Dividend Investing: 6 - Payout Raito

I continue my investing series with another statistic that can give a lot of light onto the dividend policy of a company...

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.

There are a lot of different ways to look at the ideas behind what a payout ratio represents. It can be based on EPS, free cash flow, free cash flow before capital expenditures, before debt is calculated in, etc.
The key point is to figure out in some way...
1:  How much money the company generates.
2:  How much they keep to grow the company in the future
3:  How much money they have to pay as a dividend.



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.

"Storage Wars" is the Financial Markets

We can get interesting lessons of the markets from different types of media...

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.

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.

Week 18 Deposit

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.

One other problem with doing an account transfer... I have to send Sharebuilder an account statement from my current broker. Being as how ThinkorSwim merged in with TDAmeritrade I don't have a full month's of account statement yet and I don't want the hassle of explaining things to Sharebuilder. I'd have to wait till October to get a full account statement meaning it could be middle of December before I'd have my accounts straightened out.

The more I think about this transfer the more comfortable I am with where my money will be. I want to be on autopilot as much as I can so I can focus on other things that need my attention. That isn't always about making more money. I'm passionate about the markets but not as much as I am passionate about my friends and family. Things being easier for investing and trading frees up more time for other things in life.

Weekly Activity
$100 deposit into Investing


Model Portfolio Totals

Trading Account: $200
Max amount in Forex trade (20%): $40
Max loss per trade (2%): $4

Investing Account: $1278.59
Stock
REITs
     O: Scheduled to be sold 9-1-11
Bonds
     JNK: Scheduled to be sold 9-2-11
     PCY: Scheduled to be sold 8-29-11
Maneuvering Cash: $468.05 moving to Sharebuilder

Savings Account: $300
Emergency: $250
Portfolio Protection: $50
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

Dividend Investing: 5 - Dividend Growth Rate

You can have all the dividend raises in a row you can get but if they are too small they aren't worth it...

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.

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.

Week 17 Deposit

Last week sure had a lot of activity. I suppose a better term would be inactivity...

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.

Is it me or does the still frame of the video make it look like I have braces on?

After I posted the video to Youtube I went out to pull off a red bell pepper to take as part of my lunch to work. Proper tools are made for proper jobs. Instead of using a shear I thought I'd tear a pepper off. I ended up snapping a branch that had 5 small peppers growing on it. Seeing as how those sell for $1.50-$2 in the grocery store that was a $7.50 mistake right there. Lets consider it a capital gains that I had but the share price dropped before I could sell it.


Weekly Activity
$100 deposit into Investing
$1.16 dividend from O

Model Portfolio Totals

Trading Account: $200
Max amount in Forex trade (20%): $40
Max loss per trade (2%): $4

Investing Account: $1166.59
Stock
REITs
     O: 8 shares ($1.16 total dividends received)
Bonds
     JNK: 7 shares. ($3.52 total dividends received)
     PCY: 10 shares. ($2.48 total dividends received)
Maneuvering: $368.05

Savings Account: $300
Emergency: $250
Portfolio Protection: $50
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 advisor. 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

Portfolio Management: 6 - Risk

Most people focus on the profit and most of the financial industry, news, and advisers do too. They really have a way of talking about risk without actually talking about risk itself...

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.

In the video I mention that people do not think about risk. Oh they may say that they do. They know a company's debt limit and their competitors' and business model but that is risk to the company not to them.
They have analyzed the technicals of a commodity knowing the support and resistance and moving averages but that is risk to the future not to their portfolio.
How can I tell that they have not thought about their risk? Because when things are going well they talk about how great of an investor or trader they are. When things are going poorly they ask, "What do I do now?" or they sit there watching their trade plummet.
They defaulted into category #4 risk acceptance: whatever happens happens.

You should never ever NEVER be in a trade that goes against you and ask "What do I do now?" You ask and answer that before the trade is entered. If I don't have good answers to potential "What do I do now" scenarios I do not enter that trade.
That's the difference between a trade losing 3% of your account vs 30% of all your money.



