takes to 'be' a trader. To trade well. It's a blog I highly recommend.

In fact it's scary at times, how similar Don's thought process is to my own, in regards to trading psychology and other matters. Indeed, we even format our blog in a similar manner. Both of us will often have new media entry such as a video, or at times for myself a podcast, that accompany a bit of surrounding text. As he just started a side 'project' with his "Jellies" project, we both run a side project to help other traders. I think it was David who recommended Don's blog to me. And I remember David making the comment that he was struck by how similar Don and I are.

The other day, I was reading and watching Don Miller's October 4th entry, "Trading with a Chip", He made some fascinating insights within that post, and comments that I feel offer a lot of room for discussion regarding psychology and the understanding under what conditions you perform best as a trader. I will discuss more regarding this topic in the following podcast

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry and press the "Play" button ...)



Click here to Download this Podcast. Remember that my podcasts can also be downloaded and subscribed to from itunes.

* * *

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 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.

Monday, October 5, 2009

Monday Challenge Project Summary: October 5, 2009

Previous Challenge Project Balances:

Investing Account Balance: $591.82
Stock / Futures Trading Balance: $1,521.21
Online Savings Balance: $150.30

If you're not sure what the Challenge Project is? 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.

The biggest news of the last week, was that I transferred the Challenge Project trading funds away from optionsXpress, to the ThinkorSwim brokerage. That has been accomplished as of today.

We're continuing to build cash in the Investing Account. As noted in the balances below, some of this cash is reserved, so that we can better dollar cost average the positions that we already have in Coca-Cola (KO) and Johnson and Johnson (JNJ). Therefore, if either Johnson and Johnson (JNJ) or Coca-Cola (KO) takes a dive in their stock price? Then I will buy more shares, at a better price, thus lowering my overall "cost basis" or average price.

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: $619.36
(YTD cash and equity up about 27.5% Return is about -1.5%)
  • 4.1377 shares of KO (DRIP on)
  • 3.0546 shares of JNJ (DRIP on)
  • Cash: $214.12
-$60.00 of this I reserve to D.C.A. KO
-$60.00 of this I reserve to D.C.A. JNJ
-This leaves $94.12 for cash for new purchases
  • Additional $37.53 available from slush fund
Investing Account Balance Since Inception:


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:

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:

Total Challenge Project Growth Since Inception:

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 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.

Saturday, October 3, 2009

I'm Crawling to the Keyboard ...

You'll have to excuse me, but I can't muster up a Week in Review podcast this week. I think if I had the strength to talk for twenty minutes, you wouldn't much care to listen to a podcast with constant coughing punctuating each sentence.

Yeah, I'm home sick with the flu today. A pounding headache from the incessant coughing, fever, aches ... the whole nine yards.

As my Dad used to say: "I'd have to die to feel better ..."

I'm going to crawl back to the couch ...

Friday, October 2, 2009

Investment Series: Infer Bias - By Dollar Cost Averaging (D.C.A.) (VIDEO)

"The first rule of business is to buy cheap ..." - Colonel King, King Rat by James Clavell

This video is part of a series. The introduction to this series, can be found by clicking here.

After that introduction, I discussed the fact that Buy and Hold is not dead.

Within this "Investing Playlist", I then revealed that the kernel, the root of my investing approach, is that of the "Dogs of the DOW" approach. Modified of course. We then discussed what I see as the true difference between investing and trading.

I then discussed the importance of dividends, and after this, we discussed what I look for when it comes to dividends.

We then discussed the power that DRIP (Dividend ReInvestment Plan) has to compound a single purchase.

We then had an entry that talked about the actual purchase, and 'inferring bias', or getting the dividend stocks at good 'seasonal' times of the year. Namely, in November and March.

At times? You will hear the term "Dollar Cost Average", or "D.C.A.". What does that mean for investing? Well, that is the topic of the following video ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



So in essence, the video is the long winded way of saying: Dollar Cost Averaging is buying more shares of a dividend stock, at a better price.

Next we'll talk about 'scaling into' a dividend DRIP stock's position.

* * *

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 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.

Thursday, October 1, 2009

I Feel Like Death ...

Every year.

I can almost set my watch to it.

At the end of September to the beginning of October, I start to wake up with a sore throat, and then comes the sinus headache. For the last 14 hours, I've been trying to remain as unconscious as humanly possible. So I'm struggling at the moment.

Regardless, I had to put up a note regarding the Challenge Project.

The Challenge Project is leaving optionsXpress.

I finally took the plunge, created an account at ThinkorSwim for the Challenge Project, and transferred all of the money out of optionsXpress. As soon as the money clears my personal checking accounts, I will be sending the funds over to ThinkorSwim. So from this point forward? The trading portion of the Challenge Project will be occurring with ThinkorSwim as the primary broker.

There are a number of reasons for this. Primarily? ThinkorSwim just has a better platform, and better customer service. The customers, including myself, have been on optionsXpress forums for 4 years now, asking for audible alerts. That's right, 4 years. In the span of 4 weeks, ThinkorSwim has provided updates as to it's platform, that include the ability to drag the audible alerts around the screen. I wouldn't be surprised if there are further improvements and updates at ThinkorSwim in another 4 weeks.

I've also been 'snooping' a bit around their customer service. As the Challenge Project is sort of a 'model' for those with low funds? I've been asking people that I know are low funded to ask ThinkorSwim customer service various questions; and then tell me what they said. I must say I was impressed.

The reason I did this, is because I've noticed over the course of the last 13 years, that this industry has the ability to show extreme disdain for anyone in the low funded position. Which is infuriating to someone like myself, who is attempting to help the low funded. Let me tell you, it's a pretty thankless job.

This is supposed to be one of the last businesses that offer success to anyone, despite where they come from, or how much education they have. Yet optionsXpress, with their pricing structure, demonstrates extreme disdain for anyone in the low funded position. If you have less funds in your account, you are charged more in terms of commissions. They basically, intentionally stack the deck against the low funded.

In addition? The commissions can't be beat on commodity futures between the two brokers. In some cases, I was noticing that the commissions were a full $11.45 cheaper with ThinkorSwim, per contract, than they were with optionsXpress.

The only disadvantage that I will face? Is that I can no longer trade pit-traded options. But is that honestly a disadvantage?

A few folks have asked what I'm going to do with the Challenge Projects Investing accounts, since that account is with Sharebuilder, which is with ING Direct. To move my accounts away from Sharebuilder, they are going to sell off my partial shares that I've DRIP'd in with many of them. So if the Challenge Project Investing Account has 3.038 shares of a company? They're going to sell off the .038, and then charge me a commission for selling it off. Nice eh? So I figure I'll wait to gain a whole other share for each company (for the DRIP to accumulate to like ... 4.01 shares) before transferring the account and shares over to a separate account at ThinkorSwim. It'll take a while, but I'm not about to be screwed out of what I've gained thusfar. Plus, since Shareholder is a subsidiary, and pretty rock solid financially, I don't forsee too many problems by just waiting ...

Edit: On another note, Coca-Cola (KO) paid out it's dividend today.

* * *

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 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.

Search Investing and Trading Articles and Products