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Monday, July 11, 2011

Challenge Project Summary: July 11, 2011

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $1,278.00
Trading "Sister" Balance: $2,394.36
Side-pocket Savings "Sister" Balance: $875.19
Total Challenge Project Funds: $4,484.82

The original video explanation of the Challenge Project that began with $500, is to be found here. If you would like to hear the "why" behind the challenge project, you can find that here as well as 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, 2010 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 DIVIDEND INVESTING Account.

Rule No. Two:
First of all, as I mentioned in the previous week's entry, applications of rule number two towards either the dividend investing account, or the savings side-pocket account? The cash is being applied towards 'cash reservations' that you see within those accounts ... so that the accounts line up with the previously established 'goals'. So as time passes, you will begin to see that the Challenge Project's Dividend Investing account, as well as Savings Side-Pocket account will align with those goals.

Capital contributions towards dividend investing will help soften any blow from a pullback that we may experience in equities, if the seasonal July 15th downturn in equities holds true this year.

Yield Increase:
It is also important to note that General Mills (GIS) announced a dividend raise some time back. The dividend has increased from $0.28 a share, to $0.305 a share. Our next dividend pay date for this stock is on August 1, 2011.

So ... we have ourselves a little 'raise' so to speak.

And remember that there is no DRIP turned on for the General Mills (GIS) stock. All of that stock is being held at one account, and we are receiving straight cash. All of the cash that I receive at this point on dividends, I place in the category to further D.C.A. that same stock down the road. Thus, a 'synthetic' DRIP is still built.

Moving on, I stated in the "Week in Review" podcast that I would discuss how I am going to implement Forex into the Challenge Project. It's important to talk about how I am going to implement it into the portfolio, because after all ... portfolio management is something that I'm really trying to stress as of late.

Ok, at the present time ... we have $2,394.36. That money is set aside so that we can begin to trade in the future. That money will remain dedicated towards trading commodity futures, since that is where the majority of my experience lay.

However, from this point forward, for every application of rule number two ($25.00 a week) that is applied towards the trading account, $5.00 of that capital will go towards a new "Forex Trading" account category, that you will see appear on this blog. In the future, I will also implement Forex into the "Airelon's Challenge Chronicles" accounts in much the same way.

This means that ...
  • Capital contributions towards the trading account will become more important in terms of frequency. Because all contributions will now be split between two accounts.
  • There will be real money, set aside for Forex trading, in the very next capital contribution towards the trading account.

I will discuss more of my Forex 'adventures' in upcoming entries ..

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

Challenge Project Balances After Rule No. 2 Deposit:

Goals for Each Account
  • Investing Account: This Entry describes the next goal. Account is 'active'
  • Trading Account: $2,600.00
  • Savings Side-Pocket Account: This Entry describes the next goal. Account is 'active'

Investing Account Balance: $1,304.93
(YTD the account is +27.89 % YTD Return is about +4.784 % )
  • 6.3585 shares of KO ( DRIP is on for 4.3585 shares - Yield is +2.7373 % )
  • 5.2422 shares of JNJ ( DRIP is on for 3.2422 shares - Yield is +3.3743 % )
  • 6 shares of GIS ( DRIP is not on for any shares - Yield is +3.3143 % )
  • Cash $293.15 ( 22.46 % )
Percentages of that Cash:
-$200.00 of this cash I reserve for 'maneuvering' capital ( 68.22 % )
-$ 19.25 of this cash I reserve to D.C.A. KO ( 6.567 % )

-$ 43.22 of this cash I reserve to D.C.A. JNJ ( 14.74 % )
-$ 20.68 of this cash I reserve to D.C.A. GIS ( 7.054 % )
-This leaves $ 5.00 cash available for a new purchase ( 1.706 % )
-This leaves $ 5.00 cash available for a second new purchase ( 1.706 % )
  • Additional $218.75 ( 16.76 % ) available from slush fund, up to $1,523.68
Investing Account Balance Year to Date
(Can be Enlarged)

Trading "Sister" Account: $2,394.36
( YTD cash equity up 7.885 % Return on Capital is 0 % )
  • $2,394.36 set aside for Commodity Futures trading
-2% risk tolerance gives us $47.88 'at risk' for draw-down tolerance
-3% risk tolerance gives us $71.83 'at risk' for draw-down tolerance
-Additional $218.75 available from draw-down / slush fund, to $2,613.11
  • $0.00 set aside for Forex trading
Trading Account Balance Year to Date
(Can Be Enlarged)

Savings Side-Pocket Balance: $875.29
( YTD cash equity up about 40.05 % Return on Capital is 0.03314 % )

- $0.10 as interest payment for June of 2011
  • $218.75 for a Slush fund / Draw-down Kill Switch fund
  • $437.79 for a Base Savings
-$351.79 of this cash I reserve for 'burn rate / maneuvering' capital ( 80.36 %)
-$ 59.00 of this cash I reserve for CD Ladder creation ( 13.48 % )
-$ 10.00 of this cash I reserve for the first side-pocket purchase ( 2.284 % )
-$ 10.00 of this cash I reserve for the second side-pocket
purchase ( 2.284 % )
-$ 7.00 of this cash I reserve for the hedging account ( 1.599 %)
  • $218.75 for Emergency Saving
Savings Account Balance Year to Date
(Can Be Enlarged)

- As described in previous entries, all deposits past $675.00 will be towards an interest bearing account, although it separate accounts will still be treated as one 'sister' portion of the book

Total $500 Challenge Project Balance: $4,574.58 ( YTD the account is +18.37 % YTD Return is about +1.326 % )

* * *

Note: The above statements should not be construed as an investment or trading recommendation. Airelon's Investing and Trading Journal is a blog that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change.. Any trades or investments that I discuss within this blog are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this blog; as larger accounts may require a different strategy as the ones presented here. This blog simply contains my trading and investing thoughts for the next week. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. I personally only enter any market after watching and reading the tape and I trade using money management principles. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. I do have 15 years of experience in trading and investing in these markets. Airelon's Challenge Chronicles are demo accounts,with all of the inherent problems therein, which are used within this blog in an attempt to track the results of my own thought processes., and is run as a model. Traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this blog are believed to be public domain. Any charts that displayed using the ThinkorSwim platform, or any other charting software are believed to be public domain. Any other pictures were obtained through Wikipedia's public domain policy. As a reminder, any trades discussed for "Airelon's Challenge Chronicles" would only be 'day trades' according to the parameters discussed for Airelon's Challenge Chronicles, at this stage of the game in order to escape the risk of over-leveraged gap opens in the commodity futures markets. As a 'trading sister' would have grown to the $30,000 level, I would have graduated the account into 'swing trading'. In addition, it is understood that readers have read my YouTube methodology series. It is also understood that the writer of this blog has repeatedly warned against the dangers of shadowing any other traders thoughts. 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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