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Saturday, February 27, 2010

Week in Review: Subjective "Cloud Reading" and the Shipping Sector (PODCAST)

"The fastest way to break the cycle of perfectionism and become ... fearless ... is to give up the idea of doing it perfectly - indeed to embrace uncertainty and imperfection." - Arianna Huffington

Welcome to the Week in Review!

First of all, I'm not sure if I got the "Friday Review" video up in time here at the blog for the 'email feed' to send the entry to subscribers last night. So if you missed it, it's probably included in today's email delivery, and can be found here.

Please note there is a mistake in that Friday review video, which I will talk about in the "Week in Review" podcast. I basically show a chart of the wrong market when it came to Lean Hogs in that video. I showed the chart for Live Cattle (LE) rather than Lean Hogs (HE). Again, the Lean Hogs market was a great short up until Wednesday, when I had stopped trading for the week. But only up until Wednesday.

Now, onto my 'weekend comments' regarding the last week ...

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)




Click here to Download this Podcast.

* * *

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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Friday, February 26, 2010

Friday Investing and Trading Review for February 26th, 2010 (VIDEO)

"Ride your winners, and keep your losses small" - Market Mantra

"When you are staring at a trade, where you are sitting on profits three times greater than your risk? You have already 'ridden' your winner" - Personal Axiom


Here is the "Friday Review" video, that will review my investing and trading efforts for the last week, based off of comments in last weeks "Airelon's Market Tactics".

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



Please note there is a mistake in that Friday review video, which I will talk about in the "Week in Review" podcast. I basically show the wrong market when it came to Lean Hogs. I showed the chart for Live Cattle (LE) rather than Lean Hogs (HE). Again, the Lean Hogs market was a great short up until Wednesday, when I had stopped trading for the week. But only up until Wednesday.

At this point, the Model Portfolio of Airelon's Market Tactics is up 39.4%

Airelon's Market Tactics Model
Portfolio
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 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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Thursday, February 25, 2010

ThinkorSwim Response on Partial Shares and DRIP ...

Well, in response to my inquiry into ThinkorSwim support, I received this reply ...

"Hi Daniel,

Thanks for the e-mail. I just confirmed with Penson, our clearing firm, and was informed that they reinvest whole shares only. I believe that was the only thing you wanted confirmed, but if I missed something please let me know.

Kind regards,"

If they ever do issue 'partial shares' (as some have been told when they inquired) - it's probably on more of a direct speciality plan that the offering company has. I think we'll just have to wait and see.

This will allow for a little more flexibility, as self-directed synthetic DRIP's can be constructed, which I will demonstrate with the Challenge Project accounts. Speaking of the Challenge Project, the shares of corporations that are gaining partial shares at Sharebuilder will remain there, but any new purchases I gather will be done in the new ThinkorSwim account.

* * *

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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Tuesday, February 23, 2010

The Challenge Project, Dividend ReInvestment Plan (DRIP), and Synthetic DRIP

"The difference between a mountain and a molehill is your perspective." - Al Neuharth

On February 18th, Scott left an interesting comment that has a direct relation on the "Challenge Project". It reads:

"I contacted ThinkorSwim and they said that Pension - their clearing firm does not buy partial shares.

I have my IRA account with TOS and was turning on DRIP for some select stocks I own and noticed I received cash for my position in PG.

This stock is in the low 60's currently and I do not own enough shares for a quarterly dividend to equal one share.

Have you mentioned or experienced this?

Thanks again!"

Wow. I found this one very interesting. In fact, it sort of threw me for a loop. I discuss this topic in the vlog entry below ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



Here is a copy of the email I've sent to ThinkorSwim. I am awaiting a reply, but they're pretty good about getting back to their clients in an expedient manner.

"I would like to confirm that any shares that I hold in Account #XX______ are enrolled in DRIP, and that any dividends paid on this share of Coca-Cola (KO) would gain partial shares.

