A.I.M. Users Bulletin Board

[lostcowboy]

Hi Toofuzzy, I think you are calculating on the wrong parts. When I did the calculations using a $10 stock that drops to $7, and then returns to $10 I got some different numbers. $100,000 divided by ten gives 10,000 shares. The price drops to $7, and the value drops to $70,000. You now through in $30,000 more to bring the value back to $100,000. You now have 14,285.71 shares. The price goes back to $10, and your shares are worth $142,857. I think we can agree that we have a total of $130,000 invested in the stocks and a profit of $12,857. Now then how do we calculate the percentage of profit, do we use $130,000, or $100,000, or $30,000 as the base. If we use $130,000 we get 9.89%. For $100,000 we get 12.86%, and for $30,000 we get 42.86% It is my view point that you should use $30,000 and 42.86%. The reason is that the $100,000 is still invested at 10 a share ,and has not made a dime of profit, it has only returned to the break-even point.