September 23, 2012

time we were at that point, was the first week of May, when the portfolio dove from 5.1860% to 3.0830%. Don't forget that the 21 st of each month, the one year CD at an online bank is considering as having purchased a $10.00 one year CD. One more month, and we'll have that CD ladder completely built. Once the Fed raises the rate be that 2013, 2014 or 2015, we already have more liquid interest rates being returned to the tier capital. Looking over both the year, and the numbers this week, the weakest portion was obviously the trading side of the portfolio. I spoke last week about how I will be correcting this, with arbitrage income trading via options, until I have the account over $30,000 and I can begin to swing trade commodity futures. And before that point, using that type of trading to leverage into futures trades every now and then. I have gone ahead, and begun to implement this strategy with the STX trade. I'll have more to say about that later on.

Aileron Market Balance

Issue 47
Visit Us: NoNonsenseTrading.com Email: aileronmarketbalance@gmail.com Twitter: @NoNonsenseTrade

Each

Investing Outlook:
Note: As a reminder. the share purchases of the Dividend Investing 'Sister' will be extremely small. It is my intent to demonstrate how to grow the size of these positions from 2 shares, to 300 shares using the three sisters portfolio management style. The Dividend Investing 'Sister' Account will also implement the Permanent Portfolio Method beginning in April 2012 with $1,120.00 of the cash dedicated towards it..

newsletter on Sunday that will contain my thoughts for the week ahead will have an audio file that accompanies it. The audio file that is associated with this PDF will contain my detailed thoughts moving forward into the next week. This PDF file is meant to serve as a rough, general outline to the audio file that many subscribers are finding more advantageous.

I have mentioned this before, but I think it bears repeating. Each week, I usually talk about where the 'market is at'. Is this in an effort to 'time' the cycles so I know when to be purchasing value-dividend stocks, and when not to be purchasing stocks? No. Not necessarily. Yes, it obviously follows that if I believe the market is going to have a large down move, that I would want to delay any purchases But really, it is important to know what's going on with the markets that you are engaged with, in order to understand how you are conducting your business. This is why I was not caught flat-footed in 2008 when the Great Recession began.

Portfolio Review:
So issue No. 47. Five more to go and we'll have been at this almost a year now. Which means it's a good time to review the portfolio, in addition it being a good idea to review one's portfolio as often possible. In addition, I run a bit of an involved portfolio, and therefore it's even more important to really have a clear grasp at least weekly, to know 'where I'm at', in terms of performance, and how each piece of my 'risk parity' is running. Thankfully, as we look over the entire portfolio, the return by this week in entirety is 3.9910%. The last

September 23, 2012

There is an aspect, that you simply have to understand the nature of the 'crowd' that one is dealing with. As Larry Williams once said: ... I've broken it down into kind of an overall

Trading Outlook:
Note: By way of reminder, since the Model Portfolio has only $10,074.87 in the Commodity Futures and Stock Trading portion of the portfolio, there will only be ' brief day trades' at this stage of the game for Commodity Futures trading in order to escape the risk of over-leveraged gap opens in the commodity futures markets. Stock trades may last more than one day. This is an attempt to demonstrate how account size relates to trading style. As I mention in my methodology series1, as the commodity 'trading sister' approaches $30,000 I will graduate the account into 'swing-trading' and demonstrate how I would go about doing this. The Forex account has $69.44 and is considered a micro-forex account for the purposes of the model portfolio.

view. Because I don't think it's just enough to give people a bunch of numbers, and things, and here's a system. Because my sense is you get a system, or some parameters to trade with ... and you think you're a great trader. And you're not. And I'm not. Because really being a great trader takes more than just having something mechanical to follow. Being a great trader, means that you have to understand what's going on. Because whatever is going on now, will be different than anything the past. And anything in the future, will not be exactly like now - Larry Williams
That quote, I believe is priceless. It's true. When I began to trade, we used pencil, and paper, and everyone was a swing trader. There were no daytraders, except in the pits. There were no multimonitor setups. Reviewing, each week, where I believe the markets are at? How the currency markets are behaving in relation to indices? How oil is behaving in relation ot other commodities? Is one way not to get 'left behind' and still be one of those guys that's still trying to use a pencil and paper chart. So after that whole speech what do I feel is going on? Well, with unconvetional Operation Twist and purchases of MBS, or the vulgate QE3 ongoing, you have a situation that is unlike QE2 or QE2. Many professionals have commented that they really don't 'trust' these markets, and they can't 'put their finger on what's wrong'. I suppose at the moment, I'd say that that markets are clear in their lack of determination for any clear determination in direction.

