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Monday, August 30, 2010

Monday Challenge Project Summary: August 30, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $852.72
Trading "Sister" Balance: $2,019.63
Side-pocket Savings "Sister" Balance: $500.30

Total Challenge Project Funds: $3,372.65


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 not being made. We have exhausted Rule No. two of the Challenge Project for the month of August, 2010.

That's right. We've exhausted the $100.00 from Rule No. two this month. But I thought we could review the Challenge Project. I thought I could focus on examining each account from the standpoint of where I would like that account to be, once all of my personal accounts are finally liquidated and I'm ready to only trade the Challenge Project for my main trading vehicle.

Investing Account:

First of all, I need to say that now, as of August 30th, 2010 ... the Challenge Project accounts that comprise my dividend investing accounts? Comprise the complete total of my dividend bearing stock holdings. That's right ... I've completed the liquidation of all other accounts, and as of today, the cash is en route from those accounts. No more DTE Energy (DTE), Taiwan Semiconductor (TSM), McDonalds (MCD) or any of the others.

Yeah ... it's pretty exciting, I have to admit.

So what's the next priority for Dan when it comes to dividend investing?

Cassshhhhhh.

I've already talked about this. This account is in serious need of capital. I'm not overly concerned ... yet. I probably won't be ready to start actively trade these accounts for several months, so I have some time (in fact, the time needed to get the Challenge Project 'in gear' is directly related to the next surprise I have coming).

If I wanted to, I could continue to use rule no. two to continue to bump up the cash amount of this account. So from that standpoint? As I said early, I'm not overly concerned.

For each deposit I make to this account, I will also also be increasing the amount that is reserved to dollar cost average existing positions.

Trading Account:
Oh ... so ... close.

I would be happy to start trading this account with about $2,400.00 (With rule no. two as a heavy backup). I'm getting there. I wouldn't even mind a trade or two in the meantime.

I view this account as in the best shape of the three.

Sidepocket Account:
The main use of the account at this stage of the game is a side-pocket amount. As such, when I begin trading the Challenge Project full time, I would like to be able to withstand 3 losing trades in a row. That's my maximum consecutive losses thus far this year. So that's what, having about $200.00 in the slush-fund? Which would mean that I would need another $300.00 in this account.



Here are the new balances for each of the Challenge Project accounts as they exist today ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $852.23
(YTD the account is +6.70% YTD Return is about +2.235% 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 $125.00 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 $125.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Side-Pocket Balance: $500.30
(YTD cash equity up about 149.8 % Return on Capital is 0 %)
  • $125.00 for a Slush fund / Drawdown Kill Switch fund
  • $250.30 for a Base Savings
  • $125.00 for Emergency Savings
Savings Side-Pocket Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,372.16

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



* * *

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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