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Wednesday, March 30, 2011

Arbitrage (VIDEO)

At times I will use words, like "arbitrage" throughout this journal. I have to remind myself (as I do forget) that though I may be familiar with terms that are common in this industry, that the stated purpose of my blog here is to provide a journal that will explain my thoughts in a way that any newcomer to the financial markets could follow along and understand.

So let me back up a bit, and say that arbitrage really is not that difficult to understand. It's quite a basic situation, and "The Khan Academy" has put together a nice, short video that explains this concept and the resulting conditions of 'arbitrage'. This video was passed along to me by a fellow trader "cosmosgato" on Youtube to assist those who are new to the terminology of the capital markets ...

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




If you have not yet checked out "The Khan Academy" on YouTube, I highly suggest checking him out. Sal has put together an incredible amount of free education (and you know I am someone who will support free education at every opportunity), organized by playlist and topic ... as well as topics that deal with investing and trading ...

* * *

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. But 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.

Monday, March 28, 2011

Challenge Project Summary for March 28, 2011: Expansion

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $1,133.66
Trading "Sister" Balance: $2,269.36
Side-pocket Savings "Sister" Balance: $700.00
Total Challenge Project Funds: $4,103.02

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 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 SAVINGS SIDE-POCKET Account.

Ok. I have mentioned for some time that I want to 'expand' the Challenge Project savings side-pocket 'sister' account.

How?

Well, first let's review the original explanation of this portion of my 'book'.

"The savings account is split into three purposes, and used for three separate reasons, and by different percentages at different stages in the accounts growth. [This statement, by the way, is critical to understand, as today's entry will explain ...]
  • Drawdown Kill Switch Fund
  • Base Savings
  • Emergency Savings
If you are not familiar with my outline of money management principles, again, you can review that information for free. It will explain what I mean by both a “Drawdown Kill Switch” (Some call this the 'ruin level' of an account, that is a percentage of the account capital that the trader does not want to risk any more capital, and stops trading), and why I have a fund dedicated to supplementing an account, once the drawdown kill switch is tripped. To summarize briefly, if the trading account or investing account were ever to reach this “kill switch” level in terms of drawdown? Then a percentage of the savings account could be used to supplement the drawdown that the other account experienced.

Honestly though, that is only used in the beginning. I have not used my own personal drawdown killswitch fund in years. But it's still there, if need be.

In addition, everyone should have a base savings. In better times, the entire savings account would be earning interest, and I will soon talk about how the accounts 'feed' one another. Hopefully, a way can be found out of the current liquidity trap that has occurred in recent years, and we can once again return to days of actually earning interest on our savings. What a radical thought eh? It should also be noted that I do keep physical metals, actual bullion as part of my base savings. But bullion cannot put food on the table.


Regardless, a percentage of the savings accounts are also used for emergency savings. I don't care what someone's level of wealth is, everyone needs to maintain an emergency savings fund. If you have $5,000,000.00, and you develop a critical, debilitating illness? Despite having good health insurance, you had best hope that you have access to liquid funds. There are any number of emergencies that can arise in our lives. I know, I've watched it happen. I've watched patients on cancer regiments have their retirement savings eaten up, despite having health insurance.
And yes, I keep this function as a part of my “three sisters” methodology, although at first it may not seem related to trading or investing. Because when I generate money in the markets, having these accounts as part of my portfolio strategy reminds me that no matter what sort of success I'm enjoying? Life is a precious, fragile thing, and I should do my best to prepare for unforeseen events."



So let's talk about the expansion of those ideas and concepts for the 'savings-sister' account as well as what I mean when I wrote: " It should also be noted that I do keep physical metals, actual bullion as part of my base savings." as well as "The savings account is split into three purposes, and used for three separate reasons, and by different percentages at different stages in the accounts growth."

Because we have arrived at a time period where we can begin to expand the 'savings side-pocket account'.

How? By what means?

Well, after noting the balances below, you will see that I have created categories within the "Base Savings" 'third' of this account, in a similar manner that I categorize and reserve cash for the dividend investing 'sister' account.

Let's discuss those categories now.