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

Garden Project: August Update

The great ThinkorSwim Debacle of 2011 is getting worse. I'm still missing the $200 in the trading account but am told it is being transferred and fixed. The $266 in cash in the investing account was turned into a money market position. That is not showing anywhere but I do have a message of "Margin -$266". I sure hope they arent thinking I am needing a margin call and they will sell my stock positions. Total I am now missing $466. I'll refrain from commentary until I am a bit more... calm.

But at times like this I try to focus on other things so lets talk about my garden project and its quest to generate some cash flow in the form of saving me grocery money...

I started seedlings out in April but as I mentioned previously I didn't have any good direct sunlight. So in the second week of June I set them out in the sun hoping for them to grow. I was careful to keep them watered however we had a heavy wind storm which knocked them over, and out of their little pots. About half of the dirt was blown away and the shriveled pretty quickly. Which really I suppose is just as well, I used biodegradable Jiffy Pots strips which are nice but some of them started getting a bit of mold on them. Too much water, not enough water. Its like I can't win. I wasn't able to save any of them.


Packets of seeds: $16
Jiffy Pot strips: $4
Jiffy Potting soil: $7
Total for Seedlings: $27

I figured I would at least get something out of a garden this year in the form of experience if nothing else. I went down to Lowe's and picked up some pre-grown vegetables. Just enough to fill one of my raised gardens. I also learned my lesson from last year and bought some chunks of tree bark for mulch to block the sun from baking the ground.
1 each of Pumpkin, Cucumber, Strawberry, Green Bell Pepper, Red Bell Pepper, Squash: $30
1 Tomato: $10
2 bags of Mulch: $6.50
Total for Pre-Grown Plants: $46.50
Yeah that is going to set me back in the profitability column.

Now for the good news. Plants grow an unbelievable amount of vegetables and are flowering all over the place. It took them awhile to grow, presumably as they were growing solid root systems but now they are really spreading out nicely.
Bobby my Saint Bernard hopped up into the garden and kicked over the Green Bell Pepper plant. I was rather surprised that after I planted it back in (albeit at a 45 degree angle) it not only has survived but thrived and is preparing to give me half a dozen peppers.

The harvest so far is just two red tomatoes. However that one plant has 5 green ones and 20 flowers. The squash has 18 flowers and the rest of a dozen or so. I am not sure if I can break even on my costs this year as I only have 1 garden bed going and had to spend $46.50 more then I should have. At any rate though I will have a good amount and have until the end of September probably before the first overnight frost sets in.  And the taste of those tomatoes? Fabulous. I hadn't realized how artificial tasting the grocery store vegetables had become.

Total cost of the raised gardens: $154
Total cost of the seedlings: $27
Total cost of the pre-grown plants: $46.50
Total cost: $227.50
Yeah I don't think I will get 75 lbs of food this year. However next year I should only have $30-$40 in reoccurring costs.

Total profit: $1.50 from 2 tomatoes

Week 16 Deposit

4 months? Really. Wow...

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.

Weekly Activity
$100 deposit into Trading
$1.74 dividend from JNK


Model Portfolio Totals

Trading Account: $200
Max amount in Forex trade (20%): $40
Max loss per trade (2%): $4

Investing Account: $1056.00
Stock
REITs
     O: 8 shares
Bonds
     JNK: 7 shares. ($3.52 total dividends received)
     PCY: 10 shares. ($2.48 total dividends received)
Maneuvering: $266.89

Savings Account: $300
Emergency: $250
Portfolio Protection: $50
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 advisor. 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.

Broker Management

When looking at where your portfolio can fail and where we can shore up its weak points we shouldn't forget non financial concerns...

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 made this video Friday morning with my internet going down twice for hours at a time. It ended up being the cable modem supplied by my service provider broke. I won't blame this one on them, I have had it for about 4 years now and it has worked well. But that does not change the results or the future risks... my connection was down and I could not trade. I was down most of yesterday too (thusly the delay in posting this blog entry vs posting my video). My service provider said they might be able to get someone out in a couple days to take a look at it.

