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1 line
28 KiB
JavaScript
1 line
28 KiB
JavaScript
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"use strict";(self.webpackChunkspeice_io=self.webpackChunkspeice_io||[]).push([["4833"],{6171:function(e,s,t){t.r(s),t.d(s,{assets:function(){return o},contentTitle:function(){return r},default:function(){return m},frontMatter:function(){return l},metadata:function(){return n},toc:function(){return c}});var n=t(3071),a=t(5893),i=t(65);let l={slug:"2016/02/profitability-using-the-investment-formula",title:"Profitability using the investment formula",date:new Date("2016-02-26T12:00:00.000Z"),authors:["bspeice"],tags:[]},r=void 0,o={authorsImageUrls:[void 0]},c=[{value:"Theoretical Justification",id:"theoretical-justification",level:2},{value:"Running a simulation",id:"running-a-simulation",level:2},{value:"And now the interesting part",id:"and-now-the-interesting-part",level:2},{value:"Summary and plans for the next post",id:"summary-and-plans-for-the-next-post",level:2}];function h(e){let s={a:"a",annotation:"annotation",code:"code",h2:"h2",img:"img",li:"li",math:"math",mfrac:"mfrac",mi:"mi",mn:"mn",mo:"mo",mrow:"mrow",p:"p",pre:"pre",semantics:"semantics",span:"span",strong:"strong",ul:"ul",...(0,i.a)(),...e.components};return(0,a.jsxs)(a.Fragment,{children:[(0,a.jsx)(s.p,{children:"After developing a formula to guide our investing, how do we actually evaluate its performance in the real world?"}),"\n",(0,a.jsxs)(s.p,{children:["I've previously talked about crafting an ",(0,a.jsx)(s.a,{href:"/2016/02/guaranteed-money-maker",children:"Investment Formula"})," that would guarantee making money if you could predict which direction the stock market was going to go. This is going to be the first in a series of posts trying to flesh out what an actual investment strategy based on this formula would look like."]}),"\n",(0,a.jsxs)(s.p,{children:["But first, the formula doesn't take into account two very important things: ",(0,a.jsx)(s.strong,{children:"leverage"}),", and the ",(0,a.jsx)(s.strong,{children:"number of days invested"}),". That's why I want to set up what I'm going to call the ",(0,a.jsx)(s.strong,{children:"Profitability Score"}),"."]}),"\n",(0,a.jsx)(s.p,{children:"The definition is going to be very simple:"}),"\n",(0,a.jsxs)(s.ul,{children:["\n",(0,a.jsxs)(s.li,{children:[(0,a.jsxs)(s.span,{className:"katex",children:[(0,a.jsx)(s.span,{className:"katex-mathml",children:(0,a.jsx)(s.math,{xmlns:"http://www.w3.org/1998/Math/MathML",children:(0,a.jsxs)(s.semantics,{children:[(0,a.jsx)(s.mrow,{children:(0,a.jsx)(s.mi,{children:"p"})}),(0,a.jsx)(s.annotation,{encoding:"application/x-tex",children:"p"})]})})}),(0,a.jsx)(s.span,{className:"katex-html","aria-hidden":"true",children:(0,a.jsxs)(s.span,{className:"base",children:[(0,a.jsx)(s.span,{className:"strut",style:{height:"0.625em",verticalAlign:"-0.1944em"}}),(0,a.jsx)(s.span,{className:"mord mathnormal",children:"p"})]})})]}),": Profit made once you exit the investment"]}),"\n",(0,a.jsxs)(s.li,{children:[(0,a.jsxs)(s.span,{className:"katex",children:[(0,a.jsx)(s.span,{className:"katex-mathml",children:(0,a.jsx)(s.math,{xmlns:"http://www.w3.org/1998/Math/MathML",children:(0,a.jsxs)(s.semantics,{children:[(0,a.jsx)(s.mrow,{children:(0,a.jsx)(s.mi,{children:"i"})}),(0,a.jsx)(s.annotation,{encoding:"application/x-tex",children:"i"})]})})}),(0,a.jsx)(s.span,{className:"katex-html","aria-hidden":"true",children:(0,a.jsxs)(s.span,{className:"base",children:[(0,a.jsx)(s.span,{className:"strut",style:{height:"0.6595em"}}),(0,a.jsx)(s.span,{className:"mord mathnormal",children:"i"})]})})]}),": Initial investment into the asset"]}),"\n",(0,a.jsxs)(s.li,{children:[(0,a.jsxs)(s.span,{className:"katex",children:[(0,a.jsx)(s.span,{className:"katex-mathml",children:(0,a.jsx)(s.math,{xmlns:"http://www.w3.org/1998/Math/MathML",children:(0,a.jsxs)(s.semantics,{children:[(0,a.jsx)(s.mrow,{children:(0,a.jsx)(s.mi,{children:"m"})}),(0,a.jsx)(s.annotation,{encoding:"application/x-tex",children:"m"})]})})}),(0,a.jsx)(s.span,{className:"katex-html","aria-hidden":"true",children:(0,a.jsxs)(s.span,{className:"base",children:[(0,a.jsx)(s.span,{className:"strut",style:{height:"0.4306em"}}),(0,a
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