Whiting USA Trust 2 (WHZ)

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.

Hopefully this clarifies more on why I invested in Whiting USA Trust 2.

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 70 Update

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.

Believe it or not, the crazy day trader thumbnail was my best option that Youtube was offering.


Model Portfolio Totals

Trading Account: $1,825.78
Estimated Monthly Income: $0
Max loss per trade (1% of account): $17.25
Portfolio stop (3% account): $51.75

Investing Account: $4,253.25
Estimated Monthly Income: $11.06 ($0.385 from DRIP)
Stock
     ABT: $0.77 ($0.012 from DRIP)
     AFL: $0.63 ($0.005 from DRIP)
     STX: $1.07
     WMT: $0.59 ($0.011 from DRIP)
Energy
     COP: $0.78 ($0.016 from DRIP)
     ERF: $0.91 ($0.068 from DRIP)
     PSX: $0.12
REITs
     O: $1.11 ($0.047 from DRIP)
BDCs
     TCAP: $2.19 ($0.049 from DRIP)
Bonds
     JNK: $1.72 ($0.121 from DRIP)
     PCY: $1.17 ($0.055 from DRIP)
Maneuvering Cash: $1,401.26

Savings Account: $1,975.20
Emergency Fund: $1,000
General/Car Fund: $625.20
Portfolio Protection
     Trading Account: $100
     Investing Account: $250



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 69 update

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 Savings
$2.29 dividend from ABT
$1.11 dividend from O
+3.4% dividend raise from O


Model Portfolio Totals

Trading Account: $1,825.78
Estimated Monthly Income: $0
Max loss per trade (1% of account): $17.25
Portfolio stop (3% account): $51.75

Investing Account: $4,181.78
Estimated Monthly Income: $11.06 ($0.381 from DRIP)
Stock
     ABT: $0.77 ($0.012 from DRIP)
     AFL: $0.63 ($0.005 from DRIP)
     STX: $1.07
     WMT: $0.59 ($0.011 from DRIP)
Energy
     COP: $0.78 ($0.016 from DRIP)
     ERF: $0.90 ($0.064 from DRIP)
     PSX: $0.12
REITs
     O: $1.11 ($0.047 from DRIP)
BDCs
     TCAP: $2.19 ($0.049 from DRIP)
Bonds
     JNK: $1.72 ($0.121 from DRIP)
     PCY: $1.17 ($0.055 from DRIP)
Maneuvering Cash: $1,300.82

Savings Account: $1,975.20
Emergency Fund: $1,000
General/Car Fund: $625.20
Portfolio Protection
     Trading Account: $100
     Investing Account: $250



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.

Networking and Financial contacts

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.

This is an overlooked aspect of retail investing and trading. People enjoy sitting back and watching videos or skimming through a blog especially watching a progression blog like mine where you follow along the progress being made. I enjoy them too. However in watching what someone is doing its easy to miss out on why.

Shadowing is another problem. A big one that deserves another mention today. Way too many people buy what someone else bought blindly and Warren Buffett is the most shadowed. He started self made and grew into the biggest and best investor of our time so why not do what he does you are starting off too right? That's what he used to do but what is he doing now? He bought company X so I will too. But he bought 2-3 months ago and he bought preferred shares of stock yielding 7% that he negotiated a special price directly from the company. You just bought the common stock off the open market at maybe 50% higher price then his equivalent. In the end you aren't even buying the same thing that he is.

Recently I have been reading The Reformed Broker. I find Josh to be funny, entertaining, and insightful. Yes he has a book to sell that he brings up, who wouldn't on their blog. He does offer some ideas on process.

Passive observation is useful but active communication is even better.

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 68 update

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
$1.60 dividend from JNK


Model Portfolio Totals

Trading Account: $1,825.78
Estimated Monthly Income: $0
Max loss per trade (1% of account): $17.25
Portfolio stop (3% account): $51.75

Investing Account: $4,139.6
Estimated Monthly Income: $11.05 ($0.371 from DRIP)
Stock
     ABT: $0.76 ($0.006 from DRIP)
     AFL: $0.63 ($0.005 from DRIP)
     STX: $1.07
     WMT: $0.59 ($0.011 from DRIP)
Energy
     COP: $0.78 ($0.016 from DRIP)
     ERF: $0.90 ($0.064 from DRIP)
     PSX: $0.12
REITs
     O: $1.11 ($0.043 from DRIP)
BDCs
     TCAP: $2.19 ($0.049 from DRIP)
Bonds
     JNK: $1.72 ($0.121 from DRIP)
     PCY: $1.17 ($0.055 from DRIP)
Maneuvering Cash: $1,300.82

Savings Account: $1,875.20
Emergency Fund: $1,000
General/Car Fund: $525.20
Portfolio Protection
     Trading Account: $100
     Investing Account: $250

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.