Per an email correspondence with Lila Frazier on 5/18/09, I asked:

“4) Does ThinkorSwim offer DRIP (Dividend ReInvestment Plan) on stocks that pay dividends and have a DRIP program? I own ___, ___, ___, ___, ___, and ___. At Sharebuilder, I have a straight buy and hold these stocks, when they pay dividends, the dividends are reinvested. What's more, I can turn this plan on and off with the click of a button. Does ThinkorSwim offer this option? If ThinkorSwim DOES offer DRIP on dividend stocks, does ThinkorSwim offer partial DRIP? In other words, could I say: I want 50 shares of FRO to pay me in cash, and 50 shares to be reinvested through the DRIP program?”

and the answer I received was …

In a tos account mutual fund dividends are automatically re-invested. For stocks you will need to request either on a stock by stock basis or for the entire account. Please let me know and I will take care of this for you. In addition we may not do fractional shares.”

I had assumed, as with most every other broker I've done business with, this meant that if an ACAT transfer was performed out of ThinkorSwim, then the partial shares would be sold off and could not be transferred. Especially since I had asked about ACAT within that same email. As I mentioned, this is rather usual with most brokers. Perhaps I should have inquired further on this matter. But I was assured that ThinkorSwim offers dividend reinvestment.

As I have mentioned in earlier email correspondence, I am just beginning to move some of my other brokerage accounts over to ThinkorSwim. There are still some accounts I am looking to perform an ACAT transfer into ThinkorSwim accounts. Some of the accounts that I hold at other brokerages, hold dividend investing stocks that are involved with DRIP. Therefore, instead of receiving a cash dividend, I just receive more shares of the company to compound the returns. I was going to wait a bit for those shares to DRIP in a few more shares, before I instituted the ACAT transfer to ThinkorSwim.

Then an acquaintence of mine who also uses ThinkorSwim got a hold of me, and stated that his shares weren't DRIP'd in his account, but he received straight cash. He tells me that when he inquired further on the matter, he was told that ...


"I contacted ThinkorSwim and they said that Pension - their clearing firm does not buy partial shares.

I have my IRA account with TOS and was turning on DRIP for some select stocks I own and noticed I received cash for my position in PG.

This stock is in the low 60's currently and I do not own enough shares for a quarterly dividend to equal one share"

So I guess I'm confused, and seeking clarification. It's impossible to be enrolled in a DRIP program, and not receive partial shares. If I had 4000 shares of Coca-Cola, and the dividend is 0.41 cents, then I this would equal $1,640 which when enrolled in the DRIP program would gain 30 shares and another 0.37037037 partial shares. Partial shares cannot be avoided when a stock is within a DRIP program, no matter the size of the position. Must the size equal one share? That's fine if so, as I will simply built my own 'synthetic DRIP'. I just need to know, before moving forward. So how is it that ThinkorSwim will go ahead and place stocks on a request basis within DRIP - but the clearing firm does not deal in partial shares?

Thank you in advance for clarification on this matter ..."


Once again, I'll let everyone know what I hear in regards to a response ...

* * *

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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Monday, February 22, 2010

Monday Challenge Project Summary: February 22, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $803.73
Trading "Sister" Balance: $1,654.23
Interest Bearing "Sister" Balance: $300.30
Total Challenge Project Funds: $2,758.26

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. Some time ago I stated that I may 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 SAVINGS Account.

Thus far, we have increased the "Savings Sister" account of the Challenge Project by $125.00. I could say that we've increase this account by "62%", but come on ... it's 62% that was built on the $200.00 that we started off with at the beginning of the year. So let's be a little realistic. Two months into 2010, and we've increased the "Savings Sister" account by $125.00.

The advantage there, is not the $125.00, but that we've increased the "sidepocket" fund, or the 'drawdown kill switch / slush fund' up to $81.00. We've thus increased our 'breathing room' for the trading account. The trading account could conceivably have two scalping losses before the 'kill switch' would be hit.

On February 18th, Scott left an interesting comment that has a direct relation on the "Challenge Project". It reads:

"I contacted ThinkorSwim and they said that Pension - their clearing firm does not buy partial shares.

I have my IRA account with TOS and was turning on DRIP for some select stocks I own and noticed I received cash for my position in PG.

This stock is in the low 60's currently and I do not own enough shares for a quarterly dividend to equal one share.

Have you mentioned or experienced this?

Thanks again!"

