Re: Alternate LMBF methods
Hey guys, been wanting to tell you this for a while now, just didn't have the heart. This post I made a minute ago elsewhere pretty much explains what I'm talking about:
Hi JTH,
How did you come up with the percentages? (I could cross check the numbers and answer my own question, but it's easier just to ask, and the odds favor that you used simple addition ) If you used simple addition, you will get faulty results:
Suppose, an account has $100 first of the year, ends year up 10% for the year at $110, ends second year up 10% (for that year) at $121.
Simple addition says total percentages over the two year span is 20% (10%+10%). But as you can see, it is actually 21% ($100 into $121).
The differences/errors are amplified with higher account amounts (used internally by the tsptalk spreadsheet) and time (number of years span lasts).
To do this correctly is more complicated and requires more work. (Using a pseudo account balance for each trader that runs to whole time span, etc.)
They also do these simple addition of percentages in the alternative LMBF forums...also getting incorrect conclusions...guess I'll finally let them know as well by copying this to them.
To any sensitive readers: not trying to fight (as so many times helpful (albeit: critical) information leads to on this site) just thought you would like accurate information. There is no easy way to tell someone: "Sorry, that's not correct if you did it like this..." But I tried.
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[COLOR=#0000ff][FONT=comic sans ms][I]"In the land of idiots, the moron is King."--Unknown[/I][/FONT][/COLOR]
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