I went out and bought one for $70 which includes $10 from Best Buy's extended warranty. I know I know. Those things are usually a scam and the manufacturer has a warranty. Being an I.T. guy there is also some wounded pride involved but I do have a reason. If my modem goes out for whatever reason it directly impacts my trading, what if I am in the middle of one? I do not want to call the manufacturer and wait for them to send me a new one. I want to walk into Best Buy, grab one without question and be on my way to get back up and running.

Why bring up buying a new cable modem to you guys at all? Well there is a lesson here that I missed. When I first signed up they charged $5/month to lease a cable modem. This was years ago when cable modems cost quite a bit. Last year they raised the price to $7/month. $2 is no big deal and I didn't pay attention probably as much as I should have. The end result? I have paid easily over $350 in fees for a $60 piece of equipment.
$300 is the same size as my stock purchases for the model portfolio.
Money can be tight at times for anyone especially in these times. Finding the cash flow in our budgets may not be as hard as we think if we take a close look at our budgets.


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 advisor. 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.

Sometimes you don't have to wait for dividend growth

In a previous entry I mentioned that through patience and time, a dividend paying company's dividend can grow over the years and surpass bonds.
Sometimes you don't even have to wait...

O: 5.65%
KMB: 4.47%
ABT: 4.09%
JNJ: 3.79%
PG: 3.59%
30 year U.S. Treasury: 3.51%


WMT: 3.02%
KO: 2.94%
MCD: 2.9%
CL: 2.89%
10 year U.S. Treasury: 2.13%



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 advisor. 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

Further stock market jitters

Not too surprising seeing a market dive after the U.S. gets downgraded in credit rating...

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.

The main point I hopefully made in that rambling was that we cannot predict with 100% certainty what will happen. What we can do is control our risk and exposure and be prepared for when things settle down.  That will be my mine focus for the near future.


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 advisor. 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

Week 15 Deposit

We certainly are in interesting financial times...

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 made the video and posted it on youtube this morning before the markets were open. I am posting this blog entry after the markets have closed. I mention this because in the video I talk about the $100 going to trading. That hasn't changed. However after having two 5% drops in 3 days it tends to alter ones plans which I will share my thoughts on...

At the time of the transfer I was thinking that I might get a breather in the plummeting of the markets, I could build up a trading position and then if it started to fall again when focus returned to Italy and Spain I would be in a position to take advantage of that. Now though it appears that we might be back to a 2008 situation where we will be in free fall. We have already dropped around 16% total I could easily see another 16%. I would not be surprised in the least if we hit the 2008 lows.

However for trading? We have already gotten big moves. Volatility is high so that will make options more expensive. I have chased massive moves too many times and gotten in the bottom of them. It may move too far and too fast for a trade here. What then?

Then I look to invest. When everything has started to settle it will be a rare chance to buy cheap. I want to be in a position to buy more shares, not just trade their options.

So I am reserving the right to move the trading money over into investing. If this does turn out to be another 2008 where the general market fell by 50% I will be buying twice the shares for the same income stream. Remember these dividend companies didn't cut their dividends then I don't see them cutting them know especially with the record amount of money companies are hoarding.
For trading I am still testing and practicing. I can easily fund it later. The forex market will always be there for me to trade. However there won't always be large discounts on stocks.


Weekly Activity


$100 deposit into Trading


Model Portfolio Totals

Trading Account: $100
Max amount in trade (20%): $20
Max loss per trade (2%): $2

Investing Account: $1017.34
Stock
REITs
     O: 8 shares
Bonds
     JNK: 7 shares. ($1.78 total dividends received)
     PCY: 10 shares. ($2.48 total dividends received)
Maneuvering: $265.15

Savings Accout: $300
Emergency: $250
Portfolio Protection: $50
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 advisor. 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

The Stock Market "Crash"

After the horrendous day yesterday with stocks how can one possibly recover?

