Friday, October 29, 2021 -- $97,175.90 (+$1,293.99, +1.35%)

 


Friday, October 29, 2021 -- $97,175.90 (+$1,293.99, +1.35%)

The portfolio recovered a little more today.  Following Monday we had two days sharply down and two days sharply up.  The portfolio fell, from Monday's close, about 6.16% in just two days!  Then, in the past two days, it rose 5.95%, to recover to just 0.59% off of Monday's price.

It is worth noting the difference between 5.95% and 6.16% appears to be just about 0.21% but the portfolio is down 0.59%, much more than 0.21%.  When a stock or portfolio goes down, the percentage change is measured against the original (higher) value.  When it goes up, it is measured against the original (now lower) value.  Because of this, a 50% increase and a 50% decline, sequentially, will not bring you even, but will leave you in a loss position--down 25%.  It does not matter whether the loss happens first or the gain happens first.  Consider a $100 investment.  If it goes up 50%, then down 50%, it will go up to $150 and then down to $75, leaving you with a loss of $25.  If it goes down 50%, then up 50%, it will go down to $50 and then up to $75, again leaving you with a loss of $25.  In order to increase in value, your percentage gains must exceed your percentage losses.

This historical average return of the market is about 10% per year.  With swings of over half this amount in just two day periods, you can see that this type of portfolio is not for the faint of heart.

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