PPRuNe Forums - View Single Post - QF shares hit $2.00, discuss
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Old 1st Apr 2015, 13:58
  #677 (permalink)  
norm123
 
Join Date: Mar 2008
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You simply went 1.8 times times inflation of 3% over ten years is 1.8 times 1.03 power 10 = $2.42 (which is correct) and then compared that to the current share price of $3.17, then subtract the diff and put that over 2.42 to come up with a "gain" of 31%. That is just silly as people concentrate on the % without considering the real compounding return. If you are going to compare % rates of return, have to do that on a annual basis - so that you are comparing apple with apples. I just used the same method solving an equation (3.17 div 1.8 then 10th root) to get 1.058 (1.05822 actually). That represents an annualised return of 5.822%...or 2.822% gain over inflation of 1.03. Yes the numerical "gain" at the end of 31% sounds impressive until you do the maths and see that the real return is only 2.8% above inflation...not such a headline grabber. You certainly convinced the next dude.
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