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Friday, April 30, 2010

Friday Investing and Trading Review for April 30, 2010 (VIDEO)

"Honesty, will save your life" - Daniel Shy - Personal Maxim

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". It's a bit of a 'different' "review" video.

(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, April 29, 2010

YouTube Partner (VIDEO)

"They [The Grateful Dead] founded a profitable merchandising division and, peace and love notwithstanding, did not hesitate to sue those who violated their copyrights. But they weren’t greedy, and they adapted well. They famously permitted fans to tape their shows, ceding a major revenue source in potential record sales. According to Barnes, the decision was not entirely selfless: it reflected a shrewd assessment that tape sharing would widen their audience, a ban would be unenforceable, and anyone inclined to tape a show would probably spend money elsewhere, such as on merchandise or tickets. " - Management Secrets of the Grateful Dead by Joshua Green, appearing at 'The Atlantic'

YouTube has acted as a wonderful 'marketing tool' for my blog here, and getting my message out there. With 300 + videos however, I wasn't generating any revenue from this marketing tool. It was rather pleasing to see that after some time, my application for YouTube partnership was approved today.

In addition to the positive aspect of garnering a bit of ad revenue for myself, this also brings benefits to my loyal YouTube subscriber base ...

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


I think it's rather ironic, that the first video that I made after I made partner was only 7 minutes 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.

Wednesday, April 28, 2010

DTE Energy (DTE) ... Yeup, I Still Have It ...

Remember some time ago, I had mentioned that I was buying some DTE Energy (DTE) for my personal accounts? (In other words, non-Challenge Project, non-newsletter accounts. A search of the blog of DTE Energy will reveal each time I have talked about the stock) .

It's a stock that I've never really averaged down on. I took an introductory nibble. I left the Dividend Reinvestment Plan (DRIP) turned on, and sort of walked away for a while. Each time a dividend was paid, I dutifully recorded how many shares I received, on what date, at what price (this is absolutely vital for record-keeping and tax purposes). The recently reported growing earnings, and the stock surged all day long.

So I decided to check on my progress with this stock.

It appears I'm up ... almost 30%. And I've barely done a thing with it.

Dividend DRIP investing folks.

Seriously.

Here's a fun tool I've shared with subscribers earlier. It's a website called DRIP Calculator that demonstrates the power of what DRIP compounding can do with a dividend bearing stock.

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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.

Tuesday, April 27, 2010

Goldman Sachs Hearing ... Is ... Really Good ... (VIDEO)

"I don't vote. On Election Day, I stay home. I firmly believe that if you vote, you have no right to complain. Now, some people like to twist that around. They say, 'If you don't vote, you have no right to complain,' but where's the logic in that? If you vote, and you elect dishonest, incompetent politicians, and they get into office and screw everything up, you are responsible for what they have done. You voted them in. You caused the problem. You have no right to complain. I, on the other hand, who did not vote -- who did not even leave the house on Election Day -- am in no way responsible for that these politicians have done and have every right to complain about the mess that you created" - George Carlin (A man I usually found distasteful, but here, he was bang on)

So I decided to turn on some of this hearing being blasted about financial channels of Goldman Sachs (GS) execs in front of various members of Congress. A few traders I know were discussing it in the twitter stream this morning, so my curiosity was piqued.

This is what it reminds me of ...

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



Doesn't make much sense? Yeah ... neither did the hearing. I never thought I'd say this, but I truly felt bad for executives of Goldman Sachs. The questions were just .... soooo bad. It was like watching a bunch of "sharks" being grilled by Lloyd Christmas from Dumb and Dumber.


It only took them about two or three hours to get to the real issue in this particular case. Although the fact was conveniently skirted that elected officials were the ones that started the housing bubble in the first place by thinking it was a "great" idea to put 'every American into a home, regardless of their income level'.

As I discussed in a recent podcast, there is plenty of blame for Goldman Sachs (GS) as one part of the financial institutions, and blame for what occurred in 2008. But to lay the fault of the entire economic crisis at the feet of Goldman Sachs (GS) ... is ... simplistic at best.

It seems that eloquent demagoguery is the only language in which the modern politician is conversant.

