Friday, February 3, 2017

The Right Way to Measure Stock Gain

How do we measure our gain? Is it by the amount we gain or the percentage of the amount gain?
To answer this question let me show you guys an illustration:



Lets say person A invested P10,000 to buy STOCK X at P5.00 each. With this amount of money he can buy a total of 2,000 shares. Which when he sell it at later time for P10,00 each he will have a total gain of P20,000. That would be a 100% gain. Now look at person B with a capital of P100,000. Same percent gain but different total amount of gain. This is because of the big difference of the amount they have invested initially.

So in SUMMARY I want to emphasize:
1. Start investing early so you can accumulate more money through time. Else you need a much bigger initial investment to have a much bigger profit.
2. Measure your gains in percentage and not by amount for it will give you a much clearer picture of how well your investment/trades is performing.
3. By focusing on the percentage it will help people to be less greedy or fearful. It removes the emotions which comes along when you focus on the amount you gain or loss on a particular stock.


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