I was going to comment on this on Sunday, but I got caught up with my newsletter, which turned out to be almost 9 pages, as I had a lot to say on the economic front. So I didn't get to this yesterday as I had some other emails that I wanted to get through. But I want to say that I think I'm going to have a vlog entry on this tomorrow, so be watching for it.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $818.37
(YTD cash and equity is up +2.4 % Return is +1.39% )
  • 5.1665 shares of KO (DRIP on)
  • 3.0779 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP is now OFF)
  • Cash: $204.61
-$5.10 of this cash I reserve to D.C.A. KO
-$64.00 of this cash I reserve to D.C.A. JNJ
-$84.00 of this cash I reserve to D.C.A. MCD
-This leaves $51.51 cash available
  • Additional $81.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $1,654.23
(YTD cash and equity up about 3.64 % Return on Capital is 0.5 %)
  • 3% risk tolerance gives us $49.62 to risk per trade
  • Additional $81.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)


Savings Balance: $325.30
(YTD cash equity up about 62.45 % Return on Capital is 0 %)
  • $81.00 for a Slush fund / Drawdown Kill Switch fund
  • $163.30 for a Base Savings
  • $81.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $2,797.90

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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Saturday, February 20, 2010

Week in Review: All Things in Context (PODCAST)

"Disinformation is most effective in a very narrow context." - Frank Snepp

Welcome to the Week in Review!

The Fed raised ... the rate? Or did they? What's all this about a discount window? Does that mean my money will be paying me more interest at my bank?

During my review of the capital markets, we talk about exactly what happened last week, and what it means. But I'm sorry, first you're going to have to endure a little 'sports rant' of mine ...

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)




Click here to Download this Podcast.

* * *

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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Friday, February 19, 2010

Friday Investing and Trading Review for February 19th, 2010 (VIDEO)

"People who make money often make mistakes, and even have major setbacks, but they believe they will eventually prosper, and they see every setback as a lesson to be applied in their move towards success." - Jerry Gillies

Here is the "Friday Review" video, that will review my investing and trading efforts for the last week, based off of comments in last weeks "Airelon's Market Tactics".

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



I have yet to do the exact figures, but I believe that instead of being up 32.66% now, I think the Model Portfolio is only up about 31%.

:)

It's all about keeping the losses small in relation to the wins.

* * *

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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Thursday, February 18, 2010

Commodities Trading and Futures Speculation (Series): Contracts and More Contracts !! (VIDEO)

"A verbal contract isn't worth the paper it's printed on" - Samuel Goldwyn

This vlog entry is a continuation in a series of videos, the "Commodities Trading and Futures Speculation", and is continued from the previous entries.

Introduction: I discussed some of the myths regarding commodities speculation, and introduce the entire series.

The Reason for the Markets Existence: We discussed that the commodity futures markets exist, to allow companies, farmers, and others involved in production within the economy to hedge themselves against catastrophic losses. This in turn, keeps unemployment lower, and reduces volatility in the economy.

Why Traders Trade Commodities: Ok, if the commercial interests use the commodity markets to protect their business profits, then why are traders in those future markets? We discussed liquidity, and that the commercial interests need that trader liquidity, in order to hedge more efficiently. Without traders, the commercial interests have a very difficult time operating in the markets.

Collective Crowd Wisdom: We next discussed the free market benefits that traders bring to table while they are trading future delivery contracts.

So let's begin to get into some of the 'nuts and bolts' of the commodities, and at the same time, dispel a few myths and rumors that have persisted as of late. We'll begin by discussing Commodity Contracts ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



We will continue this series by discussing the expiration aspect of contract specifications with commodity contracts.

* * *

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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Tuesday, February 16, 2010

Just One of Them Days ...

Tried to short the market today.

Not such a hot idea.

But I actually managed to break a little below even on the trading front. I had a profitable short earlier in the day ($75.00 per contract), but then gave it all back with a short after the equities opened up. After that, I just stepped back, as it had the feel of a day that was just determined to see green. Especially with the Dollars weakness.

As I mentioned on the Facebook page, days like today are why I'm a trader, and also an investor. The dividend stocks are allll green. I'm doubly thankful I averaged down on some of them, where I had the capital to do so (Remember - portfolio management and money management!) So actually, I'm positive for the day, and a dividend incoming for Procter & Gamble (PG). I suppose my "three sisters" works out to be a type of 'hedge' on days like today.