Savings "Maneuvering Capital"
This is something I've always believed in. Maneuverability in cash, is a key principle in any venture. You may have the skills to determine great entry points. You may be able to read any given markets sentiment and instantly 'place' the psychology of the mob.

But without cash? Without liquidity? You're dead in the water.

Thus ... this category, which will also be earning just regular savings interest, adds maneuverability to both the savings side-pocket sister as a whole, as well as the book overall.

CD Ladder Creation
Again, this is a portion of my savings that I've always believed in and discussed in the past. So there is nothing new in my proposing CD Ladders. If you would like an explanation of CD ladders, you can find one here, with a "CD Calculator" here ...

The question arises ... "How do we actually create the CD ladder?" Well ... that's a 'horse of another color' so to speak.

Remember .... I'm here for the low-funded, and showing them alternate means of getting started, since they do not have $200,000.00 to manage. I feel this is especially important, as we have just emerged from one of the worst recessions anyone currently alive remembers. That is, after all, the entire point of the Challenge Project. To try to assist those who are starting out as I did, with next to nothing by sharing and journaling my thoughts and experiences.

For the online savings institution that I am using, you can place as little as $25.00 in a CD. So I am not limited, as some institutions limit their customers, to saving $100,000 before I can initiate a CD Ladder.

But at the same time, $25.00 is just too small to begin branching out in a full form CD Ladder, with 6 different 'rungs' on the ladder.

One method, is not to create the ladder in one moment, and splitting $50,000 across different maturities, as is often done.

What is the goal with a CD Ladder exactly? To have a 'ladder' of CD's at different maturities .... correct?

So the low funded have to consider the option of savings up $100.00, and place that towards a 6 month CD that will mature. Then, build another 'rung' by saving up another $100.00 and wait until the first 6 month CD is halfway through one of it's maturities, and instigate another 6 month CD, and slowly build the complete ladder in this manner by building the rungs in an individual manner.

This is probably the route the Challenge Project book will have to take.

It should also be noted that I keep the CD ladder portion and the maneuvering capital completely separate and weighted so that there is more maneuvering capital than there is in the CD ladder. Why?

Well, this goes back to the principles behind maneuvering capital and liquidity. When you have a CD Ladder, you have higher interest and better liquidity than if it was locked into one CD, but still less liquidity than just having simple, straight cash. And with less liquidity, comes less maneuverability and ability to adapt. Which is 'risk'. Therefore, I 'weight' the CD Ladder section as less than the cash maneuverability. At least for now.

Now ... the question may arise ... "Dan ... why didn't you create a CD ladder immediately when creating this Challenge project? Why wait until now?"

Good question.

It's a matter of flexibility.

I could have begun this Challenge Project by simply saving all $500 and constructing a CD Ladder. And in the beginning I may have had a better rate of return. But by constructing the Challenge Project as I have, I now possess....
  1. Better versatility to invest with different instruments as time progresses Thus, the Challenge Project overall has great flexibility in it's construction. As time progresses, it becomes easier to trade, as well as invest, as well as save. And with that diversification, it becomes easier for the 'three sisters' to re-distribute their individual gains to help the account grow more quickly.
  2. As well, come on ... who wants to read a journal about a guy sticking money in a savings account for 6 months. This is an investing and trading journal and 'diary' so to speak.

Side-Pocket
'In enters' the 'side-pocket' accounts. Stamps. Coins. Artwork. Assets for which there is a market, but no exchange.

Despite my rants during 2008 due to the lack of a regulated CDO market, I do not feel that every single asset in the world needs to be placed on a regulated exchange. That'd be silly. If an asset is going to be used, as CDO's were, and purchased by financial institutions ... but kept off of their balance sheets ... and those same assets become leveraged, and a certain level of liquidity is attained by institutions trading those assets in a leveraged manner ... yes ... I would like to see a regulated exchange.

But let's be reasonable ... there doesn't need to be a "postal stamps exchange" to properly value collectible stamps.

Now the next question, is a matter of liquidity. Do we consider something like silver a 'liquid' investment, or do we consider it an 'illiquid' investment?

My answer is: Yes.

Do I consider something like silver as a liquid investment at the moment?