* * *

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, April 26, 2010

Monday Challenge Project Summary: April 26, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $828.30
Trading "Sister" Balance: $1,751.47
Interest Bearing "Sister" Balance: $400.30
Total Challenge Project Funds: $2,970.00

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.

Ok, there is a lot to discuss this Monday, in regards to the Challenge Project.

Let's start off, by talking about McDonalds (MCD), that we have thusfar gained $2.20 in dividends. As I have mentioned previously, I sold the stock off at $70.92 from the original purchase price of $58.20. I have made the comparison, that portfolio management is similar to playing chess. And when playing chess, you have to think about the move in front of you, as well as every possible variation of what that decision will accomplish. So, I have generally found that when a decision is usually a 'profitable' decision, when it accomplishes more than simply 'making money'. In other words, it opens up 'futures maneuvering on the chess board' so to speak.

First of all, we took profits, which is always a good thing right?

But allow me to explain my thought processes a bit more. This taking of profits occurred much, much more quickly than it usually does for a "investing" sister. However, the strength of this stock displayed itself immediately. As I mentioned previously in the comments section of one blog entry ... it's just the speed with which this one "manifested" itself. To tell you the truth? I've never had this happen before. Where a stock absolutely exploded in strength as quickly as this one has.

In addition, McDonalds (MCD), for as much as I believe in their strength? They don't have the history of paying quarterly dividends as does, say, Johnson & Johnson (JNJ). If this was Johnson & Johnson (JNJ), and the stock was sitting at $90.00? I'm still not sure that I would take my profits on Johnson & Johnson (JNJ). The reason? The history that Johnson & Johnson (JNJ) have behind paying quarterly dividends, as well as increasing those dividends.

For example, if you look at my Johnson & Johnson (JNJ) holdings, you will note that I have the same level of profits build into JNJ through my DRIP accumulation as I did into McDOnalds (MCD). But I have zero interest in taking profits and selling my Johnson & Johnson (JNJ) shares since I have only begun to accumulate the shares I wish to hold for this company. More on that in future blog entries.

What other good comes from selling this stock?

Cash. It frees up some cash for the 'investing sister' account. Obviously it frees up the cash that was tied in the equity of McDonalds (MCD), but it also frees up the cash that I had reserved to use to dollar cost average (D.C.A.) shares of McDonalds (MCD) down the road. Since we have a little more cash to play with, then I am going to increase the amount that I am reserving to dollar cost average more shares of Coca-Cola (KO) as well as Johnson & Johnson (JNJ).

Now, let's turn our attention to this weeks contribution, which went to the "savings sister" account.

With enough additions to the 'trading sister' account, we are nearly forced to add capital to the 'savings sister' account. In increasing the capital we add to the 'savings sister', we thus increase the 'slush fund', which can keep up as a 'side pocket' drawdown fund for the trading and investing account.

We will continue to focus on the "Trading Account" with rule no. 2 in the future.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $818.83
(YTD the account is up +2.465% YTD Return is about +1.178% Yield is approximately +6.28% in dividends and additional shares of stock)
  • 5.1665 shares of KO (DRIP on for 4.1665 shares)
  • 3.1014 shares of JNJ (DRIP on)
  • Cash: $336.94
-$60.00 of this cash I reserve to D.C.A. KO
-$140.00 of this cash I reserve to D.C.A. JNJ
-This leaves $136.94 cash available
  • Additional $106.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):



Stock / Futures Trading Balance: $1,751.47
( YTD cash contributions, equity and return up about 9.729 % )
  • 2% risk tolerance gives us $35.03 at risk levels
  • 3% risk tolerance gives us $52.54 at risk levels
  • Additional $106.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)


Savings Balance: $425.30
(YTD cash equity up about 112.5 % Return on Capital is 0 %)
  • $106.00 for a Slush fund / Drawdown Kill Switch fund
  • $213.30 for a Base Savings
  • $106.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $2,995.60

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, April 24, 2010

Week in Review: Preliminary Communication on the Part of the Fed (Podcast)

"Communication works for those who work at it." - John Powell

Welcome to the Week in Review!

