WHAT WE DO? WE SELL OPTIONS FOR INCOME. WE USE THAT INCOME TO BUY DIVIDEND GROWTH STOCKS!
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Posted by MartZee March 17, 2010
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DEVRY (DV) searching for the new trade


Last two weeks I have been searching for a stock which would pass my new criteria and I would be able to open a new position. My screener has been shooting many candidates at me, but further screening blocked those stocks from buying them.

Recently I reviewed the following potential candidates for buying:

ACU; AKAM; BIG; BKE; BRCM; CMP; CPO; CSGS; DMND; DV; EDU; EMS; FSC; HGR; KED; MPAA; MWIV; OTEX; PETM; PTNR; TGI; THS; & TNK

All stocks were originally selected by my screener because of high Relative Strength (RS) and increasing institutional accumulation, however the next screening failed those stocks. They weren’t either trending properly or heavy insiders’ selling or didn’t pass screening of EPS, revenue, EPS growth etc.

Finally I was able to find a stock which showed on my screener and passed my further evaluation as a strong candidate: Devry (DV). It failed only in a few criteria such as insider selling, however since DV is a university I do not consider insider selling as a significant issue here. Also most of the selling was an option execution.

After DV passed my screening I calculated potential risk of the portfolio. Because this stock is quite expensive one the risk will be a bit higher initially. Nevertheless I decided to buy 12 shares of this stock as my initial position.

Why I am buying only 12 shares? By limiting the size of the position I am limiting my potential risk if the trade turns against me. If that happens I will lose only 52 dollars and my entire portfolio drops to $1998.26 of liquidation value and that is acceptable for me. I entered a buy order for tomorrow’s opening to buy 12 shares of Devry (DV).




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No new trades available


On Saturday I calculated my total portfolio risk based on my adjusted rules:

  • trade must be larger than $800 to lower the cost ratio when buying stocks
  • existing positions must be positive
  • or the total current risk exposure to stop loss must be less than 3%
  • or the total liquidation value of the portfolio must be larger than $2,000

Based on this I could open a new position without risking too much if all open trades turn against me. Previously I calculated the above conditions wrong and when all trades turned against me in January 2010 I lost almost 21% of my portfolio. With these new rules I shouldn’t lose so much anymore.

When calculating new risk I am looking at what my portfolio will look like WITH the new position if all turns against me.

Based on those rules I evaluated the following stocks:

AKAM, BRCM, CPO, HGR, MWIV, OTEX, PTNR, THS,

From the stocks above only Open Text Corp. (OTEX) was barely able to pass my further scanning and meeting criteria. It scored as a moderate buy candidate, creating new highs, however it didn’t pass my other criteria. By buying this stock at this time would increase the risk of my portfolio to almost 6% and drop my total value below $2,000. I decided not to buy at this time and stay aside unless a new candidate shows up. I also will need to save and deposit more money to allow new purchases.




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Picks 02/15 – 02/19


Trading Account:

New [tag]stock picks[/tag] this week:

Stocks bought or added to portfolio this week:
none

Stocks dropped from portfolio this week:
none

Existing & new [tag]holdings[/tag]:

Symbol Qty Last Gain($) Gain(%)
[tag]V[/tag] 10 86.81 23.10 2.73

Contribution this week: $0

Current [tag]capital exposure[/tag]: -3.32%     Learn more

New positions available to open: 1     Learn more

Starting [tag]account value[/tag] = $2,030.15

Account value = $2,050.49 (without margin)

Buying power = $5,966.87

[tag]Portfolio Gain/loss[/tag] this week = 1.00%

[tag]Portfolio[/tag] Gain/Loss for FEBRUARY 2010 = 0.65%

Portfolio Gain/loss for 2010 = -19.02%

[tag]Annual Return[/tag] (CAGR): -26.99%

I adjusted my trading rules so I do not buy new positions until the loss exposure gets into the positive territory. The total capital exposure is now calculated based on liquidation value at the stop loss, not the current value as I had that originally.
I believe, this will allow me better managing the portfolio during sell offs.
I am quite busy these days, so I won’t be writing much about my trading, however I will still be showing my trading records.

