Monthly returns

Matthew, I noticed in the monthly return charts for the Sweet Spot and Raging Bull ( the chart right above the graph) is showing monthly returns for Oct Nov Dec 2011 of 41.80%, but the return when calculated is 50.70% according calculations of total equity and starting capital. Can you tell me which one is correct? And why is it different? Thanks

I don’t see any of the numbers you refer to. Where, specifically, do you see (for example) 41.80%? Where do you see 50.7%? Neither of those stats are on C2, so far as I can see, so I am not sure how I can answer why they differ. Where are you finding them? Perhaps you can send me an email containing screen shots, and then I will try my best to answer your question.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

Dec2011 +11.4% +10.7% +19.7%

When you add each month Oct 11.4%, Nov 10.70%, and Dec 19.70% it totals 41.80%, yet total equity is $75,351 on starting capital of $50,000, which calculates to 50.70%. Why the discrepancy? For marketing purposes which number should be used. Thanks as usual for your prompt responses.

Matthew, This is a snapshot of where I computed the 50.70% return as of the close of 12/30/11.

Model Account Status

Started $50,000

Buy Power $54,143

Cash $55,050

Equity ($907)

Cumulative $ $25,351

Total System Equity $75,351

Margined $0

Open P/L ($920)

You cannot add monthly returns together and expect them to add to a cumulative return. Think about the way the math works. Take a simple example. You start with $100 and, in month 1, earn 10%. Now you have $110. In month 2, you make another 10%. Now you have 110 + 11, or $121. That’s a total gain of 21% over two months, yet when you add the monthly returns you only have 20%.

I assure you C2 calculates the returns correctly. You can confirm by holding your mouse over the charts, and looking at the equity point for each relevant day.

You’re right, the starting amounts are different each month for monthly returns vs the initial capital, which is constant on cumulative returns. I’ll go with the cumulative return for the last 2 1/2 months, 50.70% for 2011.