Replies to post #213 on SEASONALITY STOCK REPORTS

[Qarel]

Going from, say 34%, to 1.34 is called 'converting to multiplier format'. A quick illustration why you need multiplier format:

The average of +50% and -50% is 0%.

Now with real money! start with $1000, +50% makes $1500, then -50% makes $750. Oops!

Multiplier format gives 1.5 * .5 = .75, or 75%. Looks about right!

Regards,

Karel

[kgoodrich]

Cowboy, I'm just a baby with this. You are way out more advanced with this then I. I believe you too. I am glad to see you coming back again. You stay gone to long. This board would have been kaput without you helping me build it up. Soon, it could be a real help to people. Next week or so, I am going to put down my criteria for buying a stock. I have too much to do at the moment. I will be back with something good in a while.

KG

[alfalogic]

Hi, lostcowboy

Nice to meet you. You are not very far off. This is called a compounded return. It assumes that you invest $1 in the 1st period and if it grows 20% it becomes $1.20, then you take $1.20 and invest for another period and so on. If you need to know the final result you just multiply the numbers,however it assumes that your entry price is equal to the closing price in the last period. However, for month to month return you can observe gaps, so the grows rates need to be adjusted.
If you add all you return you just make an assumption that each period you invest your $1 in the begining and the rest goes to you pocket.


thanks
Alfa