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Friday, May 28, 2010

Investing and Trading Review of May 28, 2010 (VIDEO)

"Drawdown is a fact of life ..." - Personal Mantra

Here is the "Weekly 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 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Wednesday, May 26, 2010

State of the Economy: Quantitative Easing, The Eurozone and Fear (VIDEO)

"Even a hint that the Bank of Japan may be getting near to ending its quantitative easing, and raising rates, is going to lead to large moves in the yen. People have been so positioned for it to go down." - Simon Derrick

The Euro! The U.S. Dollar! Bonds! Quantitative Easing! We're rallying! No! China! We're heading lower! The VIX is up! The VIX is down!

What's going on?

I share my thoughts, as well as what I have my eye on, in the following video ...

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



Here is the link to the Fed paper that I reference in the above video. Refreshingly honest read.

Here's the YouTube video of dsglop that explains the process.

Quantitative easings biggest problem, is that it does not address employment problems whatsoever. It is simply is an attempt to soften the 'destructive' side of the creative / destructive cycle. It does nothing to 'boost' the creative side.

However, the problems themselves, remain the result of over-leverage. That's why it is so disconcerting to see that institutions, once again, geared up on leverage. Perhaps not to the extent that they had in 2006. But it's still existent in the system, and therefore ... will be dealt with by market forces.

And as I discussed earlier, the drag remains on the economy.

After all ... one way or another ... risk will price itself.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Tuesday, May 25, 2010

Fear is Abating ...

.... for now. In fact, my thoughts in regards the following entry has to do with my thoughts regarding the next 10 to 15 trading sessions. So don't take any of this as a 'macro modeling' theme or anything. :)

The VIX (Called the volatility or "Fear" index) continued to fall today, and the VXX (tracks the VIX) fell almost straight out of the gate, from the open onwards. In fact, I saw someone shorting the VXX today. All I could think was ... wow. That takes some stones. It's one thing to go long a dividend bearing bearing stock inside of fear, that I know will compound my returns down the road. It's something else altogether to short it altogether. It's not often I'm impressed in the capital markets ... but that impressed me.

As I mentioned on the Facebook page today ...

"I continue to hold my long term dividend bearing stocks. I'm expecting a 'relief rally' any day now. But at the same time? I believe in "investor insurance". So I'm also a holder of SPY puts as a hedge ... just in case "the wheels come off the cart" so to speak ... I'll be protected. Obviously the Challenge Project accounts can't handle hedges of that sort at this stage in the game. So next quarter will be about focusing on the "investing sister" account once again, for those sub-accounts."

Now overall? It sounds like a great plan. We'll either rally, and I'd only have sacrificed less than 10% of the gains of such a rally on an insurance policy that will last 51 more trading sessions. If we plummet further, then I'm covered.

But it doesn't mean that on days like today ... well ... that it isn't a bit painful. The hedge works out ineffective, since we rallied from the open, and all of my dividend bearing stocks are still down.

I wanted to share a bit of the 'pain' of the business today ... because too often ones only share the successes. It's great that the model portfolio of "Airelon's Market Tactics" is up around 56% or so. It's great that this plan sounds so intelligent. But it doesn't mean that I won't face a bit of consternation on days where the market whipsaws my plan, and my dividend investing portfolio gets kicked in the teeth right after I averaged down.

One bright spot today (and I'll go ahead and say it, since I've taken most of the profit off the table) was that I was long Sugar #11, along with subscribers of the newsletter. Yes ... it was sweet.

:)

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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Monday, May 24, 2010

Monday Challenge Project Summary: May 24, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $819.11
Trading "Sister" Balance: $1,819.63
Interest Bearing "Sister" Balance: $425.30
Total Challenge Project Funds: $3,064.04

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. We 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.

Trading Account:
The new balances are reflected below. We are now up nearly 16%. It's still not enough, but it's quickly getting there. In fact, on the trading account, what I find most encouraging is that we are only about $56.00 away from entering the next 'phase' or 'stage' for the Challenge Projects' Trading Accounts growth.

This is why you've seen that the increasing frequency and number of trades that I have been taking. Our money management strategy states that as the account grows, via rule number two ... we can take more trades according to recent money management metrics. Soon enough, we'll have the trading account out of the 'tiny' account phase, and into the 'small' account phase.

Eventually, the account grows to a position such as that experienced in the newsletter. At that time, there will probably be many, many posts in regards the Challenge Project trades, as well as portfolio management decisions for the Challenge Project.