 
 

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ROTH IRA Account:

New [tag]stock picks[/tag] this week:

none

Existing & new [tag]holdings[/tag]:

NTF Mutual Funds
Symbol Qty Last Gain($) Gain(%) Div.
Y(%)
Port.
(%)
AIGYX 83.472 12.21 19.20 1.92 7.89 32
ATIPX 106.395 8.96 13.12 1.40 7.28 30
HISIX 26.918 6.85 -15.61 -7.81 4.56 6
SICNX 34.010 7.05 -10.23 -4.09 4.97 8
SWDSX 40.856 11.74 25.48 5.618 4.00 15
SWLSX 29.814 9.72 20.87 7.76 1.63 9
Individual ETFs
Symbol Qty Last Gain($) Gain(%) Div.
Y(%)
Portfolio
(%)
IGD 29.0 12.25 -1.45 -0.41 12.29 100
Individual stocks
Symbol Qty Last Gain($) Gain(%) Div.
Y(%)
Portfolio
(%)
Account target and current allocation
Individual stocks 0 42% 0%
NTF Mutual funds 3,166.09 38% 86%
ETFs 355.25 20% 10%

Contribution this week: $0

Starting [tag]account value[/tag] = $3,572.27

Account value = $3,674.98

Dividends received in 2010 = $19.12

Portfolio dividends yield 2010 = 0.52%

Dividends received lifetime = $103.24

[tag]Portfolio Gain/loss[/tag] this week = 2.88%

[tag]Portfolio[/tag] Gain/Loss for FEBRUARY 2010 = 1.79%

Portfolio Gain/loss for 2010 = -0.43%

[tag]Annual Return[/tag] (CAGR): -6.08%

[tag]Portfolio Return[/tag] since inception: -17.88%

My mutual funds are now at the target allocation. At least those funds I already have purchased. I need to buy two more funds and start investing into them to get my mutual funds into balance with my target. I am thinking about buying NOIFX a foreign corporate bonds fund and ADVDX a dividend equity fund. Both funds require an initial investment which I need to save first. Since my broker doesn’t offer better interest than my savings account I will be saving for the initial investment in my savings account. After these funds will have been purchased I will start accumulating along with my plan into mutual funds and then I will start buying individual stocks and ETFs.


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Picks 02/08 – 02/12


Trading Account:

New [tag]stock picks[/tag] this week:

Stocks bought or added to portfolio this week:
Bought 10 V @ 84.5

Stocks dropped from portfolio this week:
none

Existing & new [tag]holdings[/tag]:

Symbol Qty Last Gain($) Gain(%)
[tag]V[/tag] 10 84.78 2.80 0.33

Contribution this week: $0

Current [tag]capital exposure[/tag]: -2.71%     Learn more

New positions available to open: 1     Learn more

Starting [tag]account value[/tag] = $2,037.17

Account value = $2,030.15 (without margin)

Buying power = $5,919.37

[tag]Portfolio Gain/loss[/tag] this week = -0.34%

[tag]Portfolio[/tag] Gain/Loss for FEBRUARY 2010 = -0.34%

Portfolio Gain/loss for 2010 = -19.82%

[tag]Annual Return[/tag] (CAGR): -27.75%

 
 

aboutthisboy.com

ROTH IRA Account:

New [tag]stock picks[/tag] this week:

Bought 4.472 SWDSX @ 11.18

Existing & new [tag]holdings[/tag]:

NTF Mutual Funds
Symbol Qty Last Gain($) Gain(%) Div.
Y(%)
Port.
(%)
AIGYX 83.472 11.65 -27.55 -2.75 7.89 32
ATIPX 106.395 8.85 1.42 0.15 7.28 31
HISIX 26.918 6.74 -18.57 -9.29 4.56 6
SICNX 34.010 6.93 -14.31 -5.72 4.97 8
SWDSX 40.856 11.37 10.36 2.28 4.00 15
SWLSX 29.814 9.44 12.52 4.66 1.63 9
Individual ETFs
Symbol Qty Last Gain($) Gain(%) Div.
Y(%)
Portfolio
(%)
IGD 29.0 11.78 -15.20 -4.26 12.77 100
Individual stocks
Symbol Qty Last Gain($) Gain(%) Div.
Y(%)
Portfolio
(%)
Account target and current allocation
Individual stocks 0 42% 0%
NTF Mutual funds 3,077.14 38% 86%
ETFs 341.50 20% 10%

Contribution this week: $150

Starting [tag]account value[/tag] = $3,561.68

Account value = $3,572.27

Dividends received in 2010 = $15.49

Portfolio dividends yield 2010 = 0.45%

Dividends received lifetime = $99.61

[tag]Portfolio Gain/loss[/tag] this week = 0.30%

[tag]Portfolio[/tag] Gain/Loss for FEBRUARY 2010 = -1.05%

Portfolio Gain/loss for 2010 = -3.21%

[tag]Annual Return[/tag] (CAGR): -6.96%

[tag]Portfolio Return[/tag] since inception: -20.17%


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Visa bought back with the market pick up


The market is improving again and I am adding Visa (V) back to my portfolio. Tomorrow I am going to buy 10 shares of this stock. The total estimated trade should be $851 as per my adjusted rules. I will report this trade tomorrow morning after the shares will have been bought. I am limiting the number of shares to avoid overextending my potential loss, but keeping the total amount of the trade above $800.

The next available trade will be made only when this trade gets into a positive territory, which means even if this trade turns against me, I will be out with a gain, not loss (or loss within the maximum account draw down).




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