I did want to let everyone know that I'm back to working here at the computer, and will be back with another 'remake' vlog entry in the "Commodity Futures" series 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 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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Monday, February 15, 2010

Monday Challenge Project Summary: February 15, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $804.25
Trading "Sister" Balance: $1,654.23
Interest Bearing "Sister" Balance: $275.30
Total Challenge Project Funds: $2,715.82

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. Some time ago I stated that I may 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 SAVINGS Account.

The biggest move on the part of the Challenge Project last week, was the purchase of another share of Coca-Cola (KO) at $53.90. Now as of today's date, I have not transferred via an ACAT, the 4.1665 shares of Coca-Cola (KO) away from the Sharebuilder account, to the new ThinkorSwim account. And I really want to hold off on doing that, until I'm showing a decent profit margin on the Coca-Cola (KO) holdings. So I now have 4.1665 shares at Sharebuilder, and 1 share at the investing account at ThinkorSwim.

As it is, I'm done with Coca-Cola (KO) now here for a while. Naturally, the DRIP plan is on with my broker (I had to contact ThinkorSwim support via email to have those dividends reinvested). I'm too heavily weighted in the Challenge Project towards that stock. It should also be noted that any cash that I add to the Challenge Project Investing Account, will be attributed to the cash that I am reserving to further D.C.A. Coca-Cola (KO) down the road. But as far as further purchases ... I am going to concentrate on building up the shares of the other stocks being held by the Challenge Project Investing Account, as well as other cash.

This weeks application of rule no. two is applied once again to the savings "sister" account. Thus, the slush fund that acts as a "sidepocket" to the other accounts, continues to grow,as does the base savings as well as the emergency savings. With growth of that slush fund, further trading and investing is 'buttressed' and supported. As I look over the balances? I find it interesting to note that there is now more cash reserved as a "base" savings, than the entire Investing Account had when I began the "Challenge Project".

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $803.73
(YTD cash and equity is up +0.58 % Return is -0.47% )
  • 5.1665 shares of KO (DRIP on)
  • 3.0779 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP is now OFF)
  • Cash: $204.61
-$5.10 of this cash I reserve to D.C.A. KO
-$64.00 of this cash I reserve to D.C.A. JNJ
-$84.00 of this cash I reserve to D.C.A. MCD
-This leaves $51.51 cash available
  • Additional $75.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $1,654.23
(YTD cash and equity up about 3.64 % Return on Capital is 0.5 %)
  • 3% risk tolerance gives us $49.62 to risk per trade
  • Additional $75.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)


Savings Balance: $300.30
(YTD cash equity up about 50 % Return on Capital is 0 %)
  • $75.00 for a Slush fund / Drawdown Kill Switch fund
  • $150.30 for a Base Savings
  • $75.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $2,758.26

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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Saturday, February 13, 2010

Week in Review: Waxing Philosophic on the Power of Perception (PODCAST)

"When you're right long enough, eventually they'll start paying attention." - Amory Lovins

Welcome to the Week in Review!

You know, for a long time I could not understand why certain individuals just ate up what I refer to as "fear" websites, authors and pundits. Sites that screamed, panted and were nearly epileptic on the "coming doom of hyperinflation!" I always thought to myself ... "Well ... when that doesn't come to pass, they'll obviously lose their audience"

The funny thing is? That when their predictions and prophecies utterly failed? People became even more devoted to their chosen pundit.

As I review the capital markets in the following "Week in Review" podcast, I wax philosophic on this 'power of perception' that so many fall victim to ...

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)




Click here to Download this Podcast.

It just floors me that such pundits gain their audience, not based on this little thing we call ... "reality", or making money. I suppose for some time, I have been naive, and thought that people came to the industry of finance, because they wanted to make money. But so many of these pundits gain their audience, because the audience wants to be sold abject and complete fear. Their audience does not want to make money. They want to be fearful. Or they want to be angry. I suppose it was that comment by "Reformed Broker" Joshua Brown the other day at the Happy Hour show that really reminded me of that fact, when both he and Anthony mentioned "Hey, but that's what their audience really wants"

And lord knows I've made my mistakes. I, like many market professionals, spent the first two quarters of 2009 waiting for the pullback that never came. But as I've often said, you can often determine who is truly trading profitably, because that individual will discuss their mistakes.

