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Monday, December 6, 2010

Monday $500 Challenge Project Summary: December 6th, 2010 - Watchlist and More Portfolio Management Comments

(Please note there are a few entries today)

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $981.66
Trading "Sister" Balance: $2,194.36
Side-pocket Savings "Sister" Balance: $575.30

Total Challenge Project Funds:

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 have liquidated all of the other personal accounts that I've discussed on this blog for the last 4 years, and to emphasize the strength of these principles? I will demonstrating my success, again, this time it will be live, with the 'Challenge Project', full time.

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

Sorry, no video today. I just don't feel like the fuss of compiling and uploading a video.

So, as already stated, rule no. two is being applied to the dividend investing 'sister' account. As you can note in the summary below, I've also started to include the percentile representation of the cash within the dividend investing 'sister' account. Perhaps this will help illustrate more clearly why the dividend investing 'sister' account needs more maintenance.

It wouldn't take long to adjust those percentages. Just four applications of rule no. two, and we would greatly affect the percentile cash reserved for 'maneuvering capital'. That 'maneuvering capital' is the 'position' or share of cash that I am primarily concerned with increasing in the future.

Oh, and you'll note that I also revised my 'active' trading goals.

In 'other events', watching David Einhorn co-host this morning on CNBC (I never watch CNBC, but wanted to catch David's comments) was interesting. I commented on it earlier in the twitter stream, so I'll spare you my comments in this entry. But with Pfizer's (PFE) change in CEO, and great stock discussion that David usually brings to the table, I thought it opportune time to discuss the companies whose stocks that I usually keep within my 'watchlist'. Stocks that I keep an eye on, at least out of the corner of my eye. Yes, Pfizer (PFE) is one of them. No, not because of David's comments. If you look at the old Superior Investor (SI) forums, or the Profound Investor (PI) forums, or heck, I think there may even be a blog entry here about it from a couple of years back, I've always had my 'eye' on Pfizer (PFE).

Here are some others that I keep in a watchlist: Abbott (ABT), Shipping Finance Ltd. (SFL), Automatic Data Processing (ADP), Procter & Gamble (PG), General Mills (GIS), Pepsi Cola (PEP), Deago (ADR) (DEO), AT&T (T), Frontline Ltd. (FRO), DTE Energy (DTE) andNYSE Euronext (NYX).

These are not stocks I actively follow as I mentioned earlier. But I keep them on a list, and check in from time to time.

Oh, and in case you missed the Facebook update on my A.C.C. thoughts? Obviously, with the spike higher in Orange Juice, I've scratched that trade, at least for now. I continue to keep my eye out for any other trades.

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: $2,500.00
  • Savings Side-Pocket Account: $900.30
Investing Account Balance: $1,010.45
(YTD the account is +26.44% YTD Return is about +11.15% Continuing Yield is approximately +6.96% in cash dividends and additional shares of stock)
  • 6.2685 shares of KO (DRIP is on for 4.2685 shares)
  • 5.158 shares of JNJ (DRIP is on for 3.158 shares)
  • Cash: $283.45
-$26.45 of this cash I reserve for 'maneuvering' capital (2.618%)
-$13.00 of this cash I reserve to D.C.A. KO (1.287%)

-$24.00 of this cash I reserve to D.C.A. JNJ (2.375%)
-This leaves $220.00 cash available for a new purchase (21.77%)
  • Additional $143.00 available from slush fund, up to $1,153.45 (14.15%)
Investing Account Balance Year to Date
(Can be Enlarged):

Stock / Futures Trading Balance: $2,194.36
( YTD cash contributions, equity and return up about 37.49 % )
  • 2% risk tolerance gives us $43.89 'at risk' levels
  • 3% risk tolerance gives us $65.83 'at risk' levels
  • Additional $143.00 available from draw-down / slush fund, to $2,337.63
Trading Account Balance Year to Date:
(Can Be Enlarged)

Savings Side-Pocket Balance: $575.30
(YTD cash equity up about 187.2 % Return on Capital is 0 %)
  • $143.00 for a Slush fund / Draw-down Kill Switch fund
  • $289.30 for a Base Savings
  • $143.00 for Emergency Savings
Savings Side-Pocket Account Balance Year to Date:
(Can Be Enlarged)

Total $500 Challenge Project Balance: $3,780.11

* * *

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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