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.

So to me this "crash" is a whole lot of nothing but there is a self analyzing opportunity for us here to learn from.
What is your mindset? Did you or are you panicking and hitting the refresh button on your broker screen every few seconds? You probably have too much money at risk and you probably haven't been through these moves before. Not to say the later is bad, its a process that every new investor goes through that no book or video can teach. I go through it too.

Why I bring this up is you can tell when you are becoming an "expert" or a "professional" when you are able control your emotions or better yet, when they don't come up at all. This allows you to move more quickly to your mental checklist to go through for major events. This would include things like...
Does this change or impact my portfolio?
Does this change or impact my overall strategy?
Do I need to make any defensive changes?
Do I need to make any profit making changes?

Notice the first three I list are defensive? I always focus on that before going after profits.


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 advisor. 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

Portfolio Management: 5 - Trading

"Will there be dinosaurs in your dinosaur park?"
Jurassic Park

Will there be trading in your trading blog?
For a three part portfolio there hasn't been even talk about trading. Lets change that...

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 debated back and forth quite a bit actually on when to start talking about trading. Not that I do not want to share but do I 

A: Wait to have done my Forex demo trading before sharing and thusly skip by any mistakes? or

B: Share as I go along going through the newcomer to the forex market

I went with B because well... that's what this blog is about. I understand that I open myself up to public errors and mistakes but you know what?  That's what this entire blogging venture is about. Sharing my process with others. If I am showing my thought process and steps publicly that lead to losses and errors then that will have 

a bigger impact then me just saying "Don't do that".

Along this theme I will be creating a trading system from scratch. My stock option trading was mostly centered around fundamentals added with simple support and resistance. For Forex though I want to add in some more technical tools. I'll be testing and evaluating Stochastics, RSI, and MACD.

Evaluating? I prefer to dig into something and really learn and look at how something works. Its one thing to read in a book or watch a video saying "Do this with RSI" but to trust my portfolio's money with it? Thats something different.

Thinkorswim allows Forex trades in 10,000 sized lots. That's going to be around $300 needed in a trade with their leverage. If I want to keep it at 20% leverage of my overall account I will need $1,500 before I can think of trading. Probably more for me to be safe. To be honest some more with you guys... that isnt going to take place until next year.

Yep no trading until 2012. Now that does not mean nothing will happen for trading in the next 5-6 months. I have a lot of work to do demo trading before I am comfortable with whatever training system comes up for the Model Portfolio. More on that later.


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 advisor. 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

Week 14 Deposit and reverting back to my plan

It appears that the likelihood of default is at least lessened...

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.

One change of note is that I am not going to list the total dollar amounts for each category of investing. That is listed on the spreadsheet and I am just duplicating data. Plus when it comes down to it, since that is an income account dollar totals are only needed for weight balancing which is also listed as a percent on the spreadsheet.

EDIT: I incorrectly listed the total PCY dividends paid as $3. As a commentor noticed and mentioned, it was incorrect.

Weekly Activity
$100 deposit into Investing
$100 transfer from Trading into Investing that was planned for Phase 1 of Investing
$50 transfer from Trading back into Savings Portfolio Protection
$1.22 dividend from PCY


Model Portfolio Totals

Trading Account: $0

Investing Account: $1081.78
Stock
REITs
     O: 8 shares
Bonds
     JNK: 7 shares. ($1.78 total dividends received)
     PCY: 10 shares. ($2.48 total dividends received)
Maneuvering: $265.15

Savings Accout: $300
Emergency: $250
Portfolio Protection: $50
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 advisor. 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.

Possible US Debt limit plays

Disclaimer: NONE of the following is advice for anyone. Its merely an exercise in different choices and available options for current events and theorizing what ifs. I currently have no plans to initiate any of the following.

I'm getting hard wood floors put into my home this week. Everything is moved and out of place and life has been tossed into the air. My time to make videos has been limited but I did want to talk more on the U.S. debt limit as a few commentors requested updates as things develop.