Why? Is it simply that real traders are more honesty folks? Not necessarily. I've met many dishonest, profitable traders in my 13 years around this industry. But a real trader understands that it is profitable to quickly identify wrong calls about the market, and to correct those mistakes. Therefore, genuine traders have no problem saying:

"Yeah, that market ripped me to pieces" because they understand that their continued profitability comes from understanding and identifying mistaken calls. What a real trader, a profitable trader will not do, is sit around and blame the Federal Reserve, or political regime for their wrong market decisions and calls.

* * *

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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Friday Investing and Trading Review for February 12th, 2010 (VIDEO)

"The hardest work of all is to do nothing." - Proverb

Here is the "Friday Review" video, that will review my investing and trading efforts for the last week, based off of comments in last weeks "Airelon's Market Tactics".

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



* * *

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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Tuesday, February 9, 2010

Challenge Project Post: Investing Basis - Coca-Cola (KO)

Ok, one last brief note, as I listen to the Coca-Cola (KO) conference call. Earnings were great for a company the size of Coca-Cola (KO) as the estimates were at $0.61 a share, and 7.21 Billion in Revenue. They reported $0.66 per share and stronger revenue (But flat for year of 2009 on currency to look to the larger picture)

I took some of the cash that I have set aside to dollar cost average (D.C.A.) in the Challenge Project "Investing Account", and took a nibble into KO again, and bought in at $53.90. Of course, the DRIP is on for this stock.

If you're a subscriber of the newsletter, I am not going to do this on the model portfolio, for money management and portfolio management reasons.

Now I'm going to go rest my eyes. Honest.

* * *

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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Taking a "Blogging and Trading" Break ...

... for just a couple of days ...

I think some have noticed that it seems my eyes are giving me problems lately. They are correct, they have.

I actually have a host of eyesight problems.

First, there are the physical problems with the eyes themselves, that is ... astigmatisms in both eyes. Next, there is actually a problem that my mind has in interpreting visual input, called Amblyopia. Basically, if I'm using one eye, my brain has this tendency to stop using the other eye and completely ignore it. Usually, those who suffer from Amblyopia have a strong eye, and a weak eye. The brain itself comes to depend on the strong eye, and ignores the weak eye. Now combine all of the above, with the fact that my strongest eye, has the strongest astigmatism. So the brain has come to depend, actually, on my weakest eye.

And as of late, my eyes are giving me fits. It's becoming harder to focus with either eye, I'm seeing spots, at times the vision goes blurry, and my eyes are working even less efficiently than usual.

So I just wanted to put a brief note out here, that I'm going to take a brief break from blogging. for a few days. It's because I'm taking a break from the computer screens period, and let my eyes rest for a bit. It'll be hard, because not only do I have to take a break from blogging and writing, but from reading and watching the markets at all. Even reading can cause further strain. It should only take a few days, as I have a bit of therapy that I put myself through. As I mentioned, I just wanted to put out a brief note so you folks will know what happened to Dan, if I don't blog for respond to email for a few days.

Because eyesight problems are not something I care to ignore.


* * *

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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Monday, February 8, 2010

Monday Challenge Project Summary: February 8, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $811.29
Trading "Sister" Balance: $1,654.23
Interest Bearing "Sister" Balance: $250.30
Total Challenge Project Funds: $2,715.82

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. Some time ago I stated that I may 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 SAVINGS Account.

Well, I did say that I would focus on strengthening the challenge trading account this quarter. Which is why I'm applying rule no. two towards the savings account. :) It's building the foundation underneath the challenge trading account. And yes, you'll continue to see this for the next few weeks.

Thus, when the Challenge Project is ready to take on it's next trade? It will have a more firm foundation in order to do so.

As far as the investing account ... I'm rather pleased it's held up as well as it has in this downturn. I was debating on averaging down here on each of the stocks. But as it's only down -0.61%, then I really see no reason to do so at this point.

