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Pastimes : Stock-Picking Challenge
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To: OJS who wrote (984)2/1/2001 6:55:29 PM
From: GuinnessGuy  Read Replies (2) of 2402
 
OJS,

I never thought that this was total dollar gain. What I'm saying is that by using equal share amounts for each stock pick then one is automatically not going to get the same contribution to total return unless the stocks are the same price or move exactly the same percentage amount.

For example, say you have one stock that is $100 and 4 others that are $1. Furthermore say that the the four one dollar stocks double and the one high dollar stock goes up 10%...then, in the end, you've got $11,800/$10,400 or 113.46% total return. On the other hand, if all five stock were the same price and one had a 10% return while the others doubled, you would have a 182% total return. Big difference!

It would be much better to average the % returns on each individual stock so that the relative price of the stocks would be irrelevant.

Craig
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