Skeleton Model Forex

My forex experiment for August is....

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 big advantage is that its easy and simple. Not a lot of time is spent on over analyzing a currency pair, let alone a dozen, looking for a good trade.... guilty as charged on that count.

Is it me or is my voice in the video have a lot of echo in it more then usual?

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.

What is Cost Basis for Investing?

Last week I was in an interesting discussion about cost basis for dividend investors. How does one calculate cost basis?  You might as well ask what the best ice cream flavor is as it comes down to personal preference.
Now to be clear before I continue... the IRS has a very specific way of calculating cost basis for tax purposes. The following is not about that as you have to follow their definition. This is purely about how do you want to think about your money. How do you define your success...

Quite a bit of theory and math coming up or jump to the bolded section for the short version...

First let's look at a purchase of stock and the total dollar amount generated without terms of cost basis and % returns.
1.0: Buy $10 stock that pays no dividend. Price rises to $20. Total amount: $20
2.0: Buy $10 stock that pays $1 dividend and keep it as cash. Price rises to $20. Total amount: $21
3.0: Buy $10 stock that pays $1 dividend and DRIP an extra 0.1 shares at the same price. 1.1 shares rise to $20 share price. Total amount: $22
Assuming the stock price moved as described then #3 seems to be the clear best choice as it generates the most money. How is it then measured as far as profit and % gain?

If you bought a $10 stock and then one day later you were paid a special $10 dividend the stock would essentially be free to you. You have all your money original money back. The share price could drop to $0 and you wouldn't have lost anything. From this point of view we would actually want to reduce our cost basis by the dividend paid out. Using the same examples as above...
1.1: $10 original purchase goes to $20: 100% return
2.1: $10 original purchase, $1 dividend drops your original at risk money to $9 then goes to $20 for $11 profit: 122% return
3.1: $10 original purchase, $1 dividend drops your original at risk money to $9, you DRIP 0.1 shares, your 1.1 shares rise to $20 for $22 total position and $13 profit: 144% return
This makes sense because that $1 dividend is in your pocket and independent of share price fluctuations so it could be taken out of the equation.

We can look at DRIP shares in another way. That they are a new purchase of stock. That you have the $1 dividend in your pocket and decide to make a new purchase placing more of your money at risk.
1.2: No change: 100% return
2.2: No change: 122% return
3.2: $10 original purchase, $1 dividend drops your original at risk money to $9, you DRIP 0.1 shares raising your at risk money back to $10, your 1.1 shares rise to $20 for $22 total position and $12 profit: 120% return.
From this are we to say that starting with $10 and ending with $21 is more profitable than starting with $10 and ending with $22 because that is what the % profit tells us.
If you feel dizzy or confused here don't worry because...

Stock brokers calculate profit and cost basis differently too
Sharebuilder calculates cost basis that a dividend does not reduce cost basis and DRIP shares increases it.
Fidelity calculates cost basis that a dividend reduces your cost basis and DRIP does not increase it.
I have active accounts with both and turn DRIP on and off at different times for different stock. Its amazing how much more profitable I feel with Fidelity.

% returns and measure of gains are nothing more then a "feel good stat" most often used to figure out who the better investor is between different strategies and different positions. There is utility with how you set your own cost basis and use it to measure yourself to yourself. Was investment choice A better then your investment choice B. I feel it is important to measure yourself to find areas to improve upon so we do need some sort of cost basis to % return metric.

For the Model Portfolio I am using my original purchase as the cost basis. How much of my original money out of my pocket am I risking.
Dividends taken as cash I will use to reduce my cost basis.  This money is out of the market and will not be impacted by share price changes. It is the same as if I never had that money in the market in the first place.
Dividend taken as DRIP I will reduce my cost basis as I took it in cash then put my money from my own pocket back into the market at risk to price fluctuations. Essentially make DRIP investments an even wash.


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 67 update

No video for this week's investing and forex trading update as I am still having computer problems from the lightning strike. Parts are ordered and should be delivered this week. $150 for overnight shipping or $10 for 3 day.... I think the update is ok with no video for $140.

