Grifco Inc (GFCI)

[cyofish]

Dr Bill, strictly looking at the numerical value, going from 100 to 0 is 100% of course. But the $100 isn't your money so you don't use that as a basis for your invested capital. From the investors standpoint if he only spent 0.01 to make $100, he increased his wealth by a factor of 10,000. If he only increased his wealth 100% he would have only made $10.

Once Again
3 people each open an investment account for $100,000. A few days later all three cash out the investment account which had grown to $110,000. The gain for all three is $10,000 or 10%. That's the numerical value. No matter how you look at it the gain is 10% on all three accounts....end of story This is where your stuck.

However, that's only part of the story, ROI tells you the rest of the story:

Guy #1 open the account by depositing $100,000 cash, so his ROI =(10,000/100,000) is 10%

Guy #2 opened the 100,000 account with $50,000 cash and $50,000 bank loan. He pays back the bank loan but gets to keep the $10,000 just like #1. His investment was $50,000. His ROI = (10,000/50,000) which is 20%

Guy #3 opened the account with $10,000 cash, $90,000 bank loan. He pays back the $90,000 but gets to keep the $10,000 gain so he in essence doubled his intial investment of $10,000 His ROI = (10,000/10,000) is 100%

Now apply this to your shorting example. You short $100 and cover at $0.10. Transaction - you borrowed a 100 shares $1 and later replace 100 shares @0.001.

$100 - is not your invested capital, it's what you borrowed.
$99.90 - is your gain
$0.10 is what you invested to cover your short.