And here we are ... yet another week, and another high in the stock market. Don't forget all of the pieces that are involved in this rally, and you can understand the current economic picture.

So what might bring this stock market rally to an end? Are the pieces being communicated to us as we speak? I discuss this within the following podcast by what I have observed on the part of the Federal Reserve ...

(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.

Huh ... I just realized ... this makes podcast no. 100 for me. Fancy that. How time flies.

* * *

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, April 23, 2010

McDonalds (MCD) - Quick note ...

I am literally typing this because I have to fly out the door right now, but I am now out of all McDonalds (MCD) in every account but one. I took profits when the market jumped up this morning ... details will follow ...

* * *

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.

Friday Investing and Trading Review for April 23, 2010

"No pleasure endures unseasoned by variety" - Publilius Syrus

Well, it's Friday. Usually on Friday, I have a video that recaps my investing and trading efforts for the last week, based off of comments in last weeks "Airelon's Market Tactics".

But I didn't trade at all this week. As I mentioned in an earlier blog entry? I took it easy this week. So although I developed a definite bias towards some markets, and not others? I didn't trade.

So what are we to do for the "Friday Investing and Trading Review"?

Well, I thought I would do something a little different this week. I would let everyone read my thoughts straight out of "Airelon's Market Tactics", as they existed last week. So please remember that the market comments below were written last week, so these thoughts are not current. As well, I won't be trading today, I'll be away from my desk. So keep that in mind as well.

But I figured I'd just do what I'm known for ... putting it 'all out there' for everyone to see, and we can see how I did together. I'll include my present comments after various sections with bullet points ...

"Outlook for the Week of April 18th, 2009
Dividend Investment Outlook for the Next Week:
Hedging:

Well, I've been saying for a few weeks now that it was a good time to put on a hedge for larger accounts. I do not view the Model Portfolio's 'investing sister' account as a large enough account to be worried about hedging. The equity holdings themselves in the Model Portfolio's 'investing sister' account only equate to about $675.00. As there is still $4,268.40 in this hypothetical portfolio … the 86.30% cash position acts as that hedge.

But were an account to hold approximately, say … $18,000.00 in equity holdings alone, beyond cash … then, as I've been saying, the last two weeks provided a wonderful time to be hedged.

I had mentioned possible volatility hedges with the VXX, or there is also broad market hedges by using the SDS, or RWM. At the present time, I personally feel that it would be well advised to keep such a hedge 'on', for any larger accounts ... but it's not yet time to increase the size of that hedge. It's simply time to watch, and wait to see what the market gives us.

Of course, that's speaking to accounts that are much larger than the Model Portfolio's “investing sister” account. So turning our attention back to accounts the size of the Model Portfolio's? Remember, that cash can act as it's own hedge. How is this possible? Because that cash allows for further dollar cost averaging (D.C.A.) down the road, to increase the size of the dividend yielding stock.

Past that? We now have four dividend yielding stocks within the model portfolio. Let's now switch our focus in the future to building the size of those positions, while simultaneously controlling risk."

  • I still believe that was, and is a good move for a larger accounts. An Insurance policy is never a bad thing. Now back to the newsletter comments ...
"Trading Outlook for the Next Week:

You know, it's been a few months since I've launched “Airelon's Market Tactics”. Since November 9th of 2009 as a matter of fact.

To tell you the truth, I'm still figuring out the exact format that I want to use, to discuss trading concepts and ideas. As you have seen in recent issues of the newsletter, I mention not only the market I'm thinking of, but also different ways to play that market … be it an ETF, ETN, or possibly even various options.

Beginning with this newsletter, I'm going to experiment with mentioning markets that I don't want to trade, but I have definite thoughts and ideas regarding. So I'll differentiate between markets that I personally have “actionable trading thoughts”, and mere “observational thoughts”.

Observation #1
June Gold (GCM0 or YGM0 for the smaller contract. GLD Put Options, or the GLL for short Gold ETF): I'm not really willing to trade this market at the current time. I got whipsawed last week, and didn't catch this short that I thought was coming.

I basically see gold as moving lower until the end of this month, and that the seasonal trade that I discussed last week? Well … it's on. But I'll never, ever chase a trade. That simply leads to more whipsawing.

