SHARPE INCOME …. Automatic

Posted on Dec 22 2014 - 7:45am by Sharpe Trade

The original Sharpe Income post can be found here.

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

Remember that $25.00 has been added to the Sharpe Income, Fixed Income account this week, per the rules of this account as mentioned in the original post.  You will also be able to note this on the PDF at the bottom of this post.

We continue the “Shape Income” discussion from the last entry.

Now let’s talk about that ‘$25.00 per week’ contribution just a bit, for this entry.

Obviously, mathematically, to grow an account that is only $500.00 into an account that can eventually pay you an income each month, one must contribute capital each week.  This should surprise no one.  Hedge funds do the exact same thing.  Much of their business, is about finding new ‘assets’ for the fund.

You know what “finding new assets for the fund” means right?

Drumming up new business.  That means … getting investors.  That means … getting their money, and adding it to their fund.

So why should it be any different for a fixed income account that you are attempting to grow? Why would you act any differently than hedge funds?  New starry-eyed amateurs dream of the ‘one big hit’ to retire on.  Reality doesn’t work that way.

When I first began trading, I contributed $35.00 per week.  That’s what I could handle, each week, and it was totally disposable.  I’ve toned that weekly contribution down a bit for the purposes of this weekly project. Regardless, as we have already stated, it is vital.

Now let me stress something here.

And in order stress this point, I’m going to ask that you permit me a bit of metaphor.   This weekly contribution, of a set amount, must become nearly religious.  It must become an automatic part of your life.  You pay so much for groceries, the car insurance, gasoline for the vehicle, savings for yourself personally, health insurance, the natural gas utilities, the cable / satellite bill, some money for entertainment and then there is also your Fixed Income capital contribution, each and every week.

Let me correct that statement.

You pay so much for your Fixed Income capital contribution, savings for yourself personally, and then you pay for your groceries, the car insurance, gasoline for the vehicle, health insurance, the natural gas utilities, the cable / satellite bill and some money for entertainment.

Let’s put that list in it’s proper priority.  

This must become as deep a habit as eating.  And no, that part is not a metaphor.  You should pay yourself a savings, each and every week.  You should pay yourself an income each and every week.  I do this to this day, for my own fixed income account.  And until I am staring at near abouts’ a $4,000,000 Fixed Income account, I will continue to add funds to my own fixed income account.  As you will see throughout the history of this project, the power of constant capital contributions is incredibly powerful.

Actionable View of Markets for Sharpe Income

There are no purchases planned at the moment.  I still have my eye on IBM.  I actually use about 8 to 10 different instruments for Fixed Income, and over time, this can adjust.  But for now, the only instrument that has gained my attenion is IBM.  It’s a bit iffy at this point, so keep your eyes peeled, and check back at Sharpe Trade often.

But for now, the only action is that our reserve of capital for future deployment has just increased.

The Sharpe Income PDF breakdown for week 4 can be found here.

We continue the “Sharpe Income” discussion in the next entry that you can find here

EDIT (10:52 AM EST):  Actually, pay attention, as with price action recently on IBM, I might might be adding this to the Sharpe Income Account in the next day or so … 

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