Yes.

Can it become illiquid?

Yes.

The market liquidity that now exists for silver can disappear, and disappear quickly. So the risk in my mind is not as much a question of what price you can sell it for. It's a question of can you sell it if necessary at a price you would prefer?

Therefore, the question in my mind for collectibles such as art, stamps, or silver bullion is not really one of liquidity and how easily can I mark, or track the price. It's a matter of how heavily do I weight my 'sidepocket' holdings on an asset that can quickly become illiquid.

Thus, inside the 'base savings' category of this portion of my portfolio, I try to make sure that the weight of any such purchases is always under 3 % of the base savings category. Which would mean that if I can keep to the weighting below that level for the base savings category, then any future side-pocket purchases would be under 0.68 % of the savings side pocket account overall, and under 0.1206 % of the entire book.


Hedging Account
Now this category? This is a category that is completely new and an optimization to my 'three sisters' approach, and relates to my "Week in Review" entry that I discussed running one's family balance sheet like a corporation. With this category, I can look at hedging out gasoline costs in the spring, or even currency hedging with my frequent trips to Mexico, or hedge out my exposure to any U.S. Dollar weakness.

I hope this helps explain the categories that you will now see listed for the savings side-pocket 'sister' account.

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 Account Balance: $1,150.76
(YTD the account is +12.78 % YTD Return is about -1.674 % )

  • 6.2685 shares of KO ( DRIP is on for 4.2685 shares - Yield is +2.8826 % )
  • 5.2147 shares of JNJ ( DRIP is on for 3.2147 shares - Yield is +3.6623 % )
  • 6 shares of GIS ( DRIP is not on for any shares - Yield is +3.0685 % )
  • Cash $213.24
-$134.16 of this cash I reserve for 'maneuvering' capital ( 11.66 %)
-$ 15.00 of this cash I reserve to D.C.A. KO ( 1.303 % )
-$ 41.08 of this cash I reserve to D.C.A. JNJ ( 3.57 % )
-$ 17.00 of this cash I reserve to D.C.A. GIS ( 1.47 % )
-This leaves $ 3.00 cash available for a new purchase ( 0.2607 % )
-This leaves $ 3.00 cash available for a second new purchase ( 0.2607 % )
  • Additional $181.25 ( 15.75 % ) available from slush fund, up to $1,332.01

Trading "Sister" Account: $2,269.36
( YTD cash equity up 2.253 % Return on Capital is 0 % )
  • 2% risk tolerance gives us $45.38 'at risk' levels
  • 3% risk tolerance gives us $68.08 'at risk' levels
  • Additional $181.25 ( 7.987 % ) available from draw-down / slush fund, to $2,450.61

Savings Side-Pocket Balance: $725.00
(YTD cash equity up about 16 % Return on Capital is 0 %)
  • $181.25 for a Slush fund / Draw-down Kill Switch fund
  • $362.50 for a Base Savings
-$302.50 of this cash I reserve for savings 'maneuvering' capital ( 83.45 %)
-$ 50.00 of this cash I reserve for CD Ladder creation ( 13.79 % )
-$ 5.00 of this cash I reserve for the first side-pocket purchase ( 1.38 %)
-$ 5.00 of this cash I reserve for the second side-pocket
purchase ( 1.38 %)
-$ 0.00 of this cash I reserve for the hedging account ( 0.0 %)
  • $181.25 for Emergency Savings

- 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: $4,145.12 ( YTD the account is +7.256 % YTD Return is about -0.4704 % )

* * *

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. But 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

Thursday, March 24, 2011

The General Mills (GIS) Call

I make a habit of writing notes for any conference call that I tune into; and especially when I own some stock in the company. As I stated in the past that I would review conference calls here on the blog, here are some highlights from the notes I took during the General Mills (GIS) call ...