Investing Account:
As I mentioned in both the recent 'review video' entry, as well as in the "Week in Review" podcast, I averaged down with both Coca-Cola (KO) and Johnson and Johnson (JNJ) in the challenge project. Before the end of the year, we have ... at the very least ... $200.00 coming in to the Investing account via rule no. two to spread between cash reserves, new purchases, and reserves for dollar cost averaging. That's the bare minimum amount.

The biggest hit to the 'investing sister' at this stage in the game, is the commissions. Subscribers to my newsletter are aware of this, as this was a topic I just recently discussed. The reason being, is that since the newsletter is only a few months old, it took is still within the 'beginning stages' of constructing a "model portfolio" with a dividend investing portion. I'll repeat my comments from the newsletter ...

"The biggest hit to the dividend bearing 'investing sister' account at this stage of the game, has obviously been the commissions ($5.00 per purchase at ThinkorSwim). This is the reason you see the initial disparity when it comes to the return on equity and the cost basis for any chart that represents the dividend bearing portfolio.

However, this is a very well understood dynamic and feature of dividend investing portfolios when they are begun. The accumulation of dividends that will begin to reinvest into more shares for each stock will more than make up for this initial disparity in the long run. In short … it's understood by every dividend investor that commissions always deliver the biggest hit in the beginning before compounding really begins to take effect."

And we have, at the very least, another $200.00 in the next few months to be added to this investing "sister", to continue to build this process along. Again, do the math on dividend investing. It takes some time before the compounding begins to take effect. But intelligent "averaging purchases" must take place for that compounding to start taking effect.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $786.58
(YTD the account is -1.57% YTD Return is about -2.781% Continuing Yield is approximately +6.96% in dividends and additional shares of stock)
  • 6.1998 shares of KO (DRIP on for 4.1998 shares)
  • 5.1014 shares of JNJ (DRIP on for 3.1014 shares)
  • Cash: $154.53
-$3.73 of this cash I reserve to D.C.A. KO
-$13.86 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: $1,844.63
( YTD cash contributions, equity and return up about 15.56 % )
  • 2% risk tolerance gives us $36.89 'at risk' levels
  • 3% risk tolerance gives us $55.34 '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: $3,056.51

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 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Saturday, May 22, 2010

Investing and Trading Review of May 22, 2010 (VIDEO)

"Love is the only kind of fire which is never covered by insurance."

Here is the "Weekly 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 ...)



The Blip TV video will be embedded and replace the video when it has finished compiling (it ran into a problem with the conversion this evening). I will post the blip.tv version as soon as the compiling is completed, as I have discovered that German viewers cannot see the YouTube videos. If you are from Germany, this link may work for you ... hopefully ...

Ok ... this is a picture of the "trading sister" account from "Airelon's Market Tactics" from April 10th, to May 15th, 2010 ...


That's right ... flat. New traders have to understand that this will happen. That's the reality of trading. At best. There will also be months, that will not be flat because there will be drawdown. As I mentioned in the above video, there will be weeks, sometimes months where that will happen. It's just that simple. It's why I absolutely, flatly refuse to force trades. If I force trades for the sake of subscribtions, then I'm not portraying the reality of trading. Because this is the growth of "Airelon's Market Tactics" since the launch of the newsletter ...

That's right ... 56.25%

What's the old expression? Slow and steady wins the race?

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Friday, May 21, 2010

Week in Review Podcast: The Gift in the U.S. Credit Markets (PODCAST)

"Risk will always price itself. One way or another" - Personal Mantra

Welcome to the Week in Review!

What?

The Week in Review? On a Friday night? The Week in Review is on Saturday, not Friday! Where's the investing and trading review video? It's all coming. I'll explain in the following podcast, as well as the current gift being delivered to the U.S. economy in the credit markets at the moment ...

(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 download this podcast.

Once again ... here is the entry that I put out ... The Continuing Economic Crisis Simply Explained in Under 10 Minutes, with the associated video. It's as "linear" as I know how to make a non-linear topic ...



* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Thursday, May 20, 2010

Fear in the Markets ...

The story isn't the Euro and the United States Dollar (EUR/USD). at the moment. Well ... to be truthful ... the EUR/USD is one story. But the real story at this exact moment, is the United States Dollar and the Japanese Yen (USD/JPY). Not for a short on that cross. I don't trade Forex. But I am aware of the message that it sends.

