Tuesday, August 16, 2011

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

Monday, August 15, 2011

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.

Sunday, August 14, 2011

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.

Wednesday, August 10, 2011

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

Tuesday, August 9, 2011

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

Monday, August 8, 2011

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

Friday, August 5, 2011

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

Wednesday, August 3, 2011

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

Monday, August 1, 2011

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.

Thursday, July 28, 2011

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

Tuesday, July 26, 2011

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

Monday, July 25, 2011

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.

Thursday, July 21, 2011

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

Wednesday, July 20, 2011

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.

Monday, July 18, 2011

Week 12 Deposit and Politics

Its important to keep up with politics and current events without becoming sucked into personal bias.

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.

Well I see that youtube chose another great image for the thumbnail. Why do I never see other youtubers with this problem?

A little edit. With all the math and numbers that fly around with a portfolio mistakes will happen there isn't a way to get around that. Novels have multiple drafts and multiple editing passes to try to catch the mistakes. For financial books there are entire teams and departments to check and recheck things.

For me, I had the wrong dividend typed in here for PCY though my spreadsheet was correct. Just a good example to recheck your numbers each time between what you have vs what your broker has.

Its also a good way to make sure your broker is correct because not all of your bookkeeping errors will be with you. PCY always pays on the last business day of the month. That was Thursday June 30th. I checked that day but there was no payment. I waited until the morning of Friday July 1st and still nothing. I contacted their help desk chat and they cleared it up.

The deposit goes through their clearing company, Penson. Then it gets passed on to me. So in a few more  hours (about 9:00 am eastern) it will show up. It did but being in July I looked at the July time period of activity. I received the dividend because my cash was higher but it didn't list it in the activity section. I just magically got more money. I checked June's statement and they show that I received the dividend at 11:00pm.
It may just be me but if I don't have the money in my account until July, don't show record of it until July, and do not have access to said money until July; then I did not receive it in June. Its not a big deal its only one day, but the point here is that we have to adjust our expectations to match how our broker does things.

If I hadn't found both of these bookkeeping errors it would not have impacted my actual account dollar totals. However the longer it takes to find the harder it gets to actually find it. Months down the road where there have been lots of payments it could make it hard to spot.

I'm going to go back and edit past entries to make it match but I wanted to make mention of it. I'm not trying to hide anything or trick anyone here. Things like this will happen with just about everyone and its something that needs to be accepted and dealt with. If anyone is expecting this to be flawless then you will be disappointed.


Weekly Activity
$100 deposit into Investing
$1.78 dividend from JNK

Model Portfolio Totals


Trading Account: $0

Investing Account: $893.56
Stock: $0
REITs: $0
Bonds: $551.67
     JNK: 7 shares. ($1.78 total dividends)
     PCY: 10 shares. ($1.26 total dividends)
Maneuvering: $341.89

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

Sunday, July 17, 2011

Dividend Investing: 4 - Consecutive Years of Dividend Raises

I continue my series on dividend investing by looking at something I have talked a lot about in other videos, the consecutive years of dividend raises...

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 want to expand and clear up something I mentioned in the video. That was how a dividend company vs a non dividend company grows and expands their business.
Now I am not saying that non dividend companies expand recklessly. But when they choose to grow they are not restricted by having to increase the dividend the next year. So their moves can be longer term or if their expansion is not as profitable as they thought then no big deal, they will work it out later.

The dividend paying company though has to be sure it will start generating income to pay for the higher dividend. It could take a few years before any growth will see increased income from any one expansion of buying another company or building a new factory. This forces the company to plan out more so they have several projects in the pipe. They also have to really be sure that they are on target because if there are delays then they will not have enough growth to increase the dividend and investors could become concerned or start to sell.


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.

Thursday, July 14, 2011

Expected Returns in the Financial Markets

Making money is the goal when you are in the financial markets for whatever you are needing it for. How much can you make is the question...

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 didn't give a direct answer to the question. I really prefer to play devil's advocate and throw out varying ideas and viewpoints for each person to make up their mind. And in all honesty as I mentioned in the video, its going to vary by a lot between each person.

On one hand that may seem obvious but the person just starting out really needs to dwell on it for a bit. The 80%-90% of the people that fail are probably not going to have many veterans that have been trading for a lot of years. The beginning time for anyone in any trade skill, including trading, should be focused on education and getting experience. The money will come as an afterthought.



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.

Monday, July 11, 2011

Week 11 Deposit

This week in addition to the deposit I have some updates on brokers and various websites I have been testing.