  • Overall, I found the call positive.
  • An overall tone I began to notice was that the street seems to worry a bit about continuing and stacking growth in sales. Last call, it was commodity inflation and costs. Later in the call, management fully admitted that it would be a bit unrealistic to stack volume to increase as it has, and meet guidance. They are therefore relying on price realizations to meet targets they've outlined (If you are new, 'price realizations' does not necessarily mean, rising the cost of the product, but a manipulation of discounts on the list price to try to increase profit margins substantially).
  • The Yoplait deal: Management continues to insist it was not forced into this transaction, but that they saw a $40 Billion category, that works in all types of international markets, with a low cost; and they wanted to take advantage of that opportunity, since it was inline with their overall worldwide growth strategy. They also insist that they see no substantial 'real' pushback from the French government on the deal, and they are confident it will close. I'm always more of the opinion that nothing is done, until it's done. But at least they aren't modeling any revenue on projections or guidance with the assumption that the deal will complete.
  • Cereal sales are a bit worrisome. Management believes this will strengthen. JP Morgan analyst believes it will strengthen. I'm not sold on that one yet.
  • I found it humorous (and I admit, somewhat satisfying) that not 5 minutes into the call, they were discussing input costs. Perhaps "someone" out there will discover as others have, that although I do make mistakes as anyone does ... this is my field, and 'generally' I know what I'm talking about.
  • I also found it humorous (and again, somewhat satisfying) that the tremendous growth in China was highlighted, and in the B.R.I.C. countries overall, with China alone gaining 10% increase.

Here is a link to that call for review ...

On a somewhat related note? I will mention here what I mentioned on the Facebook page; that obviously I have been watching the divvy section of the book more as of late.

As I mentioned on Monday, any further drawdown in that section of my book would have possibly triggered a "3 sister redistribution" Things are looking good this week on that score however as market recovers ... and we recover over a percentage point ( I hit 3% drawdown on one section of the book on a year to date basis (I'm still up overall), and I flip out, lol )

* * *

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. But I do have 14 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.

Tuesday, March 22, 2011

Invest in China?

So I think the following chart says a lot ...

CSI 300 Index vs the S&P 500
1 Year



And 'on the other side of the bay' as it were ... the Hang Seng has been getting smoked in the last five months.

As "Dasan", Anthony Davian and others have noted, the fraud stories coming out of some Chinese companies almost defy description and belief.

I would say: "I tried to warn people", but I'll save that speech.

This all does lead me to another topic ...

It has to do with my complete confusion regarding this concept that I hear so often of ...

"Pull your money out of U.S. stocks, and then put your money into investing in Chinese companies, because China is a growth sector"

Seriously? That makes absolutely no sense to me whatsoever. Yes ... I do believe that China is a growth sector. So if an individual wanted to invest in the growth sector of China? Why not play the flow of large cap international companies that are currently focusing on expanding into the B.R.I.C countries, and are weighting towards China?

Why take your money out of companies that are expanding into China, to invest with unknown Chinese companies in which it is much more difficult to do your own due diligence? Just keep the money with large cap international companies expanding into China. That certainly seems the best way to mitigate fraud risk with unknown companies that seem to refuse to adhere to well accepted accounting standards.

So ... sorry ... I'll keep my money with the international companies that are focusing on selling Coca-Cola's and boxes of breakfast meals to over one billion Chinese ... thank you very much.

* * *

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. But I do have 14 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.

Monday, March 21, 2011

Monday Challenge Project Summary: March 21, 2011

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $1,129.20
Trading "Sister" Balance: $2,269.36
Side-pocket Savings "Sister" Balance: $700.00
Total Challenge Project Funds: $4,098.56

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, 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.

This week I was actually thinking of peppering the Trading account with rule no. two. I want to start the final buildup in that account so that trading can begin there by the back end of the year. But the markets are still giving a bit of volatility, so I am adjusting ... and instead ... rule no. two is being applied to the dividend investing account this week.

I'm using that application to bump up Coca-Cola's (KO) cash dividend reservation, as well as the 'maneuvering capital' that will eventually grow into a portion of the account that will take care of hedges.

At this point? The drawdown in the dividend investing account itself is breaching the 3% zone. So will I now use the drawdown slush fund to bump up the account balance to the dividend investing sister?

Well ... that is an option that my portfolio management system does offer to me. And there won't be active trading probably until the back end of this year. So I'd have time to rebuild that section of the fund with future applications of rule no. two.

