Value Microcaps Motherboard

[lentinman]

Clever:

You know me. I have to play with numbers. Taking your numbers (and assuming no additional added revenues), what do you (and I mean "you" as in anyone reading this) think the overall return is??

2000 - (90%)
2001 - 67%
2002 - 35%
2003 - 50%
2004 - 26%
2005 - 120% YTD

I ask this because it is a GREAT object lesson. Someone will calculate, -90 + 67 + 35 + 50 + 26 + 120 = +208.... +208 / 6 years = +35% per year. Not bad.

Of course, that is horrendous math, but some people think that way and that is partly why you have to question anything that anyone says. Not really question it, but rather ignore it. There are many things that one person might be factoring in and another person is not. Maybe a person only counts the investments and doesn't factor in the cash. Maybe someone doesn't factor in trading costs. Maybe someone isn't counting taxes, while another one is. Maybe someone is only in the market for short periods and is annualizing it. Who knows? Who cares?

But, the answer to the above is -6% / 6 years = -1% per year as opposed to +35% per year.

$1,000 invested is worth $100 after year 1 based on a 90% loss.

Year 1 = $100
Year 2 = $167
Year 3 = $225
Year 4 = $338
Year 5 = $426
Year 6 = $937 ($63 below the original investment)

Len