Position Cost Averaging

Hi PCA Fans,

I am selling all of the QLD. It was stupid of me to even add a leveraged ETF to this portfolio.

Leveraged ETFs are a screw job the longer you hold them.

You get churned out of profits and there are better places to be.

Sold out. Lost 4,111.00 or 25% on this one… my bad.

Lesson learned.

Class dismissed.

Hi PCA Fans,

We started the model portfolio back in August and the markets have completely fallen apart since then.

Overall the model portfolio is only down about 24.9% because we had the cash cushion to help absorb the losses.

We have had a bunch of buy orders as the markets collapsed and I am very glad we are using ETFs instead of stocks.

3 of our positions are "out of cash" and I may decide to add some more if I could be convinced that we have actually seen the bottom.

We still have some buying power, and It may be a while before I deploy any more cash into the positions.

Only time will tell.

We would love to scoop up some real bargains and so I will try and keep some powder dry.

To get our weekly commentary for all things market related… tune into www.MarketToolbox.TV every Sunday Night!

AIM High!

Hi PCA Fans,

Well, I missed the bottom…

The market tanked into the abyss on Friday and I missed my chance to get the PCA software updated at those prices… and even after the Biggest One Day Gain in Wall Street History… The market is still low enough for the software to kick out a fresh round of buy orders.

Here they are…

3 straight trades in SPY…wow!

Then we get a double in IWM…

Another Double order on DIA…

Getting a double energy buy in XLE…

We get a single buy order in XLF…

Finally we got a single buy order in QLD.

We may have gotten another round with this but we ran this holding down to just $80.00 in cash! Because PCA is a "fixed cost" portfolio process, the system will not issue buy orders when the cash reserve is dry. This is one difference between PCA and Lichello’s AIM. Since no system is "all knowing" it’s time for a human to look and see if we might deploy more cash into this equity. I will wait and see. We got hold orders in many of of positions and we are awaiting further instructions from the software. It is important to note that I am purposefully managing this portfolio in a less than optimum way. I am doing this so that people do not think I am cherry picking.. or that I am a "power user" or anything. I want to show that anyone can do this style of investing and that even if you don’t catch the "tops" or "bottoms" and even if you paid too many commissions by not "bundling" the trades, this system will still be good for you. In fact, the PCA system is one of the most "forgiving" trading models that I know of.

Hi PCA Fans,

Today as the market tanked yet again we got a whole new round of buy orders.

So here they are…

Three buys today in the SPY

Two buy orders in QQQQ

Three buy orders in IWM

Three buy orders in DIA…

Two buy orders in GDX…

A single buy order in SMH…

Two buy orders in XLE…

Finally a buy order in XLF…

Also, I would have gotten a buy order in QLD, but the system does not think I have enough cash left to make the transaction.

I thought about buying what I could afford with the remaining cash reserves. But I think I will wait and see what tomorrow brings.

Buy from the scared and sell to the greedy.

Ok PCA Fans,

When congress voted down the "bail out bill" we are now getting a fist full of buy orders.

We are getting buy orders on SPY and QQQQ and SMH and XLE and QLD all on the same day.

PCA is allowing us to strategically deploy this cash into a weak market and will also signal us to sell these shares when the markets come back in line.

This is not anything more than pure risk management.

By being most exposed to the market at the bottoms you stand to gain the most when a rebound occurs.

Conversely, by being fully exposed at the top of a market cycle you are assuming the most risk. Now we are going to put a little more capital on the table.

Here are the buy orders we got today…

Here is a good learning opportunity for those new to PCA…We got 3 buy orders on SPY today. The lesson here is that by using the occasional update method I am able to take better advantage of bigger moves in the stock in this case SPY.

Here are the 3 trades…

Notice how the size of the orders decreases

And decreases again.

Of course you would have "bundled" these orders into one transaction at your actual brokerage but for the purposes of running this model portfolio and blog I am including them separately and will account for them that way as well.

As a side note… I have NEVER seen three trades in a row before… and today it happened twice… Read on.

Here are the trades for the QQQQ and once again we are getting a multiple order. only two on the QQQQ so here they are.

Now we are moving on to the sector ETFs and we are getting one buy order on the SMH

We are also getting a buy order on XLE

And finally we are getting another triple buy order… this time on the QQQ.

WOW, I have never seen anything like it.

Thursday Night we are doing the third seminar with our special guest Jeff Webber on how to build a diversified portfolio and we’ll talk about using PCA and LEAPs for the most conservative use of leverage I have ever seen… DO NOT MISS IT!