I think I'll wait ... for now, before doing this. I just want to watch, and observe. But I did want to include a note that now that we've breached 3% drawdown in a single 'sister' of the book? I am beginning to think about that option. We're still underneath 1% drawdown for the the entire book, but at the same time I want to keep all three sisters in a healthy position.

As well, it should be noted that Johnson & Johnson (JNJ) paid a dividend, and I have noted both the dividend below, as well as the updated share accumulation.


Next week, we'll be discussing an expansion of the side-pocket savings account balances and strategy. Because even if we do decide to use the drawdown slush fund and transfer it to the other two sisters? We have arrived at the time period where we can still begin to expand this 'sister' of the three 'sister' portfolio management system.

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 Account Balance: $1,133.66
(YTD the account is +11.11 % YTD Return is about -3.135 % )
  • 6.2685 shares of KO ( DRIP is on for 4.2685 shares - Yield is +2.998% )
  • 5.2147 shares of JNJ ( DRIP is on for 3.2147 shares - Yield is +3.688% )
- $1.08 Paid in Cash in Second Dividend Account
- $0.0291 more shares of JNJ accumulated at $59.106529
  • 6 shares of GIS ( DRIP is not on for any shares - Yield is +3.056% )
  • Cash $213.24
-$134.16 of this cash I reserve for 'maneuvering' capital ( 11.83 %)
-$ 15.00 of this cash I reserve to D.C.A. KO ( 1.323 % )
-$ 41.08 of this cash I reserve to D.C.A. JNJ ( 3.624 % )
-$ 17.00 of this cash I reserve to D.C.A. GIS ( 1.5 % )
-This leaves $ 3.00 cash available for a new purchase ( 0.2646 % )
-This leaves $ 3.00 cash available for a second new purchase ( 0.2646 % )
  • Additional $175.00 ( 15.44 % ) available from slush fund, up to $1,308.66

Trading "Sister" Account: $2,269.36
( YTD cash equity up 2.253 % Return on Capital is 0 % )
  • 2% risk tolerance gives us $45.38 'at risk' levels
  • 3% risk tolerance gives us $68.08 'at risk' levels
  • Additional $175.00 ( 7.711%) available from draw-down / slush fund, to $2,444.36

Savings Side-Pocket Balance: $700.00
( YTD cash equity up about 12% Return on Capital is 0 % )
  • $175.00 for a Slush fund / Draw-down Kill Switch fund
  • $350.00 for a Base Savings
  • $175.00 for Emergency Savings
- 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: $4,103.02 ( YTD the account is +6.166 % YTD Return is about -0.8863 % )

* * *

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. But I do have 14 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

Thursday, March 17, 2011

Homework

I can't tell you the number of times in my youth, that I would show up to a class, I had not done my homework, I had not studied the material ... and yet somehow, I felt that it would be possible for me to 'pass the test'

During such times of market distress I think it's important for investors especially to remember that it's only during said times of distress that you discover whether or not you've truly done your due diligence.

I'm reminded of something that the financial blogger who goes by the handle "Dasan" once said in a post that I still revisit to this day ...

"Emotional strength is more important than intellectual prowess when it comes to playing poker, fighting wars, and investing in stocks." - Dasan, The Davian Letter, May 11, 2010

"If you don’t do your homework, you view a 5-minute 1000-point drop in the Dow as terrible. If you do you homework, you call it “a gift." - Dasan, The Davian Letter, May 11, 2010


That post of his I keep bookmarked in a little folder that is filed as: "Financial > Blogs > Great Posts to Keep for Review".

There are companies out there, who not only have a great balance sheet after the economic turmoil of the previous 3 years, but will weather this unfortunate storm very well.

Have you done your homework?

Tuesday, March 15, 2011

Why Is Dan "Close" ? (PODCAST / VIDEO)

"For mere oppression may make a wise one act crazy" - Ecclesiastes 7:1, The Bible

Yeup.

I've been on edge lately.

Here's a little video, that might peel back a little bit, and show you what I deal with, multiplied by about 1,000 ... as well as thoughts on plans for this blog for the future.

You offer an olive branch to an angry, spiteful person? I don't know why I'm surprised when they bite the branch and your hand ...

