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Monday, May 17, 2010

Monday Challenge Project Summary: May 17, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $807.16
Trading "Sister" Balance: $1,821.56
Interest Bearing "Sister" Balance: $425.30
Total Challenge Project Funds: $3,054.02

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. We 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.

Trading Account:
So far this year, we've had a 60% accuracy rate with the profitable PCBC trade, the profitable UNG trade, the loss in the GLD puts, the profitable trade in the SPY, and then this latest loss with the USO calls. Basically, I'm still up a tad bit in regards returns for trades taken.

While that is the case ... while I am still up just a bit ... I want to refocus on bumping up the capital in the trading account by applying rule no. two of the Challenge Project; and perhaps give trading the account just a bit of a break. This follows the money management strategy we have developed to date.

Investing Account:
The 'dividend investing' portion of the challenge project is holding steady currently despite the pullback in equity prices. And within the next 30 days, we'll start receiving dividends for this quarter, which will yet again ... 'grow' the share size of that portion of the account for free.

I'm already beginning to think that next quarter, each month I'll start applying a portion of rule no. two towards the 'investing sister', so there will be plenty of 'defensive cash' in case of a pullback in equity prices.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $819.11
(YTD the account is up +2.5% YTD Return is about +1.24% Yield is approximately +6.28% in dividends and additional shares of stock)
  • 5.1665 shares of KO (DRIP on for 4.1665 shares)
  • 3.1014 shares of JNJ (DRIP on)
  • Cash: $336.94
-$60.00 of this cash I reserve to D.C.A. KO
-$140.00 of this cash I reserve to D.C.A. JNJ
-This leaves $136.94 cash available
  • Additional $106.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $1,819.63
( YTD cash contributions, equity and return up about 14 % )
  • 2% risk tolerance gives us $36.39 'at risk' levels
  • 3% risk tolerance gives us $54.58 'at risk' levels
  • Additional $106.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $425.30
(YTD cash equity up about 112.5 % Return on Capital is 0 %)
  • $106.00 for a Slush fund / Drawdown Kill Switch fund
  • $213.30 for a Base Savings
  • $106.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,064.04

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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