Position Cost Averaging

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.

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!

Hi PCA Fans,

Today I updated the model portfolio and found another buy order for SMH

I’ll take that trade with a 10 dollar commissions and now we have…

The next trade advice is…

Stay tuned

Hi PCA Fans,

Yesterday we got a buy order on QLD, today we got another one. We will be buying 10 more shares at $65.44 for a total buy of $654.40.

This is a good example of why the "next available trade is not always the best idea…

If I had skipped the buy order yesterday, I would be getting a bigger buy order today, at the better price.

Not that "next available trade is a bad idea… just sometimes you’ll end up spending more in commissions this way.

Also important to note is that in an extended run in either direction you are often better off saving up a trade or two..or three to get the better deal.

Here is the trade advice…

Here is the current position…

Here is the next available trade.

Stay tuned..we may get another one soon!

Hi PCA fans,

Today we set up QLD in our model portfolio under the Leveraged ETF portfolio. The Starting price roughly 80 bucks and we are starting with 100  shares and an equal cash reserve.

We are using 300 dollars as the minimum market order to buy or sell, this represents about 2% of the overall portfolio value for the shares and the cash reserve.

Here is the trade advice that we get.

I expect this holding to generate more trades than the holdings in the indices portfolio.

Please understand that this is not investment advice. The Position Cost Averaging system will give custom advice for each user based on the AIM methodology.

This is what is going to happen to our model portfolio as we move forward we’ll update the holdings.

If you would like to watch the video… please do!

AIM High!