The only stock that I might possibly decide to do so with, is Coca-Cola (KO), but in the current environment ... well I think I may be able to get KO for an even better price soon enough. If I were to average down with Coca-Cola (KO), then I would use the cash I have set aside to Dollar Cost Average (D.C.A.) already of the investing account's cash.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $804.25
(YTD cash and equity is up +0.78 % Return is -0.61% )
  • 4.1665 shares of KO (DRIP on)
  • 3.0779 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP is now OFF)
  • Cash: $263.51
-$64.00 of this cash I reserve to D.C.A. KO
-$64.00 of this cash I reserve to D.C.A. JNJ
-$84.00 of this cash I reserve to D.C.A. MCD
-This leaves $51.51 cash available
  • Additional $68.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):



Stock / Futures Trading Balance: $1,654.23
(YTD cash and equity up about 3.64 % Return on Capital is 0.5 %)
  • 3% risk tolerance gives us $49.62 to risk per trade
  • Additional $68.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)


Savings Balance: $275.30
(YTD cash equity up about 37.4 % Return on Capital is 0 %)
  • $68.00 for a Slush fund / Drawdown Kill Switch fund
  • $139.30 for a Base Savings
  • $68.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $2,733.78

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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Saturday, February 6, 2010

Week in Review: What in the Heck Just Happened? (VIDEO)

"If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience." - George Bernard Shaw

Welcome to the Week in Review!

It's been an ... interesting ... week to say the very least. In fact, I think that "What in the Heck Just Happened?" just became the theme of this week.

I woke up this morning, and thought ... "Ok, I'm going to put this podcast together, and boy do I have a 'few things' to say in that podcast". So, I look over my email inbox, and discover I have an email from my podcast hosting service, podbean. It seems my podcasts have been in enough demand, that I've exceeded my bandwidth usage for the month.

I suppose, if I'm going to have a problem with my podcast hosting service, that's the sort of problem that is worth having. I will work to resolve this issue before the end of the month, and for the time being, we'll move to a video for today's "Week in Review".

This happenstance fits in well with the entire week as it has transpired thus far. This week has been sort of a "what in the heck just happened" week. Especially in the capital markets.

So we'll talk about all of that in this "Week in Review" video entry that follows ...

(Video Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact video entry ...)




Here is the link to Don Millers blog ...

* * *

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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Friday, February 5, 2010

Friday Investing and Trading Review for February 5th, 2010 (VIDEO)

"Trading only using technical analysis as your guide, with no thought as to a fundamental reason as to 'why' the market may move in a particular direction? Is like dialing in the sights on your rifle, but not watching where you are aiming it in the first place" - Personal Axiom

Here is ... the "Friday Review" video, that will review my investing and trading efforts for the last week, based off of comments in last weeks "Airelon's Market Tactics".

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



* * *

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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Thursday, February 4, 2010

Commodities Trading and Futures Speculation (Series): Collective Crowd Wisdom (VIDEO)

"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow citizens." - Adam Smith, The Wealth of Nations

This vlog entry is a continuation in a series of videos, the "Commodities Trading and Futures Speculation", and is continued from the previous entries.

Introduction: I discussed some of the myths regarding commodities speculation, and introduce the entire series.

The Reason for the Markets Existence: We discussed that the commodity futures markets exist, to allow companies, farmers, and others involved in production within the economy to hedge themselves against catastrophic losses. This in turn, keeps unemployment lower, and reduces volatility in the economy.

Why Traders Trade Commodities: Ok, if the commercial interests use the commodity markets to protect their business profits, then why are traders in those future markets? We discussed liquidity, and that the commercial interests need that trader liquidity, in order to hedge more efficiently. Without traders, the commercial interests have a very difficult time operating in the markets.

So what is the other benefits exist, other than that of traders providing liquidity? We discuss that in the following vlog entry ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



It still blows me away, that in the west, even among Americans, I have to explain these concepts !!

But in 2007, when ones wanted to "demonize" traders and there was talk of 'abolishing' the regulated oil market as it existed - then what was the inevitable result? Large firms started leasing oil tankers, to store oil.

