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stopdropnrol
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my performance numbers look great while my dollar values are in the dump. I figured maybe some one here would know this. Is the stated average rate of return corrected in anyway? for example the stopdropnrol500 is at 100, it tanks to 50. the next year it rebounds to the original price of 100. yr 1 ror =-50%, yr2 ror=100% , inception average ror =25%.

8/21/2019 8:52:09 PM

A Tanzarian
drip drip boom
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Wouldn't average rate of return be 0% in your example?

Sometimes they assume you're reinvesting dividends or some other scenario. You'll have to look at the fine print.

8/22/2019 12:03:17 AM

stopdropnrol
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That's kind of my question. Is the rate of return based on actual increase of dollar value or just % change?

8/22/2019 1:06:25 PM

A Tanzarian
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It's a rate, so it's a percentage change.

Rate of return is normally a percentage change in share price over some period of time.

The rate of return you see in your portfolio -- i.e., the percentage change in value of your investment account -- will likely be different than the rate of return on the underlying shares. Your personal returns depend a lot on timing.

Using your example, if you invest all of your money at the beginning of the two years, you'll end up with zero return at the end (the same as the shares). But if you invest half at the beginning and half at the one year point, you'll end up with a 50% return in your account even though the rate of return on the underlying share over the two years is still zero. You can also imagine scenarios where your investment has negative returns and the held shares have positive returns.

Dividends and what you do with them can also cause differences between your actual returns and individual share returns.

8/22/2019 1:50:07 PM

NCSUMEB
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Average rate of return is different than CAGR, compounded annual growth rate. Many outlets use them interchangeably but I only look at CAGR ((ending value divided by beginning value) raised to the 1/n, -1) and they should of course state if divs are re invested.

If they don't mention it, then dividends should be considered reinvested. This is also a "glitch" when managers show the their large cap funds against the S&P over 5/10/15/20 years with their fund beating the S&P and having an asterisk and then at the bottom stating S&P divs aren't reinvested for the CAGR.

8/22/2019 3:31:41 PM

David0603
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You can't just add the averages together and divide by number of years. That's not how averages work.

8/22/2019 4:35:46 PM

stopdropnrol
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That's exactly how averages work but I see the point that it has to include the $ already invested for the next calculation. I guess my question was more simple than I thought. historic performance percentages are poor indicators of actual gains in value.is that fair to say?

8/24/2019 8:16:30 PM

David0603
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I don't know what you mean when you say "average rate of return"
Are you looking at returns since inception on a fund you bought 1-2 years ago?

8/26/2019 8:03:40 PM

stopdropnrol
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my example was over 1-2 years for simplification . my question was about how the numbers we traditionaly hear and believe are calculated.

9/10/2019 1:24:13 AM

A Tanzarian
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https://en.wikipedia.org/wiki/Rate_of_return#Mutual_fund_and_investment_company_returns

9/10/2019 2:24:26 PM

CaelNCSU
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Geometric mean?

9/11/2019 12:08:26 AM

moron
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Does anyone follow wallstreetbets on reddit? by far the funniest message board on the internet...

1/30/2020 1:38:45 AM

1985
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lol yeah - those guys are insane.

But half of them just got rich of of tesla yolos

1/30/2020 8:14:58 PM

moron
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I had my finger on the trigger for tsla puts last week because it makes no sense

Glad I didn’t pull it though

1/31/2020 12:12:50 AM

theDuke866
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yeah no way am i betting against TSLA right now. I haven't gotten up the nerve to bet on them, either, but no way am I short TSLA.

2/2/2020 2:13:36 PM

Mr. Joshua
we want chilly willy
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Got lucky on GE and TSLA calls last week. Was going to pick up some AMZN Thursday but ended up in the car all day.

GOOG reports on Monday afternoon. Expecting a pop, but my luck might be out.

2/2/2020 4:42:19 PM

moron
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Google down 4%

Tesla up almost 20% today
Has any stock ever shown exponential growth like this and held?

2/3/2020 6:01:45 PM

theDuke866
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NFLX. I made 10x my $ on it back about 10 years ago. I sold; it crashed. I thought “whew...times that well.” Then it promptly went up another 10x from where I sold it at.

2/3/2020 6:03:59 PM

Mr. Joshua
we want chilly willy
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https://www.bloomberg.com/news/articles/2020-02-04/tesla-is-more-overbought-than-bitcoin-during-height-of-bubble

2/4/2020 11:14:06 AM

moron
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Today I learned:
Re Tesla and short squeeze
Quote :
" As stonks go up short sellers lose money, as stonks continue to go up shorts lose even more money, eventually the amount of money they lose is greater than their Personal Risk Tolerance and they have to buy back the stock to close their short position.

This buying to close their position creates more buyers in the market which drives the price up even more. Now the shorts who were just at the peak of their Personal Risk Tolerance have lost even more money and are like GUH because they're now out of their PRT so they start buying to close their position.

This becomes a self-reinforcing thing until all the shorts are ded. This is a short squeeze. The shorts are getting squeezed out of their position, them exiting their positions only drives the stock up.

Old matey potatey up above is saying that the amount of money that is short TSLA rn is equal to 20% of the company's float which is a lotta fkn money so there's still a lot of people that are yet to be squeezed out of their short position and therefore TSLA will continue to moon for a while yet.



tldr: Muskrat is pissing on short sellers and is not done yet. TSLA to the moon.

Also I missed out TSLA tendies cos I am weak and gay and didn't buy in"

2/4/2020 11:34:04 AM

moron
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For laughs I bought a single call at $1000 a few hours ago and it’s already up 10%

2/4/2020 1:28:19 PM

Mr. Joshua
we want chilly willy
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Just sold to close a call for $335. Bought to open last Wednesday for $31.10.

2/4/2020 2:43:57 PM

moron
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2/4/2020 3:07:53 PM

1985
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Its fucking stupid. Ive got 28 shares @275 in my roth. probably going to unload them on friday since i think thats when most short contracts are expiring. This feels a lot like BTC, probably driven by the same rich teenagers.

2/4/2020 7:53:24 PM

1985
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Congrats on your new car Mr. Joshua

2/4/2020 7:55:26 PM

moron
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^^ maybe my ignorance would help someone but I didn’t know you could trade options in a Roth IRA and haven’t set one up since average growth and being above the full contribution threshold didn’t seem worth it.

Definitely setting one up now to start YOLOing some money into options for tax free retirement

2/4/2020 9:21:14 PM

1985
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Oh no, ive just got 28 shares, not contracts just thinking the short squeeze will last through friday

2/4/2020 11:58:23 PM

CaelNCSU
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Quote :
"I had my finger on the trigger for tsla puts last week because it makes no sense"


The volatility is so high you cannot make money. Unless it does what it has done in the past few days and you make 10-20x on open. To get to that point you'd have lost many hundreds of thousands.

2/5/2020 2:48:22 AM

moron
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My TSLA call from yesterday obviously imploded but I bought a put this morning to soften the blow...

2/5/2020 1:56:34 PM

Mr. Joshua
we want chilly willy
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Bought an 880 put at $77 yesterday near the top and sold this morning for $155.

Used gains to buy 2 $645 puts at $20. Just sold for $27 after a boring few hours.

2/5/2020 2:32:16 PM

moron
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I second guess myself way too much to pull moves like that... maybe I’ll have the balls one day

2/5/2020 2:43:36 PM

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