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




Here is the blip.tv version of the video.

And guys and gals ... it's not even NEAR the worst of what I've gotten. That stuff is a cakewalk compared to the stuff I got in my inbox recently.

As some have suggested? I may take this little party private, and create a new, private blog that you need to be invited to in order to view the entries.

I'm so sick of this negativity I could puke.

* * *

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. But I do have 14 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.

Monday, March 14, 2011

Monday Challenge Project Summary: March 14, 2011

(Please note there is another blog entry today)

Previous $500 Challenge Project Balances:


"The Three Sisters":

Investing "Sister" Balance: $1,110.25
Trading "Sister" Balance: $2,269.36
Side-pocket Savings "Sister" Balance: $700.00
Total Challenge Project Funds: $4,079.61

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, 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.

Based on previous entries and latest events, let's just keep this to a text today shall we?

Overall thoughts in regards the markets? The equities / stock markets just look like an absolute mess; looking at them technically on a chart. Short and long term moving averages are turning over, which indicates that at least ... as of today ... the markets thinks that this is more than a simple 'breather' in the market.

Does that mean that it's a going to be hard correction?

There's no way to know, and there's no way to predict at this point in time.

I will say that if I was managing a larger account? If I did not already have insurance in terms of stock hedges ... I personally would be looking for rally at this point, so as to buy any such 'hedges' or 'insurance' a little more cheaply. I've set an alert on my S&P 500 chart of 1286.37 or lower.

Since the "Challenge Project" is not a larger account, it will be focusing on defending the dividend investing account during any such downturn, for however long that lasts. With this weeks deposit of rule no. two, we beefed up the cash reserved to dollar cost average General Mills (GIS) in the future.

One further thought on a downturn in equities market overall? If any 'downturn' were to occur to somewhat correct this stock rally? It should be noted that would be a contra-seasonal move. This is an FOMC week, so many will be listening to the Fed's comments, and their attitudes toward tightening. Any 'tightening talk' that spooks the market, we could head lower in stocks.

We'll just have to watch equities and the dollar.

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 Account Balance: $1,129.20
(YTD the account is +10.67% YTD Return is about -1.41% )

  • 6.2685 shares of KO ( DRIP is on for 4.2685 shares - Yield is +2.901% )
  • 5.1856 shares of JNJ ( DRIP is on for 3.1856 shares - Yield is +3.619% )
  • 6 shares of GIS ( DRIP is not on for any shares - Yield is +3.002% )
  • Cash $187.37
-$119.37 of this cash I reserve for 'maneuvering' capital ( 10.42 %)
-$ 7.00 of this cash I reserve to D.C.A. KO ( 0.6112 % )

-$ 40.00 of this cash I reserve to D.C.A. JNJ ( 3.492 % )
-$ 17.00 of this cash I reserve to D.C.A. GIS ( 1.484 % )

-This leaves $ 2.00 cash available for a new purchase ( 0.1746 % )
-This leaves $ 2.00 cash available for a second new purchase ( 0.1746 % )
  • Additional $175.00 ( 15.28 % ) available from slush fund, up to $1,304.20

Trading "Sister" Account: $2,269.36
( YTD cash equity up 2.253 % Return on Capital is 0 % )
  • 2% risk tolerance gives us $45.38 'at risk' levels
  • 3% risk tolerance gives us $68.08 'at risk' levels
  • Additional $175.00 available from draw-down / slush fund, to $2,444.36

Savings Side-Pocket Balance: $700.00
( YTD cash equity up about 12% Return on Capital is 0 % )
  • $175.00 for a Slush fund / Draw-down Kill Switch fund
  • $350.00 for a Base Savings
  • $175.00 for Emergency Savings
- As described in previous entries, all deposits past $675.00 will be towards an interest bearing account, and although in separate accounts will still be treated as one 'sister' portion of the book.


Total $500 Challenge Project Balance: $4,098.56 ( YTD the account is +6.469 % YTD Return is about -0.3925 % )

* * *

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. But I do have 14 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

Just ... "Close"

(Please note there is another blog text entry today)

First of all, thanks for the very kind comments. Both the comments here and all the kind comments I've received in pm's and emails..