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 Investing

Model Portfolio Totals
Trading Account: $0

Investing Account: $794.36
Stock: $0
REITs: $0
Bonds: $554.25
     JNK: 7 shares.
     PCY: 10 shares. ($1.26 total dividends)
Manuevering: $240.11

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.

Earning Season

Its that time of quarter again when the new investor looks at stock options and starts seeing big (potential) profit in the Earning Season jumps in prices...

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 wish that  the Microsoft (MSFT) option trade that made me x7 my money had not been one of my first trades. Since it was it gave me a false sense of what the markets would be like. I even told myself "Oh this is easy!" It spurned me on to keep trying to duplicate it again and again.

Something I didnt go into detail about in the video but that makes a big impact to trading are the previous quarters estimates of this quarter. Companies will guess at how much they will make. Investors will then try to jump on that and beat other investors to the punch and the stock price will balance out to what that future news is going to be. This is called having the news "priced in".
Not only that but analyst "experts" will make their educated, and sometimes not so educated, guesses. If a company beats these guesses the stock will generally move up because it beat earnings. If they miss earnings then it will usually drop.

This really confused me when I started out. A company would grow their profit by 10% and the stock drops by 5%. How? Because everyone guessed they would grow by 15% so somehow this is a big terrible thing. The trader can get burned and its one more thing they have to research around earning season time.

To me the power of analysts is frustrating. Someone from Goldman Sachs or Citibank makes an announcement downgrading a company on fear of risk of potential difficulties, nothing even substantial, and a stock drops 5%-10%.


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.

Wednesday, July 6, 2011

Dividend Investing: 3 - Yield and Yield on Cost

Yield and Yield on Cost are pretty similar in how they are calculated but the one difference is a big one...

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 ended with saying that I don't want to pay someone $20 to get $0.66 a year back which is what happened with AOD. That's a 3.3% yield on cost but isnt that what I am doing now if I were to buy a JNJ or KO?

I am not buying today's dividend dollar payout I am buying the 15 year in the future one.
I want to stress this point because its THE #1 cornerstone of dividend investing. Its something I will be repeating over and over and over again probably to the point of beating it to death. I see too many investors missing this point that they don't even consider dividend investing. If it doesnt fit for a person's strategy that is perfectly fine but at least understand it enough to be able to make that decision.

Let's break down the math of my Coca-Cola comment in the video.
KO in June 1989 was around $4.80 with a $0.0375 quarterly payment (adjusted for splits). That's a 3.1% yield.
Today it goes for $68.48 and has a $0.47 quarterly payment, $1.88 a year. That's a 2.7% yield. A person only thinking about yield would probably have skipped it. Maybe even returned to KO and thought its still not paying much.
Yield on cost? That $4.80 spent is making $1.88 a year.... 39% yield on cost. Don't even get me started on if they had reinvested the dividends all those years.

So when I say I do not want to give someone $20 to get $0.66 back a year what I really mean is I want to give someone $20 and get $7.52 back a year (having bought 4 shares of KO).

Whose to say what will become of funds like AOD 20 years from now. All I know is that has cut its payment twice while KO and other companies have raised their payment. When I am jobless I don't want the worry of having to rebalance my bills after having took a paycut.


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

Monday, July 4, 2011

Week 10 Deposit and the first dividend

We hit some nice milestones with the model portfolio...

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.



On the weekly deposit and review entries I'll also be changing the format as time goes on and new activity starts to talk about. Since I have the investing tab at the top I didn't see a need really to list out each investment's dollar value.

This changing of data shows a bonus of sharing a blog with others. It makes me keep in mind that I am talking about this with others so I need to show whats important. It also makes me keep in mind to pass on the less important stuff. Otherwise this would turn into a daily blog and you guys would get drowned out with too much info.

Just like investing is a marathon, I am finding out blogging is too. Since this portfolio will take years to complete there is no need for me to stampede out a herd of videos and entries at full speed. I can see how people go too fast and get burned out and quit a blog. Then that leaves everyone hanging.
I still want to be here and share with you all the "I hit my goal and quit my job!" video.


Weekly Activity
$100 deposit into Investing
$1.26 PCY dividend received

Model Portfolio Totals

Trading Account: $0

Investing Account: $693.87
Stock: $0
REITs: $0
Bonds: $553.76
     JNK: 7 shares.
     PCY: 10 shares. ($1.26 total dividends)
Manuevering: $140.11

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.