I said it on the Facebook page, and I'll say it here ... The USD/JPY is showing real fear in the markets right now. A very similar setup before the last "son of 87" of May 6, 2010 - it's real ... and it's fear. It's not computers. It's not "high frequency trading". It's fear. I'm not saying we'll have a repeat of May the 6th. But I am saying that there is true fear out there, and it's being represented in the currencies and credit markets.

Good lord, I'm looking at Crude Oil as I type this out. Down another $2.00.

The equities markets are down from their tops a few weeks ago ... what? Almost 9% thus far from tops? Airelon's Market Tactics dividend portfolio ... the long term buy and hold dividend bearing stocks... ... it's up about 2% since the downturn. And subscribers know why.

I wasn't yelling out "VIOLATED" and all in a blather-panic in the twitter stream yesterday when the 200 period EMA was violated by two ticks (unlike some fear monger bloggers), I had simply a very satisfied annoucement of "hedged" ...

July 100 SPY Puts.

I'm not sure where we're going from here. No one does. But I sure do know when it's time to buy some insurance on long term buy and hold stuff. It was two days ago. I was only smart enough to buy mine yesterday. I think it was Tim Sykes who made this statement originally, but some days I feel the same way:

"It's like I'm Forest Gump'ing my way to success"

:)

As I said ... I'm not 'yet' thinking we're in a "son of 87'" scenario. In fact, the USD/JPY may ease up a bit. I don't usually watch CNBC and I'm not watching it at the moment, but I would imagine they aren't showing pictures of fires and riots this time. Crashes don't usually happen after new lows. What usually happens after new lows, is the market eases up a bit. But I sure know what message that's sending out there, and that the time to be hedged was two days ago ...

And this sure as shootin' aint the result of "High Frequency Trading" or computers.

Edit: 11:12 am - just taken out of the hedge Puts with profit. More cash to play with on the dividend investing route.

Edit: 3:07 pm - I hope ones remember what I had said about what I mean when I say: "Wow, look at that rally" as opposed to "Wow, look at that fear". Opportunities are arising ... but it will take patience

Edit: 4:07 pm - We've closed. A couple of comments from some very smart people I track during the day. I'd have to agree with their sentiments ...

"i don't remember an uglier close in at least 2 years. Glad to see all the negative tweets and fear in the market. UGLY - Close on the lows ... In my opinion, today was MUCH worse than the "Flash crash" because no reversal - good heavy panicked selling volume though" - Dasan

"Not a good close. it could leave a mark ... some Hedge Fund buds have been aggressively de-risking (h8 that word) this past week, similar in fashion to fall 08. i expect to see ugly #'s" - Morgan_03

It's all fun and games, until you add in fundamental selling.

Is a small rebound in the works? Will we sell off lower on Friday? I don't know ... and I don't care. I do know that "V" shaped recoveries in the markets do not happen. I'm just thankful that I have enough cash for that time when it's time to go on a 'buying spree' for cheap, cash heavy, dividend bearing stocks.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Wednesday, May 19, 2010

Investing and Trading Thoughts: Gold is Fear, PPI Numbers and Non-Linear Systems (VIDEO)

"When you are right for long enough, eventually they start paying attention" - Amory Lovins

Every once in a while ... I have a "trader thoughts" entry. I'll talk about a couple of factors that I see going on ... economically. And with the shape the world is in ... there's always plenty to talk about on the economic front.

So since February, PPI is showing absolutely zero in terms of inflation. None. Nada. And unlike some who purport to be 'economists' - I am thankful that PPI does not include Food and Energy.

I discuss this and a whole lot more in the following video ...

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



Here is the link to the article I wrote regarding the way the BLS reports inflation data.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Tuesday, May 18, 2010

Trading Review of May 17, 2010

"Let no one think that flexibility and a predisposition to compromise is a sign of weakness or a sell-out." - Paul Kagame

I took a trade earlier on Monday, that I mentioned in the Twitter stream. As this is a trade that I discussed for "Airelon's Market Tactics", it will count towards the results of the Model Portfolio that benchmarks the results of the newsletter.

There were two moments with this trade on Monday. It was in Sugar #11. The first 'moment' was a profitable trade. The second, was a moment where I was going to enter the market, and then decided to pass. And all if it, had to do with what I saw on the tape.

The video skips about in the beginning, so forgive me for a couple of audio and video 'skips' ...