That is forcing traders to the spot market. Then, firms ARE manipulating the price of oil, because they have partial control over some supply, and inflationary and deflationary pressures begin to build in the price structure. This is why the markets are setup in the manner that they are, so that traders are not in the spot market. It maximizes the benefits that speculation brings to the table ... namely ... fair and liquid price arbitration given the economic fundamentals; while simultaneously negating the inflationary and deflationary side effects to some degree.

We will continue with this series, with a discussion of contract specifications ...

Edit: As a side note, if anyone was following the tweet feed today, Anthony Davian and I freaking crushed it by being short on Gold, and I was also short on the e-mini S&P 500. I didn't get a chance to go long the U.S. Dollar Index specifically, but was telling subs this morning that it was also a possible long ...

* * *

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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Wednesday, February 3, 2010

Commodities Trading and Futures Speculation (Series): Why Do Traders Trade Commodities? (VIDEO)

"Liquidity: Ease with which a security or derivative can be traded on the market."

This vlog entry is a continuation in a series of videos, the "Commodities Trading and Futures Speculation", and is continued from the previous entries.

Introduction: I discussed some of the myths regarding commodities speculation, and introduce the entire series.

The Reason for the Markets Existence: We discussed that the commodity futures markets exist, to allow companies, farmers, and others involved in production within the economy to hedge themselves against catastrophic losses. This in turn, keeps unemployment lower, and reduces volatility in the economy.

So why are traders within the commodities market? We discuss this topic in the following vlog entry ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



If those contract cannot be traded with ease on the market, then the hedging interests may not be able to enter the positions; in order to properly hedge themselves. With traders present it becomes much easier to protect themselves, at the exact price, time and size that they wish to weight their hedge. Without them, they can't do so easily, and the whole purpose of the market breaks down.

We will continue this series in the future by looking further at traders, and the benefit of having them increase the liquidity on future contract months ...

Edit: As a side note, anyone else note the move in McDonalds (MCD) today?

* * *

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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Tuesday, February 2, 2010

Trading Questions Podcast (PODCAST)

"There will always be another trade." - Personal Axiom

A few weeks ago, I had a "Question and Answer" podcast. I used to entertain these podcasts with more regularity, and then just got out of the habit of doing it.

Well, the response I received was so positive, that I decided to clear out my email box here again and entertain another "Trading Questions" podcast ....

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)




Click Here to Download this Podcast.

Here is the link to a free issue of "Airelon's Market Tactics #3", in which I discuss "reading the tape".

Here is the link to the free issue of "Airelon's Market Tactics", in which I discuss the "three sisters"

Here is the link to my platform setup.

* * *

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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Monday, February 1, 2010

Monday Challenge Project Summary: February 1, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $785.80
Trading "Sister" Balance: $1,654.23
Interest Bearing "Sister" Balance: $250.30
Total Challenge Project Funds: $2,690.33

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. Some time ago I stated that I may 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 INVESTING Account.

I have stated that this quarter, the portfolio management for the Challenge Project has been to focus on strengthening the trading account's foundation by paying attention to both the 'savings sister', and then the trading sister. But this one week I want to make an exception, and show a little attention to the investing account. It also coincides nicely with this recent dips in equities.

It should also be noted that as I mentioned some time ago, each time I add capital to the 'investing sister', I am increasing the amount that I am reserving to dollar cost average each stock held within that account by $2.00.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $811.29
(YTD cash and equity is up about +1.5 % Return is +0.68 %)
  • 4.1665 shares of KO (DRIP on)
  • 3.0779 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP is now OFF)
  • Cash: $263.51
-$64.00 of this cash I reserve to D.C.A. KO
-$64.00 of this cash I reserve to D.C.A. JNJ
-$84.00 of this cash I reserve to D.C.A. MCD
-This leaves $51.51 cash available
  • Additional $62.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):



Stock / Futures Trading Balance: $1,654.23
(YTD cash and equity up about 3.64 % Return on Capital is 0.5 %)
  • 3% risk tolerance gives us $49.62 to risk per trade
  • Additional $62.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)


Savings Balance: $250.30
(YTD cash equity up about 25 % Return on Capital is 0 %)
  • $62.00 for a Slush fund / Drawdown Kill Switch fund
  • $126.30 for a Base Savings
  • $62.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)



Total $500 Challenge Project Balance: $2,715.82

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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