The deposit this week is going to the investing account. This will finish replacing the funds that were used for the STX purchase. I'll be wanting high amounts of cash until things settle down in the world. Europe is still an issue. I have concerns with China being a 1 party system and finding reliable information with them.

Everyone seems to love China. Its the growth place to be and if you aren't invested in China then you aren't a real investor! The problem with investing in China is its hard to find reliable information. So Chinese companies release poor results and stocks go down. The logical action of course is to block some of that information from the public! Its that mentality that keeps me away from China directly. But I do have some Chinese exposure through my large international dividend companies. I'll let them do the work, research, and growth planning. Then I'll get the reward when their stock goes up. Seems like a pretty good deal to me.

Though I am not invested in China I cannot ignore them. They are the second largest economy and what happens there moves the markets. I don't think they have the growth that they say they do. If they are declining in a recession or even having slowed growth the world cannot turn to them for growth and help if Europe worsens.

Cash and Patience are my two best assets right now to see how everything unfolds. It may seem like I have been saying this forever. It could go on for several more months or years before things get sorted out. There will be a point in time though that I am willing to take on more risk. At that point I'll need all the cash I can get my hands on and thusly why I keep a high cash reserve.

For trading last week I did not place any trades. My computer problems started up Monday night and was a distraction. Insurance companies sure love to take my premium. "Oh you need a claim? Well ummm see you live with your girlfriend's house and since you aren't married then you're more like a renter so your items fall under renters insurance sorry." On top of that we had the Fed on Wednesday, Europe announcements on Thursday, and unemployment on Friday. It was the beginning of the month which is always a busy time for reports and news that can shift the forex markets. I have a backup laptop I keep on the shelf and not plugged in for this very reason of a smoked primary computer. If I was living off my portfolios I couldn't wait a week or more to put trading and investing on hold, it would be my livelihood. I'm eager to get to trading...



Weekly Activity
$100 deposit into Investing
$1.15 dividend from PCY
End of month account interest
28% dividend raise from STX


Model Portfolio Totals

Trading Account: $1,725.78
Estimated Monthly Income: $0
Max loss per trade (1% of account): $17.25
Portfolio stop (3% account): $51.75

Investing Account: $3,986.81
Estimated Monthly Income: $11.04 ($0.361 from DRIP)
Stock
     ABT: $0.76 ($0.006 from DRIP)
     AFL: $0.63 ($0.005 from DRIP)
     STX: $1.07
     WMT: $0.59 ($0.011 from DRIP)
Energy
     COP: $0.78 ($0.016 from DRIP)
     ERF: $0.90 ($0.064 from DRIP)
     PSX: $0.12
REITs
     O: $1.11 ($0.043 from DRIP)
BDCs
     TCAP: $2.19 ($0.049 from DRIP)
Bonds
     JNK: $1.71 ($0.112 from DRIP)
     PCY: $1.17 ($0.055 from DRIP)
Maneuvering Cash: $1,300.82

Savings Account: $1,875.20
Emergency Fund: $1,000
General/Car Fund: $525.20
Portfolio Protection
     Trading Account: $100
     Investing Account: $250


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.

"You've been thunderstruck!"

A great example of risk control and planning from real life that carries over to investing and trading...

There was quite a powerful thunderstorm on Monday night and my house was hit by lightning. Quite an interesting expereince to smell ozone in the air. My girlfriend was by a window and saw sparks raining down from the gutter. Nobody was hurt but we did suffer two computer casualties. Parts are on order to build new ones but no video updates for a bit I'm afraid.

I want to stress the importance of backing up your data, frequently and externally. We both have external hard drives that we leave unplugged when not actively used and on a shelf. I've seen too many people use it as an active second drive and leave it plugged in. For those that do not know... USB connections carry electricity and many devices are powered through the USB cable. Its a perfect candidate to get zapped along with your computer and defeat the purpose of backing up your data.

How does backing up your data relate to investing and trading? We have to be sure that whatever steps we take to control risk in the markets will actually control risk and not be misused. JP Morgan used their hedging department not for risk control but to make a profit and it blew up in their face. Stop losses for trading do not get moved back to keep you in a trade just a little bit longer. It defeats the purpose of it.

When bad events come up if its a lightning bolt or a crash in the markets and we have a plan and tools in place to protect us then it removes fear and worry. Are you ready for a 50% crash in the stock market? Who knows when it will happen but in the next 30 years I bet we will get at least one.


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.