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Monday, August 16, 2010

Monday Challenge Project Summary: August 16, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $845.73
Trading "Sister" Balance: $2,019.63
Interest Bearing "Sister" Balance: $475.30

Total Challenge Project Funds: $3,340.66


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 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. As I mentioned on August 10th, I am in the processing of liquidating my own personal accounts, and will soon be trading this 'Challenge Project', full time.

For this week, the $25.00 weekly deposit is being transferred to the Challenge Project INVESTING Account.

At this point, the investing 'sister' account is still short on cash. This is the weakest portion of the Challenge Project at the current time, and the portion of the 'foundation' that still needs a bit of tweeking. That would naturally mean that I would want to focus on applying rule number two towards the dividend investing account. Thus the reason for this weeks deposit to that account.

However, I do not expect that I will continually be sending cash towards the dividend investing 'sister' account, despite it's need.

Because I do not expect an overly large downturn in the equities market. I may be wrong. The Fed could be forced to raise interest rates, which would cause a big downturn in the equities market which would force me to apply rule number two towards the dividend investing 'sister' account, as well as possibly use some of the 'side-pocket sister' account. I have the cash available to make those sort of maneuvers.

But at the current time, I am of the mindset that I will be peppering deposits between all three of my 'sister' accounts over the course of the next few months, as I build up to trading this 'book' full-time.

For now, here are the new balances for each of the Challenge Project accounts ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $852.37
(YTD the account is +6.662% YTD Return is about +2.231% Continuing Yield is approximately +6.96% in cash dividends and additional shares of stock)
  • 6.2367 shares of KO (DRIP is on for 4.2367 shares)
  • 5.13 shares of JNJ (DRIP is on for 3.13 shares)
  • Cash: $206.49
-$4.00 of this cash I reserve to D.C.A. KO
-$14.00 of this cash I reserve to D.C.A. JNJ
-This leaves $188.49 cash available
  • Additional $118.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $2,019.63
( YTD cash contributions, equity and return up about 26.53 % )
  • 2% risk tolerance gives us $40.39 'at risk' levels
  • 3% risk tolerance gives us $60.58 'at risk' levels
  • Additional $118.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $475.30
(YTD cash equity up about 137.3 % Return on Capital is 0 %)
  • $118.00 for a Slush fund / Drawdown Kill Switch fund
  • $239.30 for a Base Savings
  • $118.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,347.30

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


We'll be discussing the Challenge Project again soon enough ...

* * *

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 14 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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