Karel, Lou Dina's question raised an important point. I see it the way you do it:
You hit upon one of the many things that become more Fuzzy(for others) the longer someone else studies it. The question on averages, as you heave pointed out here, requires a definition before you can calculate it in a meaningful way(so that others can understand it).
The same problem arises with the question: "What is the Yield on an investment?" It relates to the Average Share Price that AIMers often talk about.
The price one pays for an investment over, say several years, is indeed strongly depended on the definition what you pay for, just like this is so for yield, or ROI:
(What you get)/(What you pay for)
For a time-averaged investment(or for any question on yield, or efficiency):
Ia=(I1*T1+I2*T2+I3*T3+ . . .In*Tn)/Period
one would indeed get a negative average investment if a lot of profits are taken out(withdrawals being negative investments).
This then ends up as Ia/N being a negative average share price. This would be a useful metric to indicate that the Yield of the AIM System exceeds 100%.
So, with any other approach one would need to define for himself first what he considers what it is he paid for the shares. It is easy after the investors himself answers this question. For some people the price paid is only the sum of the actual purchases; For Winners the price they paid is a negative investment, and for investors that lost their shirt and pants the price they paid is everything they lost!
Conclusion: A Negative Average Price can be interpreted as a Yield > 100% but also as a Total Loss!
It depends on the definition thay you like the best!
Conrad
AI