What would cause me to trade this market? To move from simple observation, to something that I could trade?

Perhaps a rally up to the $1,147 to $1,149 region. As things stand this Sunday night, in such a situation with the proper congestion near those types of levels, I may move from simply observing this market, to moving in to short it among congestion of the moving averages."

  • As I mentioned, I didn't trade last week. But we did rally up to that $1,149 level, and then have preceeded to sink, and there would have been a great short. It will not show up in the model portfolio trading account since I didn't manage it as a trade as a "win", but I think we can safely count this one as a "win".

"Observation #2 July Silver (SIN0 or YIN0 for the smaller contract. SLV Put Options, or the ZSL for short Silver ETF): My thoughts regarding Silver pretty much echo my thoughts regarding Gold. It's a move that I would have loved to catch. I hope subscribers were able to catch it. It's just not a market that I was actively trading, or had my focus last week.

What would cause me to trade this market? To move from simple observation, to something that I could trade?

Well, as with Gold, a rally up to the $18.12 region or congestion up to associated moving averages, with a break lower would cause me to move into shorting Silver."

  • Well, we did rally up to the $18.12 region and a little above it. But a double top formed midweek, to form a good day trade. Like Gold however, it would have only been good as a day trade, which is what we are focusing on at the present time for the newsletter, since the trading accounts only started out with $9,000.00. Regardless, as we have been focusing in on day trades, I would personally count this one as a "win" - although again ... since I didn't actually trade this week, it will not count up as a win in the "Model Portfolio Account".

"Observation #3 June Crude Oil (CLM0 or the USO for Crude Oil ETF): I'll tell you what, Oil has me a little interested at this point. I think it's beginning to tell a “contra-seasonal” story. I'm not firmly in that camp yet? But as I'm writing out this newsletter? Oil has opened, and dropped another $1.50.

Now I'm not saying that this is a seasonal-contra move. Yet. But we're getting there.

I've very interested in seeing what happens coming if we approach the $82.60 region. That's the next area of major support.

But just that we're moving so much lower during this seasonally bullish time?

It makes me cautious.

I begin to wonder … have we hit a 'recessionary demand ceiling'? There is not only supply factors? But also demand factors in a very difficult economic period."

  • I'm glad I didn't get involved here for a long, but it pays to keep 'observing' this market. I'm still interested for the above reasons I noted in the newsletter.

"Trade Idea #1 June U.S. Dollar Futures (DXM0 or the UDN for Bearish Dollar ETF): I'm short this market in regards to my bias, thus the UDN for bearish Dollar exposure. We're at a beautiful “S Swing Point” region. Seasonally we're weak from here until the end of April.

So what will cause me to move in, and start shorting the U.S. Dollar Index Futures?

Well … as I write this, the only chart I see any sort of entrance on? Is the daily chart. Which as of right now would be a break below the lowest low of the overnight trading, or a break below 80.96.

But honestly, we've rallied enough in the overnight? That I know that the shorter time frames between then and now may present an opportunity that I cannot foresee.

So I'll keep my eye on events as they unfold. The first step, is that I would like the 10 minute chart to start trading underneath the exponential moving averages (ema). Then, with a rally on the 10 minute chart, I would look to short this market."

  • CA-LEAN miss on this bias. But since we never got a clean break below 80.96. We sunk lower, but would have been stopped out a bit later if someone got involved. But woah ... to be honest ... I missed this one completely. Especially with the open today. Wow. So it's about keeping those trading losses small, and keep to the plan! I think at the present time, the average loss I've had for the Model Trading Portfolio translates into an average of $128.07 per contract. You have to keep those losses small.

"Trade Idea #2 July Corn Futures (ZCN0 or the ZCN0 Puts): I'm short this market in regards my bias. I'd like to see a rally up to the 370.75 region, and look for congestion to short.

We're in a very seasonally weak period for Corn, continuing until the end of the month, and I'm willing to play that bias, since we've had a small rally on the daily chart."

  • If somehow, someway, someone made it into this one as a short, it would have been EXCEEDINGLY profitable on Monday, but again - for portfolio management reasons, we're day trading the Model Portfolio accounts. So you would have had to grab those profits right away.