Saturday, July 2, 2011

Investment Purchase: JNK

I made my second investment for the model portfolio this week...

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 blog entry is coming up a bit later then the video was published. It was a rather crazy week in redoing videos and learning how to edit. Plus I wanted to space out the blog entries and not do multiple ones a day.

At any rate, JNK. It has a nice high yield for a bond fund so why not put all my money there? Why waste my time with PCY that has a noticeably lower yield? Financial instruments have a high yield for a purpose. JNK trades 3.8 million shares a day so this isnt some hush hush secret investment that people don't know about. This yield is the yield because thats what the market has determined will pay enough for the risk. Or that the share price is high enough to risk because the higher that goes the more money per share is risked. If the market didn't think the yield was too high or the share price too high then it would be pushed up, plain and simple.

Here are the links to the funds discussed in this entry
JNK: Spdrs
HYG: iShares
PHB: Powershares


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.

Friday, July 1, 2011

Dividend Investing: 2 - Research

Starting out with investing has enough obstacles for the new investor that finding information to start the research process shouldn't be one of them...

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 was hoping to get this entry and video out on Wednesday but all that editing derailed that plan.
The duration in how long of a video it captures leaves something to be desired. At about the 8-10 minute mark it creates a file too big to handle and doesn't save. The screen capturing part of the video alone took me about an hour of redoing it trying to figure things out. The editing? Yeah for some reason 1 minute of screen capturing resulted in 100MB of file size!

In the end though I am really pleased how it turned out. The clarity turned out nice and when reformatting the data it compiles down to a very reasonable size. It's definitely something I have been meaning to do so I can share what I am looking at with you guys. Learning video editing isn't unlile learning investing and trading. You just have to roll up your sleeves and jump in to reading, learning, and testing.

As to the research process itself, I use all of these tools. Each shows different aspects of a company with some overlap but some uniqueness. The important thing is to get a real deep understanding of the company we might be investing in. This way there will be less chances of an "Oopps I didn't think of that before losing 50% of my money" moments.


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.

Monday, June 27, 2011

Week 9 Deposit and Rule #5 comes up for the first time

I haven't talked much about the rules of my portfolio apart from rule #3 which is the weekly deposit. That changes this week...

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.

As the portfolio grows there will be more options open to the portfolio. As that happens I will need to keep an eye on the Rules to the Model Portfolio.


Weekly Activity
$100 deposit into Investing

Model Portfolio Totals

Trading Account: $0

Investing Account: $593.40
Stock: $0
REITs: $0
Bonds: $269.90
     PCY: $269.90
Manuevering: $323.5

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.

Dividend Investing Weaknesses

I want to talk to you guys about some of the risks and drawbacks to dividend investing...


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.

As I mention in the video, I really hate when people only tell you what they want you to hear about a topic. Especially when its linked with selling a book, video, or newsletter subscription. I'm all for people wanting to sell a product or that believe their information is worth charging a price. Everyone needs to make a living. But at that point selling a product is or is in danger of becoming the primary motivator for what the person does or doesn't say.

So while I am an avid fan of dividend investing, I have to keep in mind that everyone watching and reading what I have to say is where I was many years ago. Forming their own ideas about how to build their own portfolio.

On the other hand I presume you arent watching and reading me because you want a textbook like experience. Presumably you want a living working exchange in watching the decisions a person makes and what the think about. So here are some ways to mitigate the risks.

Dividend cuts and eliminations: Keep an eye on what the company is doing. Are they saving money, growing the company, buying others? The dividend will be safer. If they are firing top management, involved in product recalls and lawsuits, and have a lot of debt then that increases the odds that a dividend will be cut.

Too much tempting capital gains: This one will have to come with experience in the markets. And to be honest? Its not a bad position to be in all in all. Sell a 100% gain position or keep a great yield on cost. I certainly am not complaining of having had to make the choice so don't get me wrong. But its something that will be encountered from time to time.


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.

Wednesday, June 22, 2011

Overview of the strengths of Dividend Investing

As I have mentioned before, dividend investing takes a different mindset to use as a core pillar of a strategy. At first glance it appears to have weaknesses. To find its strengths you have to yank out the calculator...



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 threw out a lot of numbers in the video so I want to expand upon it more here.
For my March 2002 purchase I took the close price just before that dividends ex-dividend date. For each compounding of the DRIP I took the close price of the payout date.

