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Monday, September 6, 2010

Monday Challenge Project Summary: September 6, 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

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 SAVINGS SIDE-POCKET Account.

I'm finding that my portfolio management decisions are being made on a data set that is based upon a shorter and shorter time period in duration. In other words, whereas I was making portfolio management decisions considering the broad outline that I had developed for myself for the next month or two? So that I would know where I would be sending the cash in the Challenge Project based on rule no. two a month ahead of time?

I am instead basing portfolio management decisions on an outline of only a week or two.

In fact, I did not finally decide to send this weeks deposit before last Friday.

I thought that if we would see a downturn in the equities market, that I would send rule no. two towards the dividend investing account, and it's need of cash. But the strong close in the equities markets which have given me some 'breathing room' as far as 'time'. So instead, I decided to send that cash towards the sidepocket slush fund.

At this point, we can use $131.00 for a side-pocket fund. Which gives us, possibly, two trades as far as allowable drawdown before the 'kill switch' would be hit.

I'll probably boost up the trading account by a bit, and then you'll see me match those deposits to the savings / side-pocket fund so as to keep the slush fund in step with the capital amounts in the trading account.

In conclusion, last week I specified my goals for the Challenge Project , for each account, and as you can note below, I will keep a list each week with the running balances as to those goals for each account.

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

Challenge Project Balances After Rule No. 2 Deposit:

Goals for Each Account By the Time I Trade Challenge Project Full Time
  • Investing Account: More cash, will evaluate
  • Trading Account: $2,400.00
  • Savings SidePocket Account: $800.30
Investing Account Balance: $867.78
(YTD the account is +8.591% YTD Return is about +4.04% 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 $131.00 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 $131.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Side-Pocket Balance: $525.30
(YTD cash equity up about 162.3 % Return on Capital is 0 %)
  • $131.00 for a Slush fund / Drawdown Kill Switch fund
  • $263.30 for a Base Savings
  • $131.00 for Emergency Savings
Savings Side-Pocket Account Balance Since Inception:
(Can Be Enlarged)

Total $500 Challenge Project Balance: $3,412.71

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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