I will say ... let's just call this a 'blogging vacation', rather than a "I'm completely done with doing this in the future". Although as the title of that last entry suggests, I was very close to that point.

But it somehow seemed rather 'melodramatic' to come up with a ...

"... that's it I am done, and I am leaving never to blog again ... I am saying here and now that I do quit ..."

... and then turn right around possibly a week later and say: "No, I didn't quit. I'm back. I just needed a break". I wasn't quite sure which way it was going to go ... and I didn't want to go to that route that might seem a bit melodramatic in retrospect.

So let's just call this a bit of a break. Perhaps I'll just have a few text entries in the future.

I do firmly believe that 'the needs of the many' do outweigh my personal needs. And threats I don't mind. I've gotten those for years now. Even specific threats of specifics of 'actions'. But when it gets escalated to where certain people begin digging into the 'next stage' of carrying out the threat .... ehhh ... that's something else. At the same time, I watch as various groups storm capital buildings in different states around the midwest to carry out their political agenda ... yeah ...

Let's just call this just a bit of a break. So yes, all of the videos and blog entries and podcasts remain up and available.

Perhaps I'll have some text entries in the future, and pull the blog a little 'closer to the chest'.

Don't be surprised if you see these comments put up as a text or perhaps vlog entry as well, as I believe some others in different venues may have gotten the wrong idea from this entry.

As always ... stay safe ...

Friday, March 11, 2011

Very Close ... Oh ... Oh so close ...

This is just one those days when I feel like saying:

Screw it. I'm done. I'm closing up everything, and going to recede into anonymity again.

To borrow the phrase and sentiment ... "I think I've done my bit for God and country". After what ... four years? Four years of reaching out, spending my own time free of charge, to try to help others? Four years of explaining money management, explaining portfolio management ... explaining how to start out with next to nothing and grow it into a sizeable account .. explaining how options work, and my experiences with psychological and emotional discipline? Four years?

This is a journal. Which also means that I at times explain even my own personal shortcomings and failings, and why think in a certain manner. I've been happy to do that, and explain what personally led me to some conclusions and how that impacted my approach to investing as well as trading.

But after the third or fourth threat from everything over unions, politics, taxes, the 'morality' of trading ... yeah ... I sort of get to this place where I'm just 'done' and want to just do my thing in the 'back corner' as it were.

My unabiding hatred for politics and economic bias is renewed and strengthened.

The ironic thing, is that I said three years ago this sort of 'class warfare' mentality was coming.

So yeah ... at the very least, I'm going to take a break for a while. I have no idea how long that break will take. This weekend I'll be down the street, volunteering my time so there will be no "Week in Review".

I do realize that there are many people that would never engage in such behavior, and I've managed to help. But at a certain point ... for the sake of your own psychological balance ... you just have to take care of yourself. There comes a point when the mass 'mob' begins acting just as you always thought they'd act? It's time to make yourself scarce.

Besides ... those who have my contact information (which is here on the blog itself - the 'contact me' button) know how to get a hold of me if they have a question they feel like bouncing off of me.

Wednesday, March 9, 2011

A.C.C. 14.5: Midweek Ramblings ...

As I mentioned on the Facebook page, I haven't had a trade for the ACC book since that USO 40 Call trade earlier this week. I've been concentrating on investing research, as well as plan out how I'm going to expand the "Challenge Project" in coming months. Especially, the savings side-pocket account.

General Mills (GIS) had a strong open, and hit an alert that I had set in that resistance range. So what did I do? Did I change my outlook that General Mills is now breaking above the resistance set on the chart?

No.

As I've often said, resistance on a chart is a region or zone. So I set another alert for 'at or above' $37.46. The action in General Mills to this point also demonstrates why I do this, and reinforces my statements in regards the aforementioned regions of resistance and support, and why I view the close on the daily chart as more important.

(Edit: 4:05 PM ... strong close which is a good sign. I've set another alert, higher yet)

I'll take this opportunity to review the trading thoughts that I had on Sunday ...

Gold (Brief short trades): I scratched this trade much too quickly from my focus list. It's offered several short opportunities after I stopped watching it.

