Boy, Steve. That's jumping into the Wayback Machine!
My best guess is total return was the end value of the stock+cash divided by the starting stock+cash.
For the average amount at risk, I would average each period's invested percentage over the test. In this case it appears it was 56% invested on average.
(Sum of each period's invested percentage divided by the total number of periods)
Then, Return On (average) Capital At Risk (ROCAR) is simply total return percentage divided by the decimal of average invested. In this case, it's 0.56. Then, 2146% / 0.56 = 3832% ROCAR.
ROCAR gives us a feel of how hard AIM has worked to achieve its results. You can't take ROCAR to the bank but you can use it to compare AIM's result to Mr. Buynhold. Mr. Buynhold's total return and ROCAR are the same since he's 100% invested and at risk (divisor = 1.000).
That's about the best I can do after about 20+ years!
Thanks for asking. A CPA friend of mine reviewed the concept at the time said it was valid for risk comparison.
Best regards,
OAG Tom
Buy from the Scared; Sell to the Greedy.....