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


After I filmed this, Sugar fell even further to .1382

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk

Monday, May 17, 2010

Monday Challenge Project Summary: May 17, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $807.16
Trading "Sister" Balance: $1,821.56
Interest Bearing "Sister" Balance: $425.30
Total Challenge Project Funds: $3,054.02

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. We 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.

Trading Account:
So far this year, we've had a 60% accuracy rate with the profitable PCBC trade, the profitable UNG trade, the loss in the GLD puts, the profitable trade in the SPY, and then this latest loss with the USO calls. Basically, I'm still up a tad bit in regards returns for trades taken.

While that is the case ... while I am still up just a bit ... I want to refocus on bumping up the capital in the trading account by applying rule no. two of the Challenge Project; and perhaps give trading the account just a bit of a break. This follows the money management strategy we have developed to date.

Investing Account:
The 'dividend investing' portion of the challenge project is holding steady currently despite the pullback in equity prices. And within the next 30 days, we'll start receiving dividends for this quarter, which will yet again ... 'grow' the share size of that portion of the account for free.

I'm already beginning to think that next quarter, each month I'll start applying a portion of rule no. two towards the 'investing sister', so there will be plenty of 'defensive cash' in case of a pullback in equity prices.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $819.11
(YTD the account is up +2.5% YTD Return is about +1.24% 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: $1,819.63
( YTD cash contributions, equity and return up about 14 % )
  • 2% risk tolerance gives us $36.39 'at risk' levels
  • 3% risk tolerance gives us $54.58 '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: $3,064.04

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, May 15, 2010

Week in Review: It's the U.S. Dollar (PODCAST)

"Ah, take the Cash in hand and waive the Rest." - Edward Fitzgerald

Welcome to the Week in Review!

In the beginning of this podcast, I'm going to talk for a bit as to why I pulled back from the twitter stream last week, for those that follow. It had to do more with me, than anyone or anything else ...

(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 download this podcast.

Here is the link to the article I referenced at the Davian Letter regarding aspects of my industry, that I find rather ... distasteful and if I let it, takes me to 'bad' places. Which in turn, inevitably affects my investing and trading.

Here is a link to the video that I had constructed for subscribers some time ago, regarding "reading the tape". If it asks you for a password, try kyeic43

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Friday, May 14, 2010

Friday Investing and Trading Review for May 14, 2010 (VIDEO)

"A year ago, it would have been a lot different. But I saw all their moves go by on the ticker. That made the decision pretty easy." - Troy Glaus

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". I already had the video that described my 'delving' into a way to play a long in Oil.

Thankfully ... I cut that loss nice and early. As follows, is the next market I was watching ...

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



Here is the free issue of "Airelon's Market Tactics", where I discuss "reading the tape". Included in that issue, is an accompanying video that illustrates what I'm 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 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Wednesday, May 12, 2010

Trading Review for May 12, 2010 (VIDEO)

"Discipline is the refining fire by which talent becomes ability." - Roy L. Smith

I took a trade recently, for the Challenge Project, and myself personally. As this is a trade that I discussed for "Airelon's Market Tactics", it will count towards the results of the Model Portfolio that benchmarks the results of the newsletter.

It was a loss. But I think the 'loss' videos are even more important to display, than the wins. I took short videos of my thinking process throughout this trade, which can be found here ...

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


And if you note the Crude Oil market this afternoon? It's a great thing I took my loss, when it was nice and small ...

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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Tuesday, May 11, 2010

PAWN STARS !! (VIDEO)

"Look! The best thing that I myself have seen, which is pretty, is that one should eat and drink and see good for all his hard work with which he works hard under the sun for the number of the days of his life that the [true] God has given him, for that is his portion ... and also that every man should eat and indeed drink and see good for all his hard work. It is the gift of God" - Ecclesiastes 5:18; 3:13 - The Bible

Everyone would love to have a job, where they enjoy and love their work. I am fortunate enough to have found such a job with investing, trading, and even a tad bit of writing now.

I've found that I even entertain myself with anything having to do with investing and trading ...

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



One of my favorite aspects of the show, is that the guys strive to be honest with their customers. They want to know what everything is truly worth, before they start trying to come to an agreement about price.