So here we are Thursday 7-28-11. 3 work days before the U.S. debt limit is reached. Everyone seems to have an opinion and plan as to the future of the entire world economy if the limit is not raised. Is this the doomsday event that sends us all into the dark ages again? Is this just much ado about nothing?
As I mentioned I don't want to make predictions but I do want to have plans for what ifs.

If the limit is raised then the Model Portfolio will proceed as normal.
The $150 in the trading account would be re-allocated $50 back to Savings and the $100 to Investing as was planned to continue Phase 1. No harm no foul in the long run with the portfolio.

If the limit is not raised on August 2 what is the likely event that would happen? Well its not like all payments are due on August 3rd.  Bonds are paid monthly and some government organizations get budgets front funded so they have time to keep operating.  There would be few people not getting paid and the federal government would have a bit more time to make a deal.
The impact will be to the image of the stability of the U.S. ability to pay its debts.

U.S. Treasury bonds would more then likely take a hit as people sell to get away from bonds that might not get paid on. Where would they put their money?
There are 4 main categories where your average person has their money: Cash, Bonds, Stock, Precious Metals. There are a lot more but I am talking about generalities and massive amounts of money in overall markets.

Cash
If people sell bonds and just sit on cash there isn't much of a play open to me to take advantage of short term other then the Forex but I am not ready to place money into that. It will be interesting to keep an eye on the EUR/USD pair though as this all unfolds. Even in extraordinary times I do not want to take on the risk of my own inexperience and lack of knowledge. I could be right and do something wrong and lose money. That is a very real risk that many do not think about.

Bonds
The theory so far is people are leaving U.S. Bonds so we'd want some put options on those bonds. These put options would increase in value as whatever they are tied to drops in value. Lets use the TLT etf which covers 20 year US Treasuries. Options expire on the third Friday of the month. We could go with August options but would only have about 2 weeks before they expire. Before that time, their value drops pretty sharply because of this deadline limit. Would any move in the markets move that fast? The markets perhaps but the government no. I want to look at Sept options

TLT Sept 92 PUT @ $1.22
I know I haven't covered options yet and I said I would try not to bring up topics without talking about them but time is a bit short. I will cover options more in the future.
If I were to buy this option it would give me the right, but not obligation to sell (because its a PUT option) 100 shares (the number of shares in 1 option contract) of the TLT etf for $92 each to whomever sold me this option. The $1.22 price is per share in the contract so to buy 1 option it would cost my account $122, almost all the trading money. I'm not sure if I like that part.
Since I do not have 100 shares of TLT to sell I need to sell this option in the future but since this would be a trade that is fine.

TLT is nearly at $96 right now and hasn't been under $92 since April. In June we have some support around $93-$94 range so we have that fighting against this trade.
The "open interest" of an option is how many option contracts are out there. For this Sep 92 PUT, there are 2,300 contracts owned out there by others. With lower open interest there are less investors and less money involved which would make it harder for me to get out of the trade if I were to get in it. Perhaps there is something else that I can get into with more liquidity. I ALWAYS want to be able to get out of a trade when I want to. Believe me, its rough being in a trade trying to get out and nobody is taking the other side.

TBT Sep 34 CALL @ $0.9
TBT Sep 35 CALL @ $0.84
TBT is a x2 ultra short version of TLT. These means that it will move in the opposite direction that long term US treasuries move. I could buy a CALL option which increases in value to whatever its tied to.
In this case people sell bonds, TLT drops in value, TBT increase in value by double that amount, a call option of TBT would also increase in value.
Its a bit cheaper and wouldn't take all my trading money. The open interest is 15,000 for the 34 and 34,000 for the 35 option. That's a better open interest level but bonds usually don't move far very fast and I have a time limit here.

Precious Metals
There is another play available to me. If people sell bonds where would they place their money? Precious metals is a good play when fear is high. Not many things are more fearful then the U.S. collapsing. Note I do not think the U.S. is going to collapse but the markets could think so temporarily.

