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Re: stanu78 post# 788

Tuesday, 01/31/2006 5:13:01 AM

Tuesday, January 31, 2006 5:13:01 AM

Post# of 2230
Calculating returns:

This post is now the last entry in the Ibox above.

Using Stan's example. The return would be 40% (240%/6). However, the easiest way to do it is as SSK says. Just use dollars. Forget percentages. Percentages were perfect for PSL1 because you just divided the 6 stocks' percentage gains or losses by 6. But, for PSL2, assuming you use your freeze and trade, it is easier to keep track of the dollars.

In Stan's example, you would have each stock at $1,000 to begin. Stock F doubles to $2,000. You sell it and invest in stock G. It goes up 50% - meaning it is now worth $3,000. So, at the end you have these total dollars.
 
A $1,100 ( +10%)
B $1,200 ( +20%)
C $ 800 ( -20%)
D $1,300 ( +30%)
E $1,000 ( 0%)
F $ 0 (+100%)
G $3,000 ( +50%)

Adding or subtracting percentages is problematic. If you add the total dollars, however, you will see that they add up to $8,400. $8,400 divided by $6,000 is 1.4 minus 1 = .4, or a 40% return.

Len




Warren Buffet: 5 minutes and 17 seconds of pure, unadulterated, bulletproof, flawless logic.



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