If that means calling in an expert 4 times in the show? They do it. Because they know that their reputation for honesty means everything in the long run.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 14 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Monday, May 10, 2010

Monday Challenge Project Summary: May 10, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $814.29
Trading "Sister" Balance: $1,776.47
Interest Bearing "Sister" Balance: $425.30
Total Challenge Project Funds: $3,016.06

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. We 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.

Trading Account:
Ok.

That whole mess that I was in with the puts last week during "The son of '87"?

I'm not sure if you watched the "Happy Hour" video were I fully explained what happened to me on Thursday and Friday, but those trades, quite accidentally, were in the challenge accounts.

As I said, things can and do go nuts. Now the fill on the puts was horrible, as I have explained; but I decided to hold on and wait to see if we could have a moment of panic on Friday. We did, and as soon as I was profitable past that horrendous fill, I took my $20.00 and went home for the week.

So quite accidentally ... we've had a trade in the Challenge project, and yet another profitable trade this year. We are now up in the trading account 14.12 %.

Now let me say ... that if I thought the capital levels for the Challenge project were adequate to take a trade at the current time; in it's tiny phase? I more than likely wouldn't take it. There is one commodity etf that I may play either today or tomorrow, in the form of an option. I'll have to watch, wait and see. But overall, I'm moving over to the sidelines for my own personal trading; which will naturally carry over to any trading relating to the challenge project as well.

Investing Account:
Now, turning to the dividend 'investing sister' account ... You'll note that Thursdays damaging action didn't hurt me too bad. My capital is still positive, I still have cash available to average down on these great companies if I so choose, and the drawdown that I've experienced is not even 1% (The account levels posted below are as of Friday's close).

Not too bad.

I believe this highlights the need for sound strategy, planning, money management, and portfolio management. After Thursday? Look at the overall balances for the Challenge Project as a whole. As I often say: "It's not how much money you have, it's how you manage it"

At this point, I'm weighing my options. Believe it or not, to my mind, there is more to do on the dividend investing route at the moment, than the trading route. I could average down on the stocks I do own and then start a small hedge at the same time. If I did do this, I'd have to start applying rule no. two to the investing account right away, to build back up our ability to dollar cost average those stocks in the future. At this point, I'm just weighing my options.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $807.16
(YTD the account is up +1.005% YTD Return is about -0.2373% 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: $1,821.56
( YTD cash contributions, equity and return up about 14.12 % )
  • 2% risk tolerance gives us $36.43 'at risk' levels
  • 3% risk tolerance gives us $54.64 '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: $3,054.02

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, May 8, 2010

Trading Week in Review?

No, I did not include a "week review" video this week on the investing and trading route. While appearing at the Happy Hour show, in my text, video and podcast entries; along with extra issues of "Airelon's Market Tactics" where I described a loss I experienced in the Gold Market? I think that everyone has an idea how my week progressed ...

* * *

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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Week in Review: Computerized High Frequency Trading and the Son of 87' (PODCAST)

"The nose of a mob is its imagination. By this, at any time, it can be quietly led." - Edgar Allen Poe

Welcome to the Week in Review!

I've discussed how my day went on Thursday progressed, on what we are calling now "the son of '87". We'll discuss this concept that somehow "computers" had something to do with the drop. A drop, that when you look at history ... was not that large ...

Because when you ask me? I think the computerized, quant algorithms may have saved us on Thursday ...

(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.

You know, if you look through my "Twitter" history, you'll see, that while the market was crashing? I told Dasan: "I was thinking the same thing. Iwant to buy just 100 shares of something, to say I did it". But I didn't. I refrained.

A blackbox won't hesitate.

And remember ... pro's use the "%"

* * *

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, May 7, 2010

Are You Ready, Really Ready to Sit Down at This Table and Play a Hand? (DOW Drops 1,000 points, up 650) (VIDEO)

"Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception." - George Soros

"If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks." - John (Jack) Bogle

"A market is the combined behavior of thousands of people responding to information, misinformation and whim." - Kenneth Chang


Ok, this even was just too huge. I've had numerous phone calls. Numerous conversations about the events of Thursday, May 6, 2010 in the U.S. Equities markets. So as I'm known for videos, I thought today would be a day, to put a video together; in addition to the blog entry that I had earlier.

As follows, are my thoughts, as well as a "play by play" as to how my day went ...

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



What did I say a few days ago?

Remember, the credit markets rallied yesterday, as well as today ... which is what you'd want to see, when the stock market and commodities plummet. If the credit markets fall, while the stock market falls ...

Then it's time to worry.