I do not want to buy actual gold for a trade because it would take weeks for delivery. Then when I sell I have to find someone that wants to take a pile of metal from me. So I will need to stick with ETFs here.
GLD is a gold etf but its options are going to be way too expensive for the amount of money I have currently available. I could buy options that are really far away from the current price of GLD but the further you go out the less likely you have of the share price getting to your point.

Silver is a good alternative...
SLV Aug 40 CALL @ $1.26
SLV Sep 42 CALL @ $1.33
The interest here is only 2,500 for the Sep option. Aug has 37,000 but that is getting close to expiration. Everything else is getting pricey.

ZSL Sep 12 PUT @ $0.9
ZSL is a x3 short of silver. Remember how I mentioned in my video that I don't want a lot of complex moving parts to a trade? For this trade to work people sell US treasury bonds, then put their money into silver, silver rises in price so ZSL drops by x3 that amount, since this is a put option the option increases in value.
If you are confused don't worry, this is just a ridiculous trade. The fact there are only 200 options in open interest should tell us that the rest of the world thinks this is a bit silly too

Stock
What about the stock market? The S&P500 has tried 3 times recently to break above 1350 how much more effort can it have left? The US government fears could easily push it on down. It seems the stock market freaks out over anything.


SDS Sep 22 CALL @ $0.86
SDS is a x2 short of the S&P500. I like that price and Sept gives us an extra month to see what develops. $22 was the price back in June and appears to be the resistance level. Open interest is over 11,000 so lots of liquidity there. This also helps hedge my O investment if that were to fall in price with stocks in general.

The SDS play probably is what I would consider. In all honesty though guys I see maybe a 10% chance of me actually doing this. Something major would have to happen like all negotiations stop or they keep trying to work on multiple plans on Monday Aug 1st. They could make an agreement at 11:59 pm Monday when markets are closed. I would be stuck in a trade I made on Monday. That is some very big risk to consider.

I am perfectly happy sitting back. At this early stage of the Model Portfolio I want to build up the account through deposits and my rules state my account must grow each month.
A month ago I wouldn't have even seriously considered these trades but the government seems to be messing around on this topic. If nothing else we can look back on this entry and see what happened with the option values. The research and experience gained from this exercise in theory could be more valuable then any actual dollar gains.


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 advisor. 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

Week 13 Deposit and being prepared

As I started my blog and model portfolio I laid out how and where I would make my weekly deposits. Current events necessitated me to change those plans...

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.

In the video I mention wanting to keep things simple and avoid lots of moving parts. I want to expand on that a bit.
On one hand it seems simple: if Congress doesn't raise the limit people will sell bonds. If they raise it everything is fine. But is it really that simple and is that even accurate? A lot of people are saying this.  The "moving parts" of this theory is in the details.
1: The Democrats, Republicans, House, Senate, President of the United States, "Gang of Six" all have their own ideas. That's potentially 6 different ways this could play out let alone what form any compromises will take. Even if they get a compromise in place before August 2nd...
2: How will the world react? The credit agencies have stated that they might lower U.S. credit rating even with the debt ceiling being raised. So whatever compromise that might or might not take place may not even be enough...
3: After a deal is or is not made and after the credit agencies react how will foreign countries act? Will China dump their bonds or will they stand firm? Japan has a lot too can they afford to lose the interest income with all their own economic problems? These and other countries have enough bonds that their actions could move the markets.

See what I mean about moving parts? For me, there are way to many "what ifs" and unanswered questions. We do not know what will or will not be done nor at what time this might occur let alone be able to guess the chain of events that will come later.

The thing is there will always be a crisis to worry about that an investor could be locked in permanent inactivity. They could also get stuck into a mentality of jumping in with money to beat the crowd and get rich.
I'll just sit back and watch for a bit. There will always be another trade tomorrow but if I am not careful I may not have a portfolio left for that tomorrow.


