Another Period of 'Blah'

My apologies for once again going so long between posts.  The market, as I kind of thought it would, has returned to sluggishly heading upwards.  It probably will until something is done with interest rates.  I'd imagine that that something will have to be drastic to send the stocks into a spiral.  Yet, it's an unknown, which is why I like this method.  If the market keeps going up, so will these accounts.  If it crashes, there is cash to buy stocks at a bargain.

There is becoming a situation where there is so much cash in the accounts that I may start to use the method I found on one particular website that had some 'improvements' to Mr. Lichello's formula. I've probably talked about it before - when there is a buy market order, but the cash is above 50%, the amount of the order is added to the Portfolio Control, and no actual order is put in.  I half did this with one of the kids' accounts...in other words I put half of the amount in PC and the other half I put in an order.  Doing this all the time, I admit, would be a bit expensive because of the commissions, but I figured it doesn't happen very often.  If the market would go really nuts in the up direction, I may put the whole thing into the PC, so the cash percentage would be down closer to 50%.  This prevents the cash amount getting out of hand when the market goes up for ever and ever.

I did open an account with a little money I discovered my youngest son had from an account that I thought I had taken all the money from.  There wasn't enough to do an individual stock account, so I opened one using a low-priced Exchange-Traded Fund, or ETF.  I found one that had fairly low expenses, and would move similar to the S&P.  The fund's symbol is XLF - it's the Financial Sectors fund...not as volatile as an S&P or Dow fund, but its share price is not much more than $20, which works out well in this situation.  I figure to have a minimum order of $70 instead of $100. I plugged in some worst-case-scenario market prices to get this figure.  I just wanted to make a situation that would give the account a chance to have some activity in the case of a market blow-out, but also lower the possibility that the account would run out of cash before the market bottomed.

I try to let every one know of these modifications to the regular method...if someone would be opening an account with, say, $1000 or more, then the regular method works fine.  I recommend having at least $2000 or more to do an individual stock fund, and a search would have to be done to find stocks that are low enough in price and that still pay a dividend, just to have good rules in play for the stocks, if nothing else (the dividends are also helpful with the cash that is constantly trickling into the Cash part of the account.)

In order to do a 'Dogs' account right now, probably a $4000 or $5000 starting balance would really be needed, because the stocks of the Dogs of the Dow, even the small ones, are currently pretty hefty in price.  It's best to at least have 5 or 6 shares of each stock, and the more the better.  The larger amounts make it easier to buy or sell the amount of stock that AIM is dictating.