Come to Papa

I always said, let the market come to you. :) At least it seems to be coming to this projection model for the time being. Lets run it out till the end of September and see how it does.



Tide chart below. No commentary needed. Expect some weakness ahead, but nothing extraordinary.



And lastly, but certainly not least, the trading test results for the past week. Certainly not a big week with a $22 gain, but thats to be expected at times. I changed the daily percent change formula a little bit so that it showed change from the prior days close, not from the current days open. Stocks do gap, as we all know. I also added in the upper right, a formula for estimated annual dollar gain from the portfolio and annual percent gain. Now, its important to note that these gains are not including commissions (which should be very minor with this trend following method) or slippage. I expect to add in this feature shortly, but for now, its only an estimate of future results so we wont quibble about smaller dollars. Also important to realize that this projection will vary wildly in the beginning because the basis for it is a very small sample of results (only about 2 weeks at this point) so its accuracy is surely suspect now. It'll get better as time goes by. No position changes in the test portfolio were called for this week. I will post position change requirements as they happen during the week. Have a good weekend, y'all.

Some of The Inner Workings

Let's take a look at the program behind all this. Columns B through G obviously hold the days action....change,open, high, low, close and volume. Standard stuff. This information is brought into the excel workbook by a web query that is run from a macro developed by: excelhero.com Its a rather complex macro that the writer allows anyone to use as long as his copyright material in the macro itself is not removed. Easy enough, and for all the work and talent he put into that macro, he deserves all the recognition he can get...believe me.

So, one can either enable or disable the worksheet to go out to yahoo and retrieve data. In fact, these 5 columns of data (COHLCV) are just the tip of the iceberg as to what can be retrieved automatically and dumped onto the sheet, due to the beauty of this macro. And, you can setup the worksheet to refresh information at any minute interval you want. So, at work I just have this worksheet running in the background (minimized) and refreshing every 5 minutes or so and I can immediately check on my entire portfolio by maximizing the window in a flash. Very nice and handy.

So, in summary, columns B through G are changing automatically as the information is refreshed which in turn is dependant upon the number minutes between refresh intervals. Column A is a listing of the stock symbols that are hyperlinked to the actual backup worksheets. By hyperlinked, I mean when you click on the symbol, the backup worksheet is automatically opened, allowing you to look at the details of that stock symbol in more detail. No need to go hunting for the worksheet tab at the bottom....just click and go.

Thats it for now...much more on the flexibility of this workbook at a later time.

Why the Trading Test?

Thats a good question you might ask. Its like this. In a few years, I expect to be "retiring" such that I wont be spending each day at a desk job. I've got a nice little nest egg salted away for that time, but the thought occurs to me that a pretty good and dependable bit of extra income would surely help with the peace of mind. Knowing that I can pocket $10,000 up to $25,000 a year with a trading account would be nice for a little extra spending money that I wouldnt have to use the nest egg for. The fear, of course, is that a trading account can get wacked pretty hard during a quick crash as we've seen in the recent past.

So my thought is to try to protect against, or hedge, by having nearly half the account always invested on the short side with stocks that are in downtrends anyway. Ideally both the long side and short side investiments are complimenting each other as their trends play out. I know there are tactical problems to making this work and I havent thought through all the likely hurdles yet. But, as I say, its a work in progress and I expect to get to where I want to be eventually. I have anywhere from 2 to 4 years to work the bugs out...so time is on my side. On the whole, I think I've experienced pretty much the entire gamut of investing quirks....I've seen some of my buy and hold stuff get slaughtered, I've managed to trade away profits by being overactive in the markets, I've seen nice profits vanish or turn into losses and I've watched long trade losses grow and grow hoping things will turn around. After all this, my experiences tell me that you have to be patient but...most importantly, when things go your way and then turn around, you must take profits and walk away to look elsewhere or simply reverse the position and look to make gains in the other direction. The markets give...they also are more than happy to take that away, and then some. In the words of Don Wolanchuk, "think like a criminal".

and furthermore...it strikes me that there are a lot of folks in or close to my position ....a lot of people appraoaching that point in their lives when its time to think seriously about what comes next. In my honest opinion, its not gonna be bad, all we have to do is be smart and navigate our way through it. In the meantime, take the time to pay attention to the things that are important in life...you know what I'm talking about.