Monday, October 17, 2011

Week 25 Deposit and Forex Trading Update

Time for another deposit into the Model Portfolio. I also give an update on why there has been no talk of trading.

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

I'm not too proud to admit that Oanda and Metatrader4 are currently defeating me. I really hadn't expected this many problems because it seems that everyone are using these two. Thusly I have to think the problem lies with myself and its something I have to work through.  I do keep eyeing TDAmeritrade though. They seem to be getting their act together and I may move back to them. Time will tell. Whichever I go with though... its time to get this trading show on the road!

In the video I mention that I am getting an extra $0.02 but only 1 is shown here. O and PCY each have $0.005 and that is being rounded down by Google Docs for each one thusly that $0.01 is "lost" in the total.
Its a display issue only and if I change the columns to 3 decimal points everything adds up.
Keeping track of stats and the math is important but.... its only half a penny.  Since its only a visual issue and the math still holds I plan to leave it.

Weekly Activity
$100 deposit into Investing

Model Portfolio Totals

Trading Account: $300
Estimated Monthly Income: $0 (Not ready to trade until Phase 1 completed)
Max amount in Forex trade (20% of account): $60
Max loss per trade (2% of account): $6

Investing Account: $1,535.65
Estimated Monthly Income: $5.76
     ERF: $1.68 income/month
     O: $1.06 income/month ($0.005 from DRIP shares)
     JNK: $1.85 income/month ($0.012 from DRIP shares)
     PCY: $1.17 income/month ($0.005 from DRIP shares)
     TLT: $250 reserved for future purchase
Maneuvering Cash: $310.03

Savings Account: $600
Emergency: $500
Portfolio Protection: $100
CDs: $0
Precious Metals: $0

Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others.
I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.


  1. In the investing spreadsheets, you say at the bottom of the main one Yield of Cost includes DRIP shares..

    YOC=(Dividend RATE)/Average Purchase PRice

    The average in price didn't change, so don't the purchase price of the new shares have to be known and also used in the following formula.

    Total Purchase Price = Total Cost + Commissions

  2. According to this, in the comment above APP= Investment Adjusted Cost Base

  3. Anon 7:58: Correct the cost did not increase. This is actually a really good observation and comment. I have seen and been in discussions of hundreds of comments on this topic.

    Calculating YOC depends on how you look at dividends and DRIP and really what information you are wanting out of a stat or formula.

    From a classic by the book definition each time a dividend comes in I would get the cash then be making a decision on what to do with the money. With DRIP I am making the choice to make a new purchase. YOC would then be calculated as you describe it.
    It would be simple enough to do on the spreadsheet by just increasing the total cost by whatever the cash equivalent of the dividend was.
    If I was a professional money manager running a total return portfolio for client's I would go this route.

    So why do I not do it for the Model Portfolio? I want to know how each of my own investment choices has done against each other. i.e. how much is my $250 that came out of my pocket getting me. To me that is my cost, what came out of my wallet. I will have high yield low growth dividends like utilities that pay a lot but do not raise their dividends by much if at all.
    I will also have low yield but high growth dividends where the company.

    NOTE: This is completely different then "cost" for tax purposes. For that I have to follow what the IRS wants without question. But that is all in my tax returns and different from how I monitor my performance.

    Hope that helps.

  4. Anon 8:09: Thats a great link and a bit clearer then I think I explained things above. However I might disagree slightly.
    When you receive a dividend it's your cash. You can go buy whatever you want. In the case of DRIP you are choosing to use your capital to buy more shares. Perhaps Yield on Initial Invested Capital would be a better term?

    Really it comes down to how does each person looking at their raw data want to interpret their results and performance. So I would not say that is "wrong". How he/she wants to play with their porfolio's numbers is up to them. The important question is "are they getting the information they need from their data?"

    Same thing happens with a company's quarterly earning report. Each company seems to have little caveats on how they define the results they are showing the public.

    A total return/capital gains investor calculates their cost and performance by how much they put in divided by the total value.
    What happens when they sell some but not all of their shares?
    For determining short term capital gains taxes vs long term capital gains taxes they would be using a "First in First out" method where they sell their oldest shares. Would they not have to recalculate their cost without their oldest shares and not an average? Or do they use the average for simplicity's sake?
    Looking at performance from multiple angles is not limited to income portfolios.