How does the stock-split math work with the $14.47 price I mentioned?
February 1995: The actual share price back then was $57.88. However JNJ split the stock 2:1. Meaning you know own 2 shares for every 1 share pre-split. They did that twice, once in 1996 and then again in 2001. When a company splits like this where they double the number of shares the price per share is halved. This is to keep the actual total wealth per investor the same. That $57.88 for 1 share turned into $28.94 for 2 shares. If the price didn't get halved it would double the value of the company automatically. Share price is a measure of the value of the company. JNJ didn't double their sales or double their factories.

Since they had another split for 2:1 we would half the price again which is where we get the $14.47 price. Every 1 share today had the equivalent dollar value back in 1995 of $14.47. You pretty much have to do this because what if you want to compare how 3 current shares did back in 1995? Its gets messy.

Further comparison to the 10 year bond
The video was starting to get pretty long so I cut out the following part but I really want to talk about it
In 2002 we bought are 4 shares of JNJ for $289 (excluding commissions). Back in 2002 according to the Federal Reserve Historical Stats a 10 year US Treasury had a yield of 4.6%.
The following is how much money every year we will get paid by each
JNJ stock : $1.64, $3.76, $4.54, $6.28, $7.18, $8.17, $9.04, $10.21. $11.28 (2011 estimated)
Total: $62 total paid.
10y US Treasury $300 @ 4.6%: $13.8, $13.8, $13.8, $13.8, $13.8, $13.8, $13.8, $13.8, $13.8:
Total: $138

Keep in mind that in 2002 JNJ had a yield of 1.3% so though its catching up to the 10 year bond's 4.6% yield in those last couple of years it couldn't overtake it.
By the end of 2011 the bond expires. We have our money back but no more income. We have to go buy another one. As of right now the yield is 2.95% so we lost some yield there.
Now that $300 is only going to get us $8.85 per year. One could take all of bond income and buy a bigger bond. A $438 bond @ 2.95% makes $12.92/year
JNJ? We were not forced to sell so we are still making out $11.28/year which will continue to DRIP for more shares and continue to get their payout raise per share. It will quickly overtake our bond.
I didnt drip in the bond payments because you cannot. The US government doesn't allow it as far as I know. One would either have to buy into an ETF that allows it or wait and save up their bond income to buy a second one.

So when I say its hard to see the strengths of dividend investing it really can be. Keep in mind that this was from the absolute worst time to be buying JNJ. If I were to use the 1995 example? Things get real juicy but I think you can see where it ends up at.

Monday, June 20, 2011

Week 8 Deposit and Dodd-Frank Act

Its been two months already. It seems like just the other day I was kicking around the idea of starting a blog. Just goes to show you how quickly things can build up.

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 Dodd-Frank Act is 1,600 some pages. Most will comment or joke that nobody has read it all let alone the members of Congress that passed it. Along with what I mentioned in the video that they are still writing the rules, there is the possibility that Congress won't like those rules and pass another law to change it or other parts of the Act. So all the freaking out? It may be temporary and then we will have something else to freak out about.

It can turn into a never ending cycle where all one does is whine and complain about how its not fair. What is that type even doing in the financial markets if they arent trying to make money?

Weekly Activity
$100 deposit into Investing

Model Portfolio Totals

Trading Account: $0

Investing Account: $492.80
Stock: $0
REITs: $0
Bonds: $269.30
     PCY: $269.30
Manuevering: $223.5

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.

Friday, June 17, 2011

How to measure financial success

As soon as you make your first investment or trade you are going to start looking to see how well you are doing...

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.

Here is the breakdown of what I found on the census site and on sites I would consider trustworthy enough...

Average Family Bills / month.  2 adults, 2 kids
Mortgage: $1,733 ($323k @ 5% for 2009 homes) http://www.census.gov/compendia/statab/2011/tables/11s1191.pdf
House insurance: $64/90 ($778.84/year) http://www.census.gov/compendia/statab/2011/tables/11s1221.pdf
Utilities: $316 ($158.33 electricity x2 for water and gas) http://www.energysavers.gov/pdfs/energy_savers.pdf

Car payment: $386 guess ($20k @ 6%) This number I estimated.
# of cars/family 1.16   (135m cars / 116m Househoulds) http://www.census.gov/compendia/statab/2011/tables/11s1095.pdf
Car insurance: $62 ($749.88/year) http://www.census.gov/compendia/statab/2011/tables/11s1221.pdf
Gas: $162   (43 gallons/month) http://www.nacsonline.com/NACS/Resources/campaigns/GasPrices_2011/Documents/GasPriceKit2011.pdf
  Cost $3.79 http://www.eia.gov/