I'll also include last weeks money management performance statistics for the newsletter, which are included in each weeks issue. The numbers are on a "per contract" basis ...


Well, that does it. A sneak peak into Airelon's Market Tactics, and comments as they existed last week.

* * *

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, April 22, 2010

Challenge Project: Portfolio Management and McDonalds (MCD)

"Chess is an infinitely complex game, which one can play in infinitely numerous and varied ways." - Vladimir Kramnik

Well, for the last two months, McDonalds (MCD) has been on a tear. And it's getting pretty extended off of those moving averages, although it continues to follow this 5 day exponential moving average (ema).

McDonalds (MCD) - Daily Chart
(Can be Enlarged):


On the last few days, we've taken a bit of a breather in this new $70.00 region, while still respecting that moving average.


McDonalds (MCD) - One Hour Chart
(Can be Enlarged):


To tell you the truth? I'm a bit dismayed by McDonalds (MCD) performance. The reasons for that revolve around portfolio management. Because it's getting to a point, where I am thinking of taking profits here soon on McDonalds (MCD) for all of my accounts. Since he initial purchase was so small for the Challenge Project, I was hoping for an opportunity to average in more shares since the initial purchase at $58.38. Because I felt back when I purchased the stock at $58.38, that this strength would eventually manifest itself.

But that opportunity to add more shares never came. McDonalds (MCD) just took off, and never looked back.

So if I'm staring at a $72.00 or $75.00 stock, on which I have gained $2.20 in dividends, it almost makes sense to sell the stock, take the profit, and free up some cash. If we got a pullback, to say, $62.00, then I'd have to wait that time to average in, wait for the stock to consolidate, and then begin to rise again. And at some point, I know that tightening is coming of some sort within the next 15 months.

Just one of those things I have tumbling around in the back of my head. We're just at that point of ... "Do I take the profit or do I want to wait". The level we're at right now? I'm comfortable waiting, and averaging down, down the road. But any higher, and I have to start thinking about taking the profit off the table ...


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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.

Wednesday, April 21, 2010

Lazy Week ...

It has been a bit of a lazy week for Dan.

Well ... not really. I've been engaged in my community volunteer efforts. But since this is a blog that revolves around investing and trading? It's been a lazy week for Dan on the investing and trading route. I haven't had one trade yet. I've just taken a look at the markets out of the corner of my eye, long enough to note that McDonalds (MCD) continues to make higher highs each day, typically near the open. In fact, I'm going to have to think about possibly taking profits in all of my accounts on that stock if it continues much higher.

Basically ... I've been having fun. Taking it easy, and enjoying each beautiful day that we're having here in southeast Michigan.

It's almost like I'm becoming a part time trader or something. So I'll have to dig in and hit the trenches here 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.

Monday, April 19, 2010

Monday Challenge Project Summary: April 19, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $828.30
Trading "Sister" Balance: $1,741.40
Interest Bearing "Sister" Balance: $400.30
Total Challenge Project Funds: $2,970.00

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 TRADING Account.

With this last application of rule number two, we've increased the capital in the trading account 9.729 % this year.

Now as I mentioned in the "Week in Review" podcast, I did have a loss in the Challenge trading account. It was a heartbreaking loss as well. I allowed myself to get whipsawed out of the Gold short early, and the trade then became immensely profitable. This trade is interesting, because I lost such a small amount of money, due to the way that I played the risk. For the Challenge Accounts, this means that I literally lost less than the $25.00 contribution last week.

