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To: steve in socal who wrote (12909)	9/21/2000 2:22:38 PM
From: aptus	Read Replies (1) \| Respond to of 18928

Hi Steve, r-squared is a measure that tells you how well your model predicts a future outcome. Its value is 0 to 1 (or 0 to 100%) and the higher the value, the better your model performs. This can work for individual stocks just as well as mutual funds (as a matter of fact it works with any linear model). The second part of your post says, "it also goes on to state the r-squared incorporates equal amounts of upside gain and downside loss in its measurement of risk." I didn't read the article, but here's my guess on what they are saying... When calculating risk (e.g. standard deviation), calculations tend to include both positive and negative deviations from the actual value, and gives them equal weight. However in the investment realm, we don't generally consider a positive result risky. So critics have said that this kind of calculation is misleading. To counter that, others have said that if we remove the positive and run the calculations, the results are not that much different than if we leave them in. So perhaps that's what the article was getting at (of course I could be taking your description completely out of context, in which case please ignore what I just said). Regards, Mark.