Replies to post #573 on Profunds index and sector trading (PRO)

[exp]

steve, that's correct...for example, you are 60% in uspix and 40% in urpix, uspix is up 4% (ndx is down 2%) and urpix is up 2% (spx is down 1%), then your gain is:
.6(4%)+.4(2%)= 2.4% + 0.8% = 3.2%

now, suppose you were up 20% so far this year, you will now be up

1.20 x 1.032 = 1.2384 or 23.84%

conversely, if uspix is down 4% and urpix is down 2% your gain (actually loss) is:

.6(-4%)+.4(-2%)= -3.2%

so now your gain for the year is

1.20 x 0.968 = 1.1616 or 16.16%

what's interesting mathematically here is that the difference between the 3.2% gain and the 3.2% loss is 6.4% which is approx 1/3 of the current 2003 gain of 20%...also the new 16% gain is 20% less than the old 20% gain...
this shows clearly a large negative impact of even moderate losses on one's overall performance...

george