Credit card debt: $5050 on card
http://www.census.gov/compendia/statab/2011/tables/11s1187.pdf
# of cards: 6.37 (177m cardholders, 1128m cards)
Balance:5050,  792.55/card  (894b debt outstanding)
Rate 13.4% (2009) ($56/month just interest)
Cellphone: $100 (family plan 3 phones). http://www.wireless.att.com/
Food: $806 http://www.cnpp.usda.gov/Publications/FoodPlans/2011/CostofFoodApr2011.pdf
Health Insurance: $333 http://www.ncsl.org/?TabId=14509
Life Insurance: $42 state farm

Tv/Internet: $100 (http://www.comcast.com/Corporate/Learn/Bundles/bundles.html?)

Misc: $200/month. 
    Clothes, gifts, charity, entertainment, car repair.

Total bills / month: $4420
Average household income: $4191 / month (50,303) http://www.census.gov/compendia/statab/2011/tables/11s0700.pdf
Average family income where Husband and Wife worked   73% ( 33,954 / 46,201   http://www.census.gov/compendia/statab/2011/tables/11s0700.pdf
Income for 2 kids $76,575 (http://www.census.gov/compendia/statab/2011/tables/11s0700.pdf)
Average income: $6381/ month
So half of all the above monthly bills divided in half for the dual income family brings and including the taxes I will have to pay as a theoretical family member...
TARGET: $2,762 after taxes (25%)

Wednesday, June 15, 2011

Dividend Growth Investing: 1 - Why dividends over capital gains?

I begin yet another series of discussions about the financial markets. This time on dividend growth investing...

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.

Dividend investing is the topic I am most passionate about in the financial markets. Its the thing I can "geek" out the most on. I've tried my hand at buy low, sell high. I've read up on (better never actually have) naked short sold stock. We have penny stock investing, value investing, momentum investing. All sorts of strategies of investing but they all have one thing in common. You have to make the decision when to sell. That opens up the risk and consequences of "what happens afterwards".

For me and my investing personality style, I found I would get too frustrated when I sold and the price went higher. Even when I had a great profit I would think I was "wrong" because I didn't sell at the top. Not only is that just a silly notion but it distracts one from their next investment or trade.


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.

Monday, June 13, 2011

Week 7 Deposit

Its time for another weekly 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.

My weekly deposit format of data will be a work in progress as new information comes in as with purchases...

Weekly Activity
$100 deposit into Investing
Purchase 10 shares of PCY @ $27.15

Model Portfolio Totals

Trading Account: $0

Investing Account: $395.40
Stock: $0
REITs: $0
Bonds: $271.90
     PCY: $271.90
Manuevering: $123.5

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.

Thursday, June 9, 2011

Investment Purchase: PCY

Here I talk about my first purchase for the model portfolio...




I've followed PCY for several years now and like it. When I bring it up in conversation and get to the part of which countries are in the fund, (Turkey, Qatar, Bulgaria, Columbia) a lot of people get turned off because that is "risky" and that U.S. bonds are so much safer. When I ask why they believe that they almost always seem to give a  "just because they are" reason.

That sort of thinking can be lethal to a trader and investor. Things change and common mentalities and theories on investing should be challenged and each investor should determine what is appropriate for themselves.

I have been talking in the past couple videos the idea of not shadowing and this brings up another reason. When shadowing someone you run the risk of falling into someone's line of thinking, without fully knowing why they think a certain way. You then start agreeing with something you don't fully understand and that spirals into other investment decisions you will make.

Here are the links to the various funds I mentioned in the video for those that want to research further...
PCY: Powershares
EMB: IShares
EBND: Spdrs
ELD: Wisdomtree

Here is a chart comparing several of the funds I talked about.

This is from finance.google.com and shows the % gains and losses of each one if they all started with the same purchase amount at the same time.
We can see that PCY (blue line) and EMB (green line) move pretty much the same way which makes sense being that they are the same asset class. However its always good to confirm it here. I use the S&P500 to represent the stock market. Here we see it has struggled to recover from its 2008 and early 2009 fall. TLT (yellow line) is a popular ETF for U.S. bonds. It rose while the others fell but it reverted back to 0% the quickest of them all.

Ok great so what does this tell us? To me at least, it says that U.S. bonds and emerging market bonds will move differently at times but then revert back to 0. Most bond investors will be focusing on the income they get and not share price appreciation. Bonds don't grow and expand like companies do.