Weekly Activity
$100 deposit into Trading
$50 transfer from Savings to Trading
Purchase 8 shares of O @ $34.12

Model Portfolio Totals

Trading Account: $150

Investing Account: $895.03
Stock: $0
REITs: $276.32
     O: 8 shares
Bonds: $554.78
     JNK: 7 shares. ($1.78 total dividends)
     PCY: 10 shares. ($1.26 total dividends)
Maneuvering: $63.93

Savings Account: $250
Emergency: $250
Portfolio Protection: $0
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 advisor. 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

Investment: O - Realty Income Corp

Had a busy weekend manning a booth at a local festival for Heifer.org and spending time with family I didnt do my blog entry for the video...

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've been invested with O for several years now and want to share some insight on that. The years where there was no growth in the dividend was rough to get through. Other companies were growing while O's dividend was lagging. Ok technically it grew but when it goes from $0.1445625 a month to $0.144875 its not really a raise its a gimmick to keep their streak.

Normally that is a concern for me but in O's case in handling the debt its understandable and it was reasons for protecting the investor (paying off debt before a credit liquidity crisis) and not something stupid like management messed up. My patience and faith is starting to be rewarded.

That is something that every investor will need to do. When do you bail out of a stock and sell and under what conditions. If we sell on every mistake made we wouldn't have any companies left.


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 advisor. 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.

Blog format update

Just some quick notes as I have some sharp eyed readers...

In my other portfolios I have rather complex and... well odd Excel spreadsheets. I haven't found a good way to share Excel on Blogger so I am having to use Google Spreadsheets. I suppose I could screenshot Excel and then post that but that is a bit more work then needs to be.
And really its probably for the best. My Excel spreadsheets were easy to follow only because I was the one to make it. Looking at it from anyone else's perspective I had to ask myself.... "What the @$#% is all this?"

So I am converting everything over to Google Spreadsheets but not all of the bookkeeping numbers are yet needed for the Model Portfolio. As they come up I will need to re-edit and alter the formatting of my existing formats. Note these will only be in the spreadsheets themselves not in the overall blog format.

For the Investing account I added a dividend tab. I wanted it to be in the same format as the main account summary page but Google Spreadsheets has a problem I didn't find out until yesterday. It does not handle a large amount of columns nearly as well as Excel. Eventually in a couple years I will have too many month columns and it will bog down and potentially crash. I figured I would save time and just start off with it having the rows as months.

Why bother tracking dividends on a monthly basis? Couldn't I just save time and columns some other way? As this is an income portfolio I need a "raw data" page where all the other calculations can take place. This will also make it easier to compare my numbers with my monthly broker statements so I can avoid as many mistakes as I can that I referenced in a previous post. As the goal of the Model Portfolio is to generate monthly income to live off of, keeping track of income on a monthly basis will show all sorts of things that a running total would not.

Lastly, I added a dividend calendar spreadsheet.  The first tab is the estimated ex-dividend dates to show me when I can no longer make an investment for a particular dividend. The second tab is the estimated payment date when I can expect to get the dividends into my accounts. Note these are estimated dates. Companies can and will fluctuate them.

I like to keep an eye on what companies have up and coming dividends to help me decide where to add to positions.  Let me tell you, there are few things more frustrating in dividend investing then buying a 20% yield stock on the ex-div date because you thought you had some more time. Now I can see what is coming up in the next week or two and research exact dates.
And if nothing else.... I am a man who likes numbers and graphs lol.


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 advisor. 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

Type of Investments: 3 - REITs

REITs, Real estate investment trusts, act in many ways as a standard company however the few key differences can be important...

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.

REITs can bring in stability to a portfolio as far as income. The leases that are signed can last several years or 10+. These leases will spell out how much is owed and if the rate adjusts during the leases life. Unless a tenant walks out on a REIT, the REIT will have a known quantity on its income.

Most REITs will specialize in one sector. A retirement community REIT will have the vast majority of its real estate in buildings to cater to the needs of the elderly with perhaps some overlap in assisted leaving or medical office buildings. The main theme here would be health care.



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 advisor. 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.