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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?


To: jhg_in_kc who wrote (2135)2/16/2000 11:49:00 AM
From: JSwanson  Read Replies (1) | Respond to of 4691
 
<<You bought a tech stock 2 years ago that has doubled.>> hey, Jimbo, that's 50% a year.

Actually, its 41.45% a year. Since you understand the mathematics of compounding so well tell me the annualized return for an investment that returns the following:

Year 1 42%
Year 2 42%
Year 3 -50%
Year 4 20%
Year 5 -17%

a) 28% b) 0% c) 37% d) 7%

You seem to forget that equity investing is a marathon not a sprint. You shouldn't care about winning out of the starting gate. Pacing yourself so you can at the very least finish the race is what is important.

You are very fortunate the market has been so benevolent over the past 5 years. It won't stay that way forever!

Good Luck

JS