August 20, 2012

means that the news media is reporting that the 'credit' or 'bond' situation on some of the troubled European countries seems to be improving. And thus, many of the equities markets continues to climb higher/ For the benefit of new subscribers, we've spoken as of late that this rally is simply fallowing seasonal tendencies for U.S. Presidential election years Election Year Equities Seasonal Tendencies Source Bespoke Investment Group

Aileron Market Balance

Issue 42
Visit Us: NoNonsenseTrading.com Email: aileronmarketbalance@gmail.com Twitter: @NoNonsenseTrade
And thus I am expecting this rally to continue, possibly until September. We've been taking advantage of this stock market rally is that we have hacked the investing portion of the portfolio as of late, by selling over-valued stocks, and taking the profits from them. We first sold off Johnson & Johnson (JNJ), and then followed with Pepsi-Cola (PEP) and Procter & Gamble (PG). As I have mentioned in my own private twitter stream1, I have also sold off stocks that I have held publicly for years. Namely Coca-Cola (KO) and Abbott Labotories (ABT). I still believe that Waste Management (WM) has room to move higher. General Mills (GIS) I probably will continue to hold. Eventually, continuing just on buybacks alone, I feel that General Mills (GIS) can reach $53.00 We have begun the process of replacing those stocks with stocks that I believe are 'undervalue' at the moment, and have good room for growth. Thus, we now have Aflac (AFL) at $45.05, and would be willing to average down more on this stock if it
1 Exact Link - https://twitter.com/Aileron_Trading

Each

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.

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 2012 with $1,120.00 of the cash dedicated towards it..

Let's catch up our new subscribers The market continues to move higher as we speak. The news overnight was that the yields on some European bonds are falling. If you are new, this

August 20, 2012

dips below $40.00. We bought Seagate Technologies (STX) at $24.78 or so. The problem there, is that it has rallied so fast, and so hard, that I'm actually considering taking my profits at the first sign of a turn around. The dividend yield is nice, and it's a great company but I believe it was Pulling who stated that in just a few weeks time, the capital appreciation on the stocks has given us what is worth 7 years worth of dividends. I will continue to monitor that situation, and let you know if and when I do decide to sell it. My first alert on STX at the moment is set at $35.07 or below. So at this point, the A.M.B. portfolio has ... Financial Insurance: Aflac (AFL) Technology: Seagate Technologies (STX) Services: Waste Management (WM) If I sell off Seagate Technologies (STX), then I would simply be left with Aflac (AFL) and Waste Management (WM). Both of which I plan to hold for a bit longer. I am still researching companies, and regardless of what happens with Seagate Technologies (STX) would like to own a technology company and something in the healthcare sector. I would like to own a couple of stocks in Consumer Non-Cyclical, as I always like to own a couple of consumer goods stocks but I'm having a difficult time finding just 'the right' stocks in that sector. At this point, we are approaching a possible downturn in the markets in September. So while I research what stocks I would like to have in my longer term portfolio, I am mindful that there may be a buying opportunity in about a months time for any stocks that I may want to purchase. One stock in the healthcare sector that I am becoming increasingly more interested in, is Medtronic (MDT). If we could get some sort of pullback coming up, and my research continues to yield interesting results I may look at adding this stock in. Nothing is firm there yet, but I am looking at that stock. I am continuing to research and screen for other companies in Technology, Healthcare and Consumer Non-Cyclical; and possibly something in Industrial / Capital Goods.

Trading Outlook:
Note: By way of reminder, since the Model Portfolio has only $9,811.33 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 series2, 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 $65.69 and is considered a micro-forex account for the purposes of the model portfolio.

Overall Trading Thoughts

I'm still not really looking at many commodity trades since I'm spending so much time researching on the value-dividend account.

Micro-Forex Trading

Methodology

Creation

and

As we stated on the Forums last week, we initiated a Carry Trade position. I've received more than a few questions regarding carry trades and what's possible to use In short, for American Citizens living in the United States (which is what I concern myself with) , the AUD/JPY and the NZD/JPY can be used for carry trades. Remember to calculate the cost of carry, in addition to the interest rate differential, when looking at carry trades. It is for that reason that most folks use either the AUD/JPY or the NZD/JPY, or both. I will only be adding very small positions to carry trades, and only over long periods of time. As I stated last week, as we approach September 10 th, I'll be looking for divergence in AUD/JPY to the S&P 500 Index for indication of a clue of a possible downturn in the equities market.

