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Strategies & Market Trends : Rande Is . . . HOME

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To: Rande Is who wrote (34337)	9/11/2000 3:24:50 AM
From: Greg S.	Read Replies (2) of 57584

Rande - I mostly agree with your thoughts on the telecoms, if we're keeping the arguments based on price history and charts and whatnot. I personally feel that they've been hit way too hard and are due for a rebound in the 3-12 month timeframe. However, I do take exception to your math. At 3 months a 40 percent gain is at an annual rate of 160% per year. . .while a 100% gain is of course at 400% annual rate of return. Hold it 6 months and a 40 percent gain is 80% annually. 100% gain is 200% annually. Hold it a year and 40% is 40% and 100% is 100% annually. I don't believe you're annualizing properly. I think the proper formula would be: ARR = (1 + RR)^(1/t) - 1 ARR = annual rate of return RR = periodic rate of return t = time in years it takes to get RR A 40% gain in 3 months translates to: (1 + 0.40)^(1/0.25) - 1 = 2.8416 = 284%, not 160%. Don't mean to be nitpicky, but it makes a big difference. :) Anyhow, I agree bigtime with your high reward vs. risk ratio. Cheers, -G

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