Replies to post #172 on Value Microcaps Pick Six Lotto 01

[rrufff]

As it's a 6 month contest, I would think you would be stuck with whatever the equivalent share total is.

Also if you are cashed out, that would, in essence stop the percentage change up or down after receipt of cash.

[lentinman]

tmcal: Complicated Answer:

SSK is crunching the numbers and I haven't gone over this with him yet. However, let me give you an example:

Say you have 6 stocks, A, B, C, D, E, & F. After 3 months, F gets bought out and the group is +20% on the last day of trading for F.

The way I typically do it (and I watch about 200 portfolios) is that if the original amount hypothetically invested ($6,000, 6 times $1000), then the value of the portfolio is now $7,200 ($6,000 times 1.2). I subtract the amount of the value of F (Let's say it had gone up 40% and was worth $1,400). Now, the value of the portfolio is $5,800 and there are 5 stocks in it.

BUT YOU CANNOT divide $5,800 by $5,000 or you have a bad number. You have to take the $5,800 and divide by 1.2. This gives you a new basis of $4,833 for the 5 remaining stocks. A basis of $4,833 that is now worth $5,800 is a 20% return - just like it was the day before. Only now you have 5 stocks instead of 6.

Here is the only problem with that. I think SSK is not planning on using the dollar value to do this. I think he is only planning on adding the 6 percentage gains and dividing by 6. If that is what he decides to do, the only answer is to stop the gains (or losses) right where they were. That will then act as a drag or as a support for the rest of the 5 stocks depending on whether ther rest of the group goes up or down.

I say we wait until we reach that bridge before we cross it.

Len