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Preet Banerjee, B.Sc., FMA, DMS is a former stockbroker and financial advisor in Toronto. Information on this site is for entertainment purposes ONLY. Always seek individual professional advice before making any financial decisions.

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50% Equals 100% When It Comes To Sell Offs

October 13th, 2008 • Related • Filed Under
                                                         
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At the time that I am writing this, global stock markets which are open for trading are markedly higher with gains ranging from 4% to 10% in some cases. However, when a gain follows a long stretch of losses it’s important to put this into context – it’s not as rosy as one would think (although certainly welcome).

50% = 100%

Here’s the best example: Let’s say your portfolio is down 50% – it was worth $100,000 and is now worth $50,000. Just to get back to where you were would require a 100% gain – your $50,000 would have to double to get back to $100,000.

Here’s a chart which shows the recovery you need after suffering from various levels of declines:

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Credit Repair - option trading

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