The STX Trade

The STX trade (long 100 STX at $30.45, Sold 1 October 30 Call at 2.115) continues. I have mentioned that this trade offers great flexibility. I have in recent weeks mentioned how much flexibility this trade offers. In the next 30 days, there is another possibility than what I have mentioned. If implied volatility falls enough, with the theta decay occurs so that I could get out of the option at near break even and we're sitting at $33 or $34 on STX would I dump the option ( buy it back) and then sell a call option? Possibly a 37 or 38 October Call? Yeup. It'd give me more premium, I could lock in the profit on the trade at possibily over $300.00, and still generate some option premium. We'll just have to see. As I've said, these are trades that offer great flexibility. I'm not really interested in taking on other trades however, until this trade is complete. I don't want to over-extend myself.

1 Exact Link http://nononsensetrading.com/methodology.html

September 23, 2012

Micro-Forex Trading

Methodology

Creation

and

Summary of the A.M.B. Model Portfolio

Note: In the beginning of this hypothetical portfolio, the share purchases of the Dividend Investing 'Sister' will be extremely small. It is my intent to demonstrate how to grow the size of these positions from 2 shares, to 300 shares using the three sisters portfolio management style. It is also understood that readers of this newsletter have a firm understanding of my 'three sisters' portfolio management system (See the Special Reference issue of Aileron Market Balance2 for an explanation of this system).

Carry Trades: Our carry trades continues to work, generate yield from the broker interest, and at the same time, lessen any down moves that are experienced in AUD/JPY and NZD/JPY. I'll continue to monitor both of these currencies, and keep you updated as to my thoughts. USD/CHF: Looking at this market from a regression channel basis, I am interested in this market for a long, or 'buy'. I'm actually interested in this market for a bit of a longer term move, so I may lessen my position size. I may only go long 10 or 20 units or so of USD/CHF, possibly above 0.9351(5). I'll continue to monitor that market, and see how the price continues to evolve in order to find a long entry.

S&P 500 Year to Date: + 16.11 % AMB Total Portfolio Return Year to Date: + 3.991 % Investing Account Balance: $4,224.93 4 Positions have been sold YTD for profit on each ... 0.71 % Yield redistributed to other accounts year to date Return / Yield up + 4.865 % year to date Return / Yield up + 5.623 % since inception 8.081305 shares of WM (DRIP off Current Yield is 4.37 % Yield on Cost is 4.38 % )
8 shares at $32.39 on 12/22/2011 w/ $5.01 Commissions 0.081305 shares DRIP at $34.93 on 3/23/2012 $2.86 in Cash on 6/22/2012 Sent $1.43 to Sav. Side-Pocket $2.86 in Cash on 9/21/2012 Kept entire amount in Account Next Dividend: Not Yet Announced

6 shares of AFL (DRIP off Current Yield is 2.74 % - Yield on Cost is 2.93 % )
6 shares at $45.05 on 8/6/2012 w/ $5.00 Commissions $1.98 in Cash on 9/1/2012 Keeping full amount in Account Next Dividend: Not Yet Announced

6 shares of MDT (DRIP off Current Yield is 2.40 % Yield on Cost is 2.54 % )
6 shares at $40.94 on 8/29/2012 w/ $5.00 Commissions Next Dividend: October 26, 2012 Ex-Dividend Date: October 3, 2012

9 shares of JCI (DRIP off Current Yield is 2.53 % Yield on Cost is 2.63 % )
9 shares at $27.41 on 9/6/2012 w/ $5.00 Commissions Next Dividend: October 2, 2012 Ex-Dividend Date: September 5, 2012 (Not entitled To Oct Div)

Permanent Portfolio S $1,120.00 of cash I reserved for Permanent Portfolio Purchases Return from $1082.72 = + 4.85 % from 4/23/12
2 Exact Link http://www.scribd.com/doc/73238645/Aileron-MarketBalance-Special-Reference-Issue-Portfolio-Management

September 23, 2012

- 2 shares @ 156.12 of GLD ( $312.24 ) ( Currently $343.92 ) ( 30.29 % of P.P ) - 2 shares @ 139.58 of SPY ( $279.16 ) ( Currently $291.74 ) ( 25.70 % of P.P ) - 2 shares @ 118.17 of TLT ( $236.34) ( Currently $243.10 ) ( 21.41 % of P.P ) - 3 shares @ 84.45 of SHY ( $253.35) ( Currently $253.32 ) ( 22.31 % of P.P )

Total Trading Balance: $10,144.31 ( Return / Yield up + 4.178 % Year to Date ) Commodity Futures and Stock Balance: $10,074.87 Current Mark Included of Long 100 STX at $30.45 and sold 1 October 30 STX Call Return / Yield up + 4.237 % Year to Date Next Re-Distribution Goal: $10,700.00 Original 3% risk tolerance gives us approximately $282.54 for my drawdown tolerance ALREADY USED $ 286.80 available from Slush Fund The account balance current includes the floating trade we have on with STX ... Futures and Stock 'Sister' Account Year to Date

