SHARPE INCOME … A Large Capital Contribution

Posted on Apr 13 2015 - 11:51am by Sharpe Trade

The original Sharpe Income post 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.


The rules of the project as outlined in the original post, are pretty simple. True? $25.00 a week is contributed to the account.

Let me create a little addendum to this project, and to that rule.

Every once in a while, the Sharpe Income project is open to a large capital contribution.

What? Large capital contribution? From where?

In life … a happy event is that every so often, you may receive a large pile of cash.  Be it a tax return for those of you that work a 9 to 5 job and have your taxes withheld.  Or perhaps there is an insurance settlement.  Or possibly you receive an inheritance.  The point being is that at some point, you are apt to receive some type of considerable disbursement.  And you can always use a portion of such an Pile of Cashoutlay to buy yourself more income in your income account.

Now, I’m not saying that for the Sharpe Income project I will add a large amount of purchase capital if I happen to receive an inheritance.  I have not received any such inheritance in some time.  And since I work for myself, I have to pay taxes each April.  I do not receive ‘tax refunds’, so they will not be added to this project either.

However, I am a trader.

And when I have a really good time with my short-term trading, I can take some of those profits, and send a portion of them to my income account in order to purchase more income.  So let it be known that for the purposes of this project, when we are trading well in my own portfolio in the Sharpe Report, we can take a portion of those profits and add them to this project.

So again … every once in a while, the Sharpe Income project is open to a large capital contribution.  From where?  The Sharpe Report, from my own portfolio, when it is doing well.

Of course, that will not happen this week.  As I have been saying for some-time, I have a slight bit of draw-down occurring in my trading account at the moment, and I am recovering from that draw-down.

But just be aware that we now have added such an ‘addendum’ to the rule-set of this project.  

Actionable View of Markets for ‘Sharpe Income’

As you will note from the attached PDF and spreadsheet, our cash is building back up again after our most recent purchase.  Our JNK dividend posted this month.  At this early point in the game, I like to keep the purchase size of assets around $300 USD, so we will not have any purchases at the current time.

So I will simply watch … wait … and observe.

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 20 can be found here …

6 Comments so far. Feel free to join this conversation.

  1. Redwan April 13, 2015 at 2:13 pm - Reply

    About how large do your large contributions tend to be. I know this is just what you are doing, but I like to follow along. Therefore I would like to anticipate about how much money you will be putting in in the future.

  2. Dan Shy April 13, 2015 at 4:08 pm - Reply

    Hi Redwan,

    First of all, good to hear from you.

    Good question.

    Naturally, each week per the rules from the first post (the link is at the top of the article to the first post) … $25.00 every week.

    But you asked about the large contributions.

    It can depend because it depends on how well trading goes. If I have a bad quarter? Then not much, if anything. Like right now, since I have experienced some draw-down? Then nothing gets contributed to the income account for the three month period. Just the usual $25.00 per week.

    If I have a good trading quarter? I may take the total profits for the entire quarter (not the total account, but the profits of how much the account rose that quarter) 3% in my trading account for the quarter? I may contribute 3% to 5% of those profits to the income account.

    So if a small trading account were to go up by $300.00? Then I may add $10.00 to the income account out of that $300.00, in addition to the $25.00 per week.

    If a larger trading account were to go up by $700.00 in a three month period? Then I may take $25.00 and send it to the income account, in addition to the $25.00 per week.

    If a larger trading account than that were to go up by $15,000? Then I might take $1,000 of that $15,000, and send it to the income account to buy more income, in addition to the $25.00 per week.

    Over time, this all just builds and builds upon itself to a greater and greater degree.

    I hope that helps 🙂

    Regards,
    Dan

  3. Christopher April 16, 2015 at 2:24 pm - Reply

    I have a question about the new PDF. Can you explain in a future entry what / Stock C.B.means?

    Thanks.

  4. Dan Shy April 16, 2015 at 2:52 pm - Reply

    Ah, good catch. Yeah, I didn’t explain that one. Oopsi.

    It just means … Cost Basis. In other words … if you averaged a purchase at $10.00 of XYZ stock, and then bought more of it at $8.00, your C.B. (Cost Basis) is a little bit north of $8.00.

    🙂

    D

  5. Christopher April 16, 2015 at 9:53 pm - Reply

    Thanks for the help!

    I assume the C.B. for AXP and IBM got switched around on the PDF.

    • Dan Shy April 17, 2015 at 8:55 am - Reply

      Yeup.

      Another good catch.

      I’ve corrected that one for next week.

      🙂

      Dan

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