I used options in that trade, and when it started to move against me, I sold out of the position, thus only losing what would translate into $35.00 to $70.00 loss for larger accounts, and only a loss of $14 for the Challenge Project trading account including commissions.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $830.59
(YTD the account is up +3.937% YTD. Return is about +2.659% Yield is approximately +9.41% in dividends and additional shares of stock)
  • 5.1665 shares of KO (DRIP on for 4.1665 shares)
  • 3.1014 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP is now OFF)
  • Cash: $205.05
-$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 $51.95 cash available
  • Additional $100.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):



Stock / Futures Trading Balance: $1,751.47
(YTD cash contributions, equity and return up about 9.729 %)
  • 2% risk tolerance gives us $35.03 at risk levels
  • 3% risk tolerance gives us $52.54 at risk levels
  • Additional $100.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)


Savings Balance: $400.30
(YTD cash equity up about 99.85 % Return on Capital is 0 %)
  • $100.00 for a Slush fund / Drawdown Kill Switch fund
  • $200.30 for a Base Savings
  • $100.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $2,982.36

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 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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Sunday, April 18, 2010

Week in Review: You Have Nothing to Fear, from the Capital Markets or Goldman Sachs (PODCAST)

"Many of us crucify ourselves between two thieves - regret for the past and fear of the future." - Fulton Oursler

Well, it took me about 7 hours of wrangling with my podcasting host, but I can finally say ...

Welcome to the Week in Review!

Obviously, the biggest news last week was the fact that the SEC announced it is going to prosecute Goldman Sachs for what amounts to fraud. The market immediately sold off.

So what does all of this mean? What do we have to fear from this situation? I discuss this in the following 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.

* * *

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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Podbean Problems

For the second time in as many weeks ... Podbean is giving me fits. Every time I try to upload this weeks podcast, I get ... "502 Bad Gateway. The server returned an invalid or incomplete response".

They had the same problems a week or so ago. I just have to wait, until they can get their stuff in gear so as to accept uploads.

So this is strike two. If we move on to strike three, I'll probably be searching for a new podcasting host site ...

Friday, April 16, 2010

Review Entry: Sick Day

I seem to be coming down with something. Sore neck ... chills from a fever ...

So Dan's calling a sick day, and heading off to bed early

Thursday, April 15, 2010

Portfolio Management vs. Money Management

"I'd rather have a pawn than a finger." - Rueben Fine

As subscribers of "Airelon's Market Tactics" know, I discuss portfolio management decisions each and every week. My personal portfolio management strategy was created by myself, and I refer to as "The Three Sisters". That link will take you to a complete, free explanation of this portfolio strategy, and explains why the $500 Challenge Project has an "investing account" and a "trading account" and "a savings account".

Portfolio management is not 'money management'. It's similar. It's as if they are 'kissing cousins'. But they are separate topics. I discuss those differences, in the following video that I recorded at yesterdays close ...

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



Portfolio management is all about how well you execute your decisions on the chessboard while looking to the future, as you implement the rules of money management. When you look over the blog entry discusses the the three sisters portfolio management system ... I think you'll see what I mean.

* * *

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, April 13, 2010

The Challenge Project Trades That Never Materialize (VIDEO)

"He who is prudent and lies in wait for an enemy who is not, will be victorious." - Sun Tzu, The Art of War. c.400-320 b.c.

As subscribers of "Airelon's Market Tactics" know, my bias is that I've been long oil this week. I'll go ahead and say it. It's not wrong to throw out a freebie from time to time.

But that's only my 'bias'. That doesn't mean that I'll take the trade. It means that this is the bias, and then I'll look for ways to massage that bias. Today, I decided to illustrate my thoughts in front of the computer, and in my room ... as it happened, instead of reviewing it later. It's of a trade ... that never happened, because I never sent in the entrance order.

This is what happens ... when I decide to pass ...

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



So I just never ended up entering the trade.

Please. Learn patience. Enter an audible alert, before you enter a buy to open, or sell to open order. It can make all the difference.

And as I mentioned at the end of this video? Please ... if your finances are a mess? You don't have to suffer. There are very inexpensive options, to take advantage of movements in the capital markets.

Take control!

* * *

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, April 12, 2010

Monday Challenge Project Summary: April 12, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $831.30
Trading "Sister" Balance: $1,716.40
Interest Bearing "Sister" Balance: $400.30
Total Challenge Project Funds: $2,948.00

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 TRADING Account.

As I had mentioned last week, the Challenge Project portfolio strategy for the 'trading account sister' at the current time remains ...
  • Build up the capital in the account by the application of rule no. two
  • Take a very small risk trade, only when that risk is far underneath what rule no. two has added to the account.
At this point, we have added 9.096% of capital to the trading account this year, or about $145.00. Risking 3% of the capital would expose approximately $52.24. At first glance, it looks like I could take on a trade. And truth be told, if I see a high probability setup, I'll take it.