But remember this as well. We saw a day just like today ... in 1987? Before the big drop.

* * *

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, May 6, 2010

May 6, 2010 in the U.S. Equities Markets

If you can handle what just happened in today's markets, and a whole lot more ... with real money on the line; then you just may be ready to trade and invest.

There is going to be a lot of emotion in the next few days. Quite frankly ... I don't really care what people think happened or didn't happen. This is my chosen profession, and I'm not going to bellyache over what happened in the past. If I get screwed, then I may try to fight it (I've had to go to bat against desks before, and I don't wish that scenario on an enemy); so I 'm not going to let myself just get screwed over, smile and take it. If you let them, the street will do that in a heartbeat. But I understand that the past, is the past and you have to live with mistakes in this business. Whoever makes them. So you had best have some sort of risk management defense mechanisms in place beforehand.

Literally, about 20 seconds before the dam burst, I put in order to buy some SPY puts. The entire system froze as I tried to put in the order. Yeah, I thought I missed the entire market drop, and to me, the markets were nothing more than a curiosity.

I came back about 15 minutes later, and found at that the orders were filled, and I was now holding those puts. The price wasn't really that attractive either.

Then everything flipped, turned upside down, and then and everyone started crying about the reasons why it happened.

Call "May 6th, 2010 in the U.S. Equities Markets" what you will. Call it a "fat finger" mistake. Blame it on high frequency trading, quants and algorithms; I don't care. In fact, I'm not buying the "fat finger" argument. There was fear there. You felt it, and I felt it. But the point is, that moment is in the past, it happened, and none of us are "Superman". We can't fly around the planet, turn back time, and do things differently. It happened. You have to live with the decisions you made.

Myself? This is why I preach about money management principles. I'm holding onto those puts, because the risk is assymetrical, and it's a very small position.

I'll hold the puts, and see what Friday brings us. I knew what I was signing up for, when I sat down at the table to play a hand.


* * *

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, May 5, 2010

State of the Economy: The Continuing State of "Drag" (And Peter Schiff is Still Wrong) (VIDEO)

"Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor." - James Arthur Baldwin

With the dive the stock markets and some of the metals took recently, and the absolutely parabolic moves in the U.S. Dollar, ones have asked for my thoughts regarding the "state of the economy".

As follows, are my thoughts ...

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



Remember, the credit markets rallied yesterday, which is what you'd want to see, when the stock market and commodities plummet. If the credit markets fall, while the stock market falls, as well as the credit markets ...

Then it's time to worry.

* * *

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, May 4, 2010

Infrastructure Stimulus Interrupts Our Regularly Scheduled Blog ...

Yeah ... I wanted to have a vlog entry today. But as a myriad loud, heavy pieces of machinery are resurfacing the street outside my house, it's pretty much impossible to record anything at the moment.

Look for a "State of the Economy" vlog entry this week, as well as another "fun" entry ...

Edit: If you're wondering how I did today amidst a parabolic dollar, and diving stock market? I had a fantastic day, and have one word:

Hedged


* * *

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, May 3, 2010

Monday Challenge Project Summary: May 3, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $818.83
Trading "Sister" Balance: $1,751.47
Interest Bearing "Sister" Balance: $425.30
Total Challenge Project Funds: $2,995.60

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. We 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 weeks application of Rule No. 2, we have increased the trading accounts capital this year by 11.29%. We've had a three trades this year, one of them a loss, and that turned out being only something like $13 or $14, including commissions. We'll continue to apply Rule No. 2 towards the Trading account this quarter. I'd personally like to add another two or three percent capital gain before I attempt another trade.

Therefore, the number of trades are increasing as the capital increases in the trading account. With a greater sample rate of my own trades, we'll be able to generate some real money management numbers soon enough.

On the 'investing sister' route, it should be noted that I moved the profits / cash away from the Sharebuilder account from the McDonalds (MCD) sale, and moved that $139.81 over to the ThinkorSwim account. The Cocoa-Cola (KO) holdings, as well as the Johnson & Johnson (JNJ) holdings continue to be held at Sharebuilder, and the DRIP is turned on for both of these stocks.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $814.29
(YTD the account is up +1.897% YTD Return is about +0.6439% 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: $1,776.47
( YTD cash contributions, equity and return up about 11.29 % )
  • 2% risk tolerance gives us $35.52 'at risk' levels
  • 3% risk tolerance gives us $53.29 '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: $3,016.06

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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