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

August 20, 2012

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 Balance3 for an explanation of this system).

Remaining Cash: $2,162.31 ( 51.32 % )

Percentages of that Cash -$1,922.31 of this Maneuvering Capital I reserve for Hedging and New Purchases ( 88.9 % ) -$80.00 of this Maneuvering Capital I reserve to Dollar Cost WM further in the future ( 3.7 % ) DCA Price w/ no fundamental changes on WM $28.00 -$80.00 of this Maneuvering Capital I reserve to Dollar Cost STX further in the future ( 3.7 % ) DCA Price w/ no fundamental changes on STX $15.00 -$80.00 of this Maneuvering Capital I reserve to Dollar Cost AFL further in the future ( 3.7 % ) DCA Price w/ no fundamental changes on AFL $40.00 to $38.00

S&P 500 Year to Date: + 12.77 % AMB Total Portfolio Return Year to Date: + 2.152 % Investing Account Balance: $4,213.75 3 Positions have been sold for profit ... Return / Yield up + 4.151 % Year to date 8.081305 shares of WM (DRIP off Yield is 3.98 % )
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 Next Dividend: Not yet announced

$ 283.06 ( 6.718 % of this account ) available from Slush Fund Dividend Investing Sister Year to Date

11 shares of STX (DRIP off Yield is 3.59 % )

11 shares at $24.78 on 6/29/2011 w/ $5.01 Commissions Next Dividend: August 29, 2012 Ex-Dividend Date: August 10, 2012

6 shares of AFL (DRIP off Yield is 2.86 % )

6 shares at $45.05 on 8/6/2011 w/ $5.00 Commissions Next Dividend: September 4, 2012 Ex-Dividend Date: August 13, 2012 (Cash Dividend Due)

Permanent Portfolio $1,120.00 of cash I reserved for Permanent Portfolio Purchases Return from $1082.72 = + 1.31 %
- 2 shares @ 156.12 of GLD ( $312.24 ) ( Currently $313.44 ) ( 28.58 % of P.P ) - 2 shares @ 139.58 of SPY ( $279.16 ) ( Currently $284.44 ) ( 25.93 % of P.P ) - 2 shares @ 118.17 of TLT ( $236.34) ( Currently $243.26 ) ( 22.18 % of P.P ) - 3 shares @ 84.45 of SHY ( $253.35) ( Currently $253.17 ) ( 23.08 % of P.P ) 3 Exact Link http://www.scribd.com/doc/73238645/Aileron-MarketBalance-Special-Reference-Issue-Portfolio-Management

Total Trading Balance: $9,877.02 ( Return / Yield up + 1.542 % Year to Date ) Commodity Futures and Stock Balance: $9,811.33 Return / Yield up + 1.579 % 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 $ 283.06 available from Slush Fund

August 20, 2012

There were no trades last week, as I was concentrating on the investing account and research ... Futures and Stock 'Sister' Account Year to Date Micro-Forex Balance: $65.69 Return / Yield -3.723 % Year to Date Phase 2 Return: 0.18 % Phase 3 Return: -0.026 % $ 283.06 available from Slush Fund

There was one Forex trade last week

Long 70 AUD/JPY @ 82.74(5) on 8/15/2012 Exit 70 @ 82.71(3) LOSS 22.2 Pips - $0.1975 CARRY TRADE POSTION ADDED 4 Units of AUD/JPY @ 83.35(3) on 8/16/2012

As there were no trades in this account last week, the Money Management Statistics remains as they were follows ...

PIPS FOR PREVIOUS WEEKS OF 8/13/2012 to 8/17/2012: 22.2 Pips Lost (Pips do not Reflect Differing
Position Sizes)

Micro Forex Account Year to Date

As well as the Capital Graph for the Forex Account in Phase 3

August 20, 2012

And the updated Micro-Forex money management stats are below ... Savings Side-Pocket Account Balance: $1,810.24 Capital is - 10.53 % Year to Date. Yield Return on Capital + 0.959 % $283.06 for a Slush fund / Drawdown Kill Switch fund ($222.08 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% $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: $16.42

Remember that next week has the 21st, and this is the day that the one year CD's are considered as 'purchased' for the A.M.B. portfolio ...

Total Portfolio Balance: $15,901.11 - Total AMB Inception to Date Return: + 6.007 % Return / Yield up + 2.152 % year to date) S&P 500 Year to Date: + 12.77 %

August 20, 2012

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 principles4. 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