Must ... have ... more ... monitors.

Copper (Waiting / Stalking): I've been waiting for a setup, and it's forming up nicely.

Crude Oil (Looking for longs): Obviously had my loss this week looking to go long, and as I've discussed; I think I didn't focus heavily enough on my multi-time frames, namely ... the daily chart.

U.S. Dollar (Looking for shorts): We've gotten a rally now, and I have an alert set for 'at or below' 76.965

Soybean Meal (Waiting): Waiting on firm support to form for long trades

Corn (Looking for shorts): Very profitable, but I never took it. Just seems like I'm out of synch.

Live Cattle (Short below 114): Never took it, and it just rocketed higher. So scratched that trade.

Pepsi Co (Long July 2011 60 Calls): Very profitable. This call was going for 4.60 ($460) per option, and at the time of this writing, last traded at 5.20 ($520), and the spread is between 5.50 and 5.60. I did not take this trade either.

Quite frankly, the commodity markets just feel 'out of sync' with my own personal methodology. Or perhaps it's just me. I'm not ruling that out either since I also missed that Pepsi (PEP) trade.

* * *

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. But I do have 14 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.

Tuesday, March 8, 2011

Talking Your Book or Pumping Your Book (VIDEO)

"Fortunately for serious minds, a bias recognized is a bias sterilized." - Benjamin Haydon

So there was a bit of talk in the YouTube 'arena' regarding how the 'doom and gloom' crowd's logic seems to be lacking on certain economic issues, despite the profits they are currently enjoying in the silver markets. How they love to portray as every corporation as corrupt, and horrendous, and not worth any money.

You know what I see when I see guys pull that nonsense?

People pumping their book ...

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



Here is the blip.tv version of the video.

I mean seriously ... one guy out there? Has portrayed himself as a "The Terminator" who is going to bring down JP Morgan. I call that seriously delusional.

This is what happens when a society is raised on television, and think the lessons are applicable to investment decisions in the capital markets.

* * *

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, March 7, 2011

Monday Challenge Project Summary (And A.C.C. 14 Comments): March 7, 2011 (VIDEO)

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $1,074.50
Trading "Sister" Balance: $2,269.36
Side-pocket Savings "Sister" Balance: $700.00
Total Challenge Project Funds: $4,043.86

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, 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.

(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 blip.tv version of the video.

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 Account Balance: $1,110.25
(YTD the account is +8.811% YTD Return is about -0.9097% )

  • 6.2685 shares of KO (DRIP is on for 4.2685 shares - Yield is +2.883% )
  • 5.1856 shares of JNJ (DRIP is on for 3.1856 shares - Yield is +3.538% )
  • 6 shares of GIS (DRIP is not on for any shares - Yield is +3.047% )
  • Cash $162.37
-$107.37 of this cash I reserve for 'maneuvering' capital ( 9.66 %)
-$ 7.00 of this cash I reserve to D.C.A. KO ( 0.6302 % )

-$ 40.00 of this cash I reserve to D.C.A. JNJ ( 3.601 % )
-$ 4.00 of this cash I reserve to D.C.A. GIS ( 0.3601 % )

-This leaves $ 2.00 cash available for a new purchase ( 0.1801 % )
-This leaves $ 2.00 cash available for a second new purchase ( 0.1801 % )
  • Additional $175.00 ( 15.76 % ) available from slush fund, up to $1,285.25

Trading "Sister" Account: $2,269.36
( YTD cash equity up 2.253 % Return on Capital is 0 % )
  • 2% risk tolerance gives us $45.38 'at risk' levels
  • 3% risk tolerance gives us $68.08 'at risk' levels
  • Additional $175.00 available from draw-down / slush fund, to $2,444.36

Savings Side-Pocket Balance: $700.00
( YTD cash equity up about 12% Return on Capital is 0 % )
  • $175.00 for a Slush fund / Draw-down Kill Switch fund
  • $350.00 for a Base Savings
  • $175.00 for Emergency Savings
- 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: $4,079.61 ( YTD the account is +5.561 % YTD Return is about -0.247 % )

* * *

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. But I do have 14 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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