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Strategies & Market Trends : Dawg's Place

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To: Junkyardawg who wrote (649)	7/2/1999 12:04:00 AM
From: Jack Colton	Read Replies (1) of 2751

Yes, I think there is a more realistic approach... Let me give you the following example where there is no net gain or loss in the total value of two stocks, and show you how the two different methods would compute the value... ABC sells for $200 a share on 6/30. DEF sells for $2 a share on 6/30. If ABC loses $2, it has lost 1%. (on day 1) If DEF gains $2, it has gained 100%. (on day 1) So, by your formula, you end with a 100% minus 1 percent = 99% divided by 2 equals 49 1/2% gain, even though the cash value of ABC plus DEF has not changed. The way I would do this, is take the total of both stocks [X = ABC + DEF]and the total of the daily changes [Y = delta ABC + delta DEF], and determine the total gain or loss based on the two totals. Y divided by X gives you the percentage gain or loss. So now you have stocks of X = 200 + 2 = $202 Y= $2 - $2 = 0 The gain or loss is 0 divided by 202 which equals 0 (zero) gain or loss. Does this make sense? Jack The "delta ABC" is the difference between today's closing price and the original price.

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