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Monday, March 1, 2010

Monday Challenge Project Summary: March 1, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $818.37
Trading "Sister" Balance: $1,654.23
Interest Bearing "Sister" Balance: $325.30
Total Challenge Project Funds: $2,797.90

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 TRADING Account.

Yes, from time to time, 'firming up the foundation of the Trading 'sister' account' actually means that rule no. 2 can be applied to the ... trading account! Fancy that.

This means that the trading account has seen an increase of 5.2% in it's trading capital year to date, and the last trade in the trading account was a profitable win. But I'm still not content. $1,679.23 is still a tiny, tiny account to be trading. I'm shooting for an increase of about 14%, or about $1,819.00 or so, one way or another, by July of this year. Expect to see that rule no. two is applied so that such increases occur in the trading account itself in the next quarter.

But before that can occur, expect to see some more love shown to the "Savings Sister" by the end of the quarter. I believe that I have made mention that I'd like the "sidepocket" or "slush fund" to be able to backstop two trading losses, so that's the goal I'm reading for while we are still within this 'tiny' phase.

Turning to the Investing Account ... the stock value of Coca-Cola (KO) got hit hard, but basically, this is transaction in which Coca-Cola (KO) does not have to put out any of it's cash, thus, it's a "cashless transaction" (remember, this blog is for the newcomer). It's a win, win, win for this stock in the long term, and anyone not long Coca-Cola (KO) gets a huge gift with this slice off of the stocks value in the short term.

Here are the new balances for each of the Challenge Project ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $798.60
(YTD cash and equity is up -0.056% Return is -1.1% )
  • 5.1665 shares of KO (DRIP on)
  • 3.0779 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP is now OFF)
  • Cash: $204.61
-$5.10 of this cash I reserve to D.C.A. KO
-$64.00 of this cash I reserve to D.C.A. JNJ
-$84.00 of this cash I reserve to D.C.A. MCD
-This leaves $51.51 cash available
  • Additional $81.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):

Stock / Futures Trading Balance: $1,679.23
(YTD cash and equity up about 5.2 % Return on Capital is 0.5 %)
  • 3% risk tolerance gives us $50.37 to risk per trade
  • Additional $81.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $325.30
(YTD cash equity up about 62.45 % Return on Capital is 0 %)
  • $81.00 for a Slush fund / Drawdown Kill Switch fund
  • $163.30 for a Base Savings
  • $81.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)

Total $500 Challenge Project Balance: $2,803.13

Total Challenge Account 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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