SHARPE INCOME ….. Have Cash

Posted on Nov 9 2015 - 4:03am by Dan

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.


First, a bit of house-keeping …

We began this project with $500.  All in an effort to help out the small retail investor 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 … 

Sharpe Income Balance:  $1,608.46
Sharpe Income YTD Return: -5.38%
Sharpe Income YTD Yield:  +1.05%
Sharpe Income Maximum Draw-down: -13.05%
IEF Benchmark Return: +1.00%
S&P 500 Index Return: +1.96%
Berkshire Hathaway Return (BRK.A): -9.50%

For the purposes of this particular project, this week I once again moved 92% of this weeks capital contribution towards the category reserved for purchasing capital gains assets.  The remaining 8% of the capital contribution was placed towards the cash we have reserved to purchase Wells Fargo (WFC).

Remember, that there are basically ‘two baskets’ within this ‘Sharpe Income‘ project.  There is the ‘basket’ of Income assets.  There is also the ‘basket’ of Capital Gains assets …

Sharpe Income Project Picture beginning Strategy

The purpose of the project, is to grow an account so as to eventually receive a passive income.  The ‘capital gains’ basket merely supports that primary objective.  Remember that the assets that we can purchase for capital gains are TLT, PCY, QQQ, JNK and IVV.

Ok.  Now that we are done with the house-keeping …

We could basically buy any one of these assets for the project.  We have the cash available.  As a matter of fact, if you look at the spreadsheet on the tab “Metrics and Tracking Data, you will note that I have reserved $212.00 of that cash towards purchasing IVV.   After we do this, we still have $52.02 available to be put to work for capital gains assets.

However at the moment, I do not really see anything I would want to purchase.

The S&P 500 Index (IVV) and the Nasdaq (QQQ) appears to be losing a little momentum.   To a greater extent, the same is true of Emerging Market Debt (PCY) and Hi-Yield (JNK).  And the long end of the bond curve (TLT) has been getting destroyed as of late, and shows little signs of slowing up.

Put simply … cash may be the best use of any capital right at the moment.

So I’ll be patient.  And wait for an opportunity to present itself.  Because there will always be another opportunity.  While we wait for an opportunity, more cash piles up in the background.  Giving us greater flexibility and maneuverability as we move into the future.

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 50 can be found here (numbers computed off of Friday’s close) …

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