Hi Aim Hier and Larry,
In the Amazon example, we're starting with $2000 and buying a $2000 position. The table then tracks # of shares, the cash pool, total value (of the portfolio) and the amount invested (in the portfolio).
I think, for the last column, the name "amount invested" is creating a bit of confusion. This is the total amount invested in the portfolio, not in the stock. It only increases when we have added money to the portfolio from the outside.
In 2005 and 2007, the buys were now done by cash from the cash pool. We didn't need to add extra funds into the portfolio. That is why the "amount invested" column did not increase.
The return is figured by dividing the portfolio value (stock value + cash pool) by the amount invested in the portfolio.
In the AMZN example, we had to make our last cash infusion into the portfolio in 2003. At this point, the portfolio value was $1,986.60 and the total invested (in the portfolio) was $3,762.90. The cumulative return at this point was -47%.
After this point, we had some sells which generated the cash for the purchases in 2005 and 2007. That is why the amount invested in the portfolio stayed at $3,762.90.
