SHARPE INCOME … Cash Piling Up in the Background Requires a Decision

Posted on Oct 24 2016 - 3:04pm by Sharpe Trade

The original Sharpe Income post that explains this project can be found here.

The Sharpe Income category be found by clicking on that red ‘Sharpe Income’ tag next to this post title, or by clicking here.

We continue the discussion from the last entry.

We began this project with only $500. All in an effort to help out the small retail investor who doesn’t have a lot of money, understand the importance of growing an income account, as opposed to a trading account. The following numbers are taken from our PDF that is attached below.  Remember that the numbers are computed off of Friday’s close …

Total Sharpe Income Balance: $2,867.89
Total Sharpe Income YTD Return: + 2.42 %
Sharpe Income YTD Paid Yield on Cost: + 2.45 %
Total Sharpe Income YTD Maximum Draw-down: – 6.84 %
iShares Barclay’s IEF Return: + 6.2 %
S&P 500 Index YTD Return: + 4.76 %
S&P 500 Index YTD Maximum Draw-down: – 11.24 %

As you will note in the PDF that is attached below… we have placed this weeks ‘capital deposit’ in the category reserved as “dry powder”.  Cash that we simply have ‘on hand’ and can move about as we wish.

And that cash is piling up in the background.  So how do we split up that capital?  Where do we send it?  We would like to move it over to the Income Assets for purchases to increase the Income, and pick up a couple of assets for a good price.

But at the same time, the percentage weighting to the ’embedded capital gains strategy’ we have discussed needs to be larger.  In other words, that segment of the account should be much larger, in comparison to the income assets than it is now.

To be sure, there really is no “wrong” decision here.  Just as in life, you have to weigh the pro’s and con’s, look to mitigate your risk, and at some point make a decision.  There really isn’t a ‘wrong’ answer. 

For now?  I’m just leaving the ‘dry powder’ segment “as is”, and I’ll allow the cash to pile up higher, and simply observe the market.  I have time.  I’ll be thinking about which way to send the capital in the coming days or weeks.

Decisions, decisions

The link to the Google Drive Spreadsheet that you can view, that we will edit, build upon and refer to over time can be found at this link.

We continue the Sharpe Income project with this next entry.

The Sharpe Income PDF breakdown for Week 100 can be found here (numbers computed off of Friday’s close) …

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