Remaining Cash: $2,025.14 ( 47.93 % ) $2.86 WM Dividend Paid on September 21

Percentages of that Cash -$1,722.14 of this Remaining Cash I reserve for Hedging and New Purchases ( 85.04 % ) -$63.00 ( 3.658 % ) of this Hedging and New Purchases Cash I reserve to Dollar Cost WM further in the future DCA Price w/ no fundamental changes on WM $28.00 -$85.00 ( 4.936 % ) of this Hedging and New Purchases Cash I reserve to Dollar Cost AFL further in the future DCA Price w/ no fundamental changes on AFL $40 to $38 region -$80.00 ( 4.645 % ) of this Hedging and New Purchases Cash I reserve to Dollar Cost MDT further in the future DCA Price w/ no fundamental changes on MDT $37 to $35 region -$75.00 ( 4.355 % )of this Hedging and New Purchases Cash I reserve to Dollar Cost JCI further in the future DCA Price w/ no fundamental changes on JCI $22 to $24 region

$ 286.80 ( 6.788 % of this account ) available from Slush Fund Dividend Investing Sister Year to Date Until that STX trade completes, the Money Management Statistics remains the same for that account

September 23, 2012

Micro Forex Account Year to Date

As well as the Capital Graph for the Forex Account in Phase 3. Remember that the following graph does not include the realized gain from the unfinished Carry Trades. If it did, we would be well above the positive line

Micro-Forex Balance: $69.44 The totals for the Forex account do not include the unrealized gain / loss from the Carry Trades. It does count the interest earned from those trades. Capital up + 3.472 % Return / Yield - 3.689 % Year to Date Return / Yield - 0.209 % in Phase 3 $ 286.80 available from Slush Fund There were no Forex Trades Last week

Since there were no actual trades last week the money management stats, which does not include the additions from the carry trade (yet) remain the same ...

CARRY TRADE POSTIONS AUD/JPY current mark at 81.34(1) 4 Units AUD/JPY at 83.35(3) on 8/16/2012 3 Units AUD/JPY at 81.95(0) on 8/23/2012 3 Units AUD/JPY at 80.34(0) on 9/3/2012 NZD/JPY current mark at 63.55(9) 4 Units NZD/JPY at 63.81(3) on 8/23/2012 2 Units NZD/JPY at 62.55(7) on 9/3/2012 INTEREST ADDED LAST WEEK: $0.0110

September 23, 2012

Savings Side-Pocket Account Balance: $1,822.71 Capital is - 10.14 % Year to Date. Yield Return on Capital + 1.028 % Added $1.30 of Interest to the Slush fund / Drawdown Kill Switch fund bringing total to $286.80 ($218.34 owed to this Fund) $1,010.29 for a Base Savings
Percentages of that Cash: $814.29 of this cash reserved for Long Term Variable Capital PP - ( 80.60 % ) $120.00 of this cash reserved for CD Ladder creation ( 11.88 % ) - One $10.00 One Year CD purchased on 11/21/2011 at 0.60% - One $10.00 One Year CD Purchase on 12/21/2011 at 0.50% - One $10.00 One Year CD Purchase on 1/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 2/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 3/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 4/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 5/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 6/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 7/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 8/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 9/21/2012 at 0.50% $20.00 of this cash reserved for the first side-pocket purchase ( 1.98 % ) $20.00 of this cash I reserve for the second sidepocket purchase ( 1.98 % ) $36.00 of this cash I reserve for the hedging account ( 3.563 % )

$505.14 for Emergency Savings Getting Paid Fund: $20.48 Total Portfolio Breakdown Return Graph

September 23, 2012

Total Portfolio Balance: $16,191.95 - Total AMB November 2011 Inception to Date Return: + 7.927 % Return / Yield up + 3.991 % year to date) S&P 500 Year to Date: + 16.55 %

If you have any questions regarding my personal outlook, or any other comments, please feel free to contact us at aileronmarketbalance@gmail.com. Our twitter account is @NoNonsenseTrade. I will say that if you have questions about your own trading and you want to ask for my input? Please include your most recent money management performance statistics in any email correspondence.
Until next time, stay safe trade well, and remember that loving other people doesn't cost a dime.
Note: I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. The above statements should not be construed as an investment or trading recommendation. Aileron Market Balance is a newsletter that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this newsletter; as larger accounts may require a different strategy as the ones presented here. Any trades or investments that I discuss within this newsletter are simply my own thoughts regarding my own investing and trading outlook. I discuss which trades I take and do not take on the No Nonsense Trading Forums, as well as the Ventrilo Voice Server. Remember that entering any market is an individual decision. This newsletter simply contains my trading and investing thoughts for the next week. I personally only enter any market after watching and reading the tape and I trade using money management principles3. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 16 years of experience in trading and investing in these markets. The Model Portfolio accounts are hypothetical accounts,with all of the inherent problems therein, which are used within this newsletter in an attempt to track the results of this newsletter, and is run for the education of other traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this newsletter are believed to be public domain. Any charts that are displayed using the ThinkorSwim platform, and other pictures were obtained through Wikipedia's public domain policy.

Exact Link - http://nononsensetrading.com/MoneyManagement.html