Like Tree32Likes

Help me with my math...

Closed Thread
Page 1 of 6 1 2 3 4 ... LastLast
  1. #1

    Join Date
    Nov 2014
    Posts
    853

    Help me with my math...

    So, I have a figure of +700 in year one, and a figure of -5,000 in year 25. What is the yearly drop, on a compound rate?

    Can you show me how you calculated it?

    I know how to go from + 700 to +5000, but not how to go from + to -. Or shall I go from +700 to +6400?

    The first who gives me the correct result is going to get my gratitude.

    Thanks!

    Last edited by Liked; 10-04-2015 at 03:59 PM.

  2. #2

    Join Date
    Nov 2014
    Posts
    853

    - 204%


  3. #3

    Join Date
    Sep 2007
    Posts
    4,012

    Try the "Banking 101" approach

    You have two cows.
    You sell three of them to your publicly listed company, using letters of credit opened by
    your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.
    The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.
    The annual report says the company owns eight cows, with an option on one more. You sell one cow to buy a new president of the United States , leaving you with nine cows. No balance sheet provided with he release.
    The public then buys your bull.

    justjoe86 likes this.

  4. #4

    Join Date
    May 2010
    Posts
    4,713

    doesnt your (growth) ends when your money is at 0?


  5. #5

    Join Date
    Nov 2014
    Posts
    853

    No, it doesn't. It ends when the money is at -5000

    I assume it's the same as when I go from +700 to +6400, since I start with the same amount (+700), and I have the same difference between the first amount and the last amount (5,700). But this is just a guess.

    Anybody?

    East_coast likes this.

  6. #6

    Join Date
    Nov 2014
    Posts
    853

    DeletedUser, I didn't edit my post to write -5,000 instead of +5,000. I had that all along. You just didn't read my post very accurately

    I edited it to write "Or shall I go from +700 to +6400?" instead of "Or shall I go from +700 to +5,700?"

    Is that it? I can use the CAGR to calculate the discount rate to go from +700 to +6,400?? The difference between the numbers is the same (5,700), and I start from the same number (700). Right?

    East_coast likes this.

  7. #7

    Join Date
    Jun 2011
    Posts
    1,693

    You can't calculate it in a classical sense of compounded returns, since your return is a loss of more than 100%. When you compound a return you multiply the return with the previous return. If your return is negative number (more than 100% loss), and you multiply it with another negative, the math rules tells us that two negatives becomes a positive. Therefor your return is
    undefinied.

    Another way to see it is that when you lost your money and have 0 left, a loss then of another dollar, would mean an infinite loss, since you managed to lose 1 dollar out of no money. Therefor for you to be able to continue to lose money when at zero, it means that you actually had some type of dollar exposure that created that loss. That should be your base figure, not the 700.

    You have to make up a new type of definition which is not a classical compounding of returns. 5700/25 = 228

    (700-228)/700 -1 = 32.57% drop in value per year, but not a compounded drop, just the average drop out of the 700 starting.

    Last edited by RobRoy; 12-04-2015 at 07:02 PM.
    East_coast and Morrison like this.

  8. #8

    Join Date
    Aug 2012
    Location
    Location Location
    Posts
    1,201

    Actually this is possible. You do at some point need to take the 25th root of a negative number but as long as you use complex imaginary numbers you'll be ok.


  9. #9

    Join Date
    Aug 2012
    Location
    Location Location
    Posts
    1,201

    Actually it's simpler than using complex number theory because you have an odd number of years.

    In your formula above the answer for x is - 208.1819682%


  10. #10

    Join Date
    Nov 2014
    Posts
    853
    Original Post Deleted
    Thank you all. No. It's not my return on investment. I still have a little bit off the shitty shares I bought. (I always manage to select the worst).

    Anyway, the way I did it was to go from +700 to +6400. And I calculated it with an excel file, the same way I also calculated the yearly change for the other numbers I have, though all of them go from positive to positive, or from negative to negative. This is the only one that goes from positive to negative..

    I am basically interested at the yearly change. I hope it was correct.

Closed Thread
Page 1 of 6 1 2 3 4 ... LastLast