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Monday, January 10, 2011

Monday Challenge Project Summary: January 10th, 2011

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $1,045.35
Trading "Sister" Balance: $2,219.36

Side-pocket Savings "Sister" Balance: $625.00

Total Challenge Project Funds:
$3,889.71

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 accounts that I own; following my own three sisters portfolio management system; albeit modified a bit to operate with low funds. From time to time, I provide snapshots of the broker statements.

Rule No. 2 of the Challenge Project states that each month, we can divvy up $100.00 as we wish between the various challenge project accounts. We split up Rule No. 2, into weekly segments; or $25.00 a week. As I mentioned on August 10th, I have liquidated all of the other personal accounts that I've discussed on this blog for the last 4 years, and to emphasize the strength of these principles? I will demonstrating my success, again, this time it will be live, with the 'Challenge Project', full time.

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

Today's Thoughts:
As I have already pointed out, the trading account got a bump up today with Rule No. 2.

But that's not really what I would like to talk about today.

I want to talk about the 'forgotten sister' of my 'three sisters'. The 'savings side-pocket' sister account. As I mentioned in the A.C.C. podcast, it has not generated any return for the last year.

So ... what can we do about changing that for the future?

Well, I plan on bumping this 'sister' account up to $675.00 soon enough. Those funds are at the brokerage, in a separate account. So we are clear .... $675.00 will remain at the brokerage account, and will remain as the 'savings side-pocket sister.'

But after that point, when rule no. two is applied towards the Challenge Project's 'savings side-pocket' sister' account? The funds applied will be deposited at a bank that is currently earning 0.25% on all funds. Although the funds are split between two different institutions, it will still be considered the same 'sister' account; in much the same way that the current dividend accounts are split between two different brokerages so as to engage in partial DRIP.


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

Challenge Project Balances After Rule No. 2 Deposit:

Goals for Each Account By the Time I Trade Challenge Project Full Time
  • Investing Account: $580.00 in cash past equity positions
  • Trading Account: $2,600.00
  • Savings Side-Pocket Account: $900.00
Investing "Sister" Account: $1,029.53
(YTD cash and equity up 0.8997 % Return on Capital is -1.513% Continuing Yield is approximately +6.96% in cash dividends and additional shares of stock)
  • 6.2685 shares of KO (DRIP is on for 4.2685 shares)
  • 5.1856 shares of JNJ (DRIP is on for 3.1856 shares)
  • Cash: $310.41
-$58.41 of this cash I reserve for 'maneuvering' capital ( 5.673 %)
-$ 5.00 of this cash I reserve to D.C.A. KO ( 0.4857 % )

-$26.00 of this cash I reserve to D.C.A. JNJ ( 2.525 % )
-This leaves $220.00 cash available for a new purchase ( 21.37 % )
-This leaves $ 1.00 cash available for a new purchase ( 0.09713 % )
  • Additional $156.25 available from slush fund, up to $1,201.60

Trading "Sister" Account: $2,244.36
(YTD cash equity up 1.126 % Return on Capital is 0 % )
  • 2% risk tolerance gives us $44.88 'at risk' levels
  • 3% risk tolerance gives us $67.33 'at risk' levels
  • Additional $156.25 available from draw-down / slush fund, to $2,400.61

Savings Side-Pocket "Sister" Account: $625.00
(YTD cash equity up 0 % Return on Capital is 0 %)
  • $156.25 for a Slush fund / Draw-down Kill Switch fund
  • $312.50 for a Base Savings
  • $156.25 for Emergency Savings

Total $500 Challenge Project Balance: $3,898.89 ( YTD cash equity up 0.8844 % Return on Capital is -0.4041% )

* * *

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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