But I'll tell you, my strategy this quarter is to focus on building up the trading account. So I know that each week, the Challenge project 'trading sister' account will receive about $25.00. That's nearly guaranteed, and more importantly, carries zero risk. The other factor to consider, is that each winning trade, with the current strategy ... has been about $25.00.

So don't be surprised if for a week or so, I'm content to simply add funds via rule number two. Why risk money, when I know that this quarter I'll be adding guaranteed funds to the trading account?

Of course, during this quarter we will occasionally show some love to the 'savings sister' and 'investing sister' accounts. And speaking of the 'investing sister' account, on the fifth of April, the $0.44 dividend showed up for Coca-Cola in cash. So that looks like a pretty definitive answer to our question from a month or so ago. No partial shares unless the reinvestment will equal one share.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $828.30
(YTD the account is up +3.65% YTD Return is about +2.376% Equities yield is approximately +9.41% in dividends and additional shares of stock)
  • 5.1665 shares of KO (DRIP on for 4.1665 shares)
  • 3.1014 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP is now OFF)
  • Cash: $205.05
-$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
-
$1.10 of an MCD dividend was transferred to the trading "sister" account
-This leaves $51.95 cash available
  • Additional $100.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):



Stock / Futures Trading Balance: $1,741.40
(YTD cash and equity up about 9.096 % Return on Capital is 1.15 %)
  • 2% risk tolerance gives us $34.82 to risk per trade
  • 3% risk tolerance gives us $52.24 to risk per trade
  • Additional $100.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $400.30
(YTD cash equity up about 99.85 % Return on Capital is 0 %)
  • $100.00 for a Slush fund / Drawdown Kill Switch fund
  • $200.30 for a Base Savings
  • $100.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)



Total $500 Challenge Project Balance: $2,970.00

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, April 10, 2010

Week in Review: The Continuing Carry Trade and An End for this Blog ? (PODCAST)

"Nobody can go back and start a new beginning, but anyone can start today and make a new ending." - Maria Robinson

Welcome to the Week in Review!

What?! What's that? An end to this blog?

Well ... not really. I just sort of outline what my plan is for this blog for the next few years, and what factors will bring this all to an end.

I do this after a discussion of the continuing carry trade why it means that everyone can stop calling this a "bologna" rally. It's not bologna, and there is a real economic reason for it ...

(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.

Think about it ... I hold stocks, and they are rising in value.

My assets are valued in U.S. Dollars, which is rising in value.

I hold actual bullion, which is rising in value.

It truly is a strange, strange set of circumstances we find ourselves in.

* * *

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, April 9, 2010

Friday Investing and Trading Review for April 9, 2010 (VIDEO)

"I quit being afraid when my first venture failed and the sky didn't fall down." - Allen H. Neuharth

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, April 6, 2010

Is the Gold Market Being "Manipulated" ? (PODCAST)

"Post hoc ergo propter hoc: Latin for "after this, therefore because of this", is a logical fallacy (of the questionable cause variety) which states, "Since that event followed this one, that event must have been caused by this one." It is often shortened to simply post hoc and is also sometimes referred to as false cause, coincidental correlation or correlation not causation" - Wikipedia Definition

Some time ago, I had a "Special Report on Gold" for the "Week in Review" podcast. In that podcast, I talked at length as to what I have seen when it comes to people 'selling the snake oil' as it were. Using emotional sentimantality to sell others to an emotional economic thesis, so that the 'snake oil salesman' could sell assets that they bought at a cheaper price.

Recently, a letter has been spread around the "financial blogosphere" that has purported that manipulation is occurring within the Gold market.

I went through the letter, line by line.

My reaction is as follows ...

(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.

The lack of understanding about the commodity futures markets is unreal. In fact a few weeks back (I kid you not), I heard someone mention the evils of a "naked short" position in the Futures market.

I almost cried myself silly with the lunacy of that statement for the futures market.