One key thing to keep in mind... this chart only covers the past 3.5 years with 4 things. Its far from a conclusive review of how the stock and bond markets work especially in how these work over a 50 year period that I will be wanting to carry me to and through retirement. That will be another angle we can look at and will do so in the future. Its something to keep in mind and research before entering a position however that's a topic for another entry later on.


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.

Monday, June 6, 2011

Week 6 Deposit and Shadowing

We have another deposit coming in for week 6...

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 said week 5.... Yep I screwed up and now I am at work where Youtube is blocked. I'll try to edit it or replace the video in its place tonight. Either way thoug I will keep up my "slip up" out in the open. Mistakes are going to happen.

Weekly Activity
$100 deposit into Investing


Model Portfolio Totals

Trading Account: $0

Investing Account: $300
Stock: $0
REITs: $0
Bonds: $0
Manuevering: $300

Savings Account: $300
Emergency: $250
Portfolio Protection: $50
CDs: $0
Precious Metals: $0

Friday, June 3, 2011

Type of Investments: 2 - Mutual Funds, ETFs, and CEFs

In the next part of my series on the different types of things that we can invest in I talk about the various fund types...

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 more "anti" comment on mutual funds especially for dividend investors. Even though they own companies that issue dividends? They may not necessarily pass them on to the investor. To be honest I have no idea where they go. I have called several mutual fund help numbers looking for this information and never got a straight answer. The one thing I do know is that I never received any directly.

ETFs and CEFs? They pass them on to the individual investor. So seeing as this model portfolio is about sustainable income I'll be going with those.

As investors though we should be aware of how mutual funds work. I barely touched upon it here and there are other moving parts to them. Why is it important to be aware of them even if we don't plan to invest in any? They are very predominant in 401k plans. In the four company plans I have had access to the vast majority of choices were in mutual funds.

Wednesday, June 1, 2011

What happens when we buy stock

All too often the newcomer to the markets will take an action with their money before they know what they are doing. I'm not talking about what they are doing in the sense of picking the "right" stock. I'm talking about what happens when they turn their money over to their broker and tell them to go to the stock exchange and buy them some shares...

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 say that there is risk when you initiate an order before the price moves. I touched on it with slippage and the spread a bit but I want to expand clarify that a bit. For this video and blog entry I am purposefully leaving out the words "bid" and "ask".

The spread can widen on volatility which is how fast a stock or option or whatever financial instrument's price is moving. The stock exchange knows that when something is moving fast it will attract more buyers and they want to get in on something moving fast. So they widen the spread to get more money out of those more willing to pay the higher price.

So continuing my example from the video of a stock we can buy for $10 and sell for $9.50. Let's say we have been following it and want to buy it. We place our market order. As we do it the price moves faster then we thought. Some news came out. Perhaps it's a drug company that cured cancer or is being bought out by another company or one of those "just because" fast moves. For whatever reason it's moving higher. You get filled at $10.25 because of slippage and you check the current price. The price is $10.50 to buy and the sell price only rises to $9.75. Why did the buy price go up more then the sell? The exchange knows that people are going to want to buy when stock moves up fast and buyers are more willing to pay extra for it. Sellers are less inclined to sell because maybe they can hold out a little bit longer and get a better deal so the exchange has less reason to give them more.

The stock continues to rise to $11 to buy and $10.50 to sell. The spread narrows because things are slowing down and it goes back to its normal $0.50 spread. So even though it was at $10 when you entered your order to get in and now it's valued at $11 to buy, slippage took $0.25 and the spread took an extra $0.25 then you planned on. To sell now at $10.50 when your entry point was $10.25? That $1 rise only leaves you with $0.25 actual profit.

The move ends and starts dropping, fast. Others are freaking out and selling so you decide to also. Just like before the spread widens. Though the buy price drops just $0.25 to $10.75 the reverse is happening with the spread. The stock exchange knows that people want to get out and sell. The spread widens against the seller and the price to sell your stock is $10. Slippage of $0.25 once again occurs and you sell at $9.75. The price levels off and the spread narrows back to a $0.50 range.... $10.50 to buy and $10 to sell.

So while the buy and sell price of the stock have both moved up $0.50 you ended up losing $0.50 a share! Bought at $10.25 and sold at $9.75

Oh yeah... and you also paid a commission twice, once to buy and once to sell, for the privilege of losing money even though you were right.  That's a very important thing to never forget... you can be right in guessing the move of a stock. You can be right in the timing of getting in. You can be right in the timing of getting out. With all that you can end up losing money.