Back to these letters, and the logical fallacies therein. Calling a move ahead of time? In no way proves that there must be manipulation. In fact, in regards to that very move in Gold? Here is an issue of "Airelon's Market Tactics" that was released on February 4th at the Davian Letter.

Short Release of "Airelon's Market Tactics"
(Click to Enlarge)


So if I, and many other traders saw this big sell off coming? How can it be manipulation? The element of misleading appearance is not present. We all saw it. Could have been ... gee ... I don't know ... the seasonal pressure that Gold comes under this time of year? Could I have seen that from the CoT report that every individual has available to them every week? Could it have been from watching the volume and the price movement that is available to every individual?

Seeing a move coming before it happens ... is not proof of manipulation. And I didn't even get into the fact that the market did not behave as these individuals predicted recently.

And I'm not saying that some manipulation doesn't occur. Perhaps the size limits were violated, and the market is being 'cornered', and the CFTC needs to lower the hammer. But from that letter? Because of that letter everyone is supposed to be up in arms and whipped into a fury?

Or maybe Dan is in the employ of the conspiracy! Maybe Dan is the secretive vice president of the Goldman Sachs division of "Screwing over the price of Gold" !!

Yeah ... ok ....

Remember. The markets can drive you crazy !!

Anyways, supposedly ... a few days back ... the price of Gold was supposed to "collapse". Hmmm. It didn't happen. Fancy that. So much for that "100 % of the time". Well I have an idea that may help ...

How about folks start listening to PEOPLE WHO KNOW WHAT THEY ARE TALKING ABOUT !!!!!

* * *

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, April 5, 2010

Monday Challenge Project Summary: April 5, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $821.15
Trading "Sister" Balance: $1,691.40
Interest Bearing "Sister" Balance: $400.30
Total Challenge Project Funds: $2,912.85

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 TRADING Account.

And thus we begin this second quarter of 2010 by building up the capital in the 'trading sister' account. As of today's date, capital is up 7.52% in that account for the year.

Now I could sit here and say: "I'm not going to take on a trade until the 'trading sister's' account is up by X%." I could limit myself, by saying that the next trade will occur when the capital is up to say ... 13% for the year. But I know that as soon as I put out that figure, I would get the capital up by 10%, and there would be an absolutely fantastic trade that I'd have to pass up in order to stick to my self-imposed limit. To keep to my word.

So let me put it this way ...

My goal is to get the trading account capital up by another 13% before thinking about another trade. A 13% increase in capital for this year, would mean that the account is looking at a little over $1,800.00 in trading capital. Which is still very, very tiny. Of course, if there is a trade that appears too good to pass up before that time, I'll take it. But we are not yet to a point in the 'trading sister' that we can trade the account actively. It's still within the 'tiny' phase.

So the strategy for the 'trading sister' remains ...
  • Build up the capital in the account by the application of rule no. two
  • Take a very small risk trade, only when that risk is far underneath what rule no. two has added to the account.
Remember, that the dividend reinvestment was implemented for the Coca-Cola(KO) stock that's being held at Sharebuilder; so we gained more partial shares there. As yet, the dividend has not shown up for the share held at the ThinkorSwim account. And as you can see, we've enjoyed a bit of a rally out of the stocks being held in the 'investing' sister.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $831.30
(YTD the account is up +4.03% YTD Return is about +2.62% )
  • 5.1665 shares of KO (DRIP on for 4.1665 shares)
  • 3.1014 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP is now OFF)
  • Cash: $204.61
  • $1.10 of an MCD dividend was transferred to the trading "sister" account
-$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 $100.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $1,716.40
(YTD cash and equity up about 7.52 % Return on Capital is 1.15 %)
  • 2% risk tolerance gives us $34.32 to risk per trade
  • 3% risk tolerance gives us $51.49 to risk per trade
  • Additional $100.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)


Savings Balance: $400.30
(YTD cash equity up about 99.87 % Return on Capital is 0 %)
  • $100.00 for a Slush fund / Drawdown Kill Switch fund
  • $200.30 for a Base Savings
  • $100.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)



Total $500 Challenge Project Balance: $2,948.00

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.


Share

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