Consider a push like a return to a retail store. In absence of any restocking costs incurred (one could potentially equate this to the rare book(ee) that charges vig on a push) the retail store is no more or less profitable than prior to the sale/eventual return occurring.
Consider a push like a return to a retail store. In absence of any restocking costs incurred (one could potentially equate this to the rare book(ee) that charges vig on a push) the retail store is no more or less profitable than prior to the sale/eventual return occurring.
If you look at from a financial/investing point of view, then you should include pushes.
If you purchase 10 different stocks for $1000 each, and 9 of them you happen you sell for $1000, and the tenth you sell for $2000, then you don't remove those 9 from the amount of your investment and say you had a 100% ROI. You include them and say you had a 10% ROI.
ROI = (Gross Profit - Expenses)/Investment
In you example:
Investment = $110,000
Gross Profit = $6000
Expenses = ??? (could be 0, could be the cost of paying for picks, could be the amount of time you spend * an hourly rate)
If you look at from a financial/investing point of view, then you should include pushes.
If you purchase 10 different stocks for $1000 each, and 9 of them you happen you sell for $1000, and the tenth you sell for $2000, then you don't remove those 9 from the amount of your investment and say you had a 100% ROI. You include them and say you had a 10% ROI.
ROI = (Gross Profit - Expenses)/Investment
In you example:
Investment = $110,000
Gross Profit = $6000
Expenses = ??? (could be 0, could be the cost of paying for picks, could be the amount of time you spend * an hourly rate)
The difference between the author's aforementioned scenario and yours is that, ostensibly, you have a starting bankroll and are betting a percentage of that bankroll each time. In your scenario, your starting bankroll (principal investment) is equal to the aggregate purchase price of your portfolio required to make the investment.
To illustrate, if I start out with a bankroll of $1000 and turn a profit of $100 in 1 year's time, my ROI is 10%. I could have $100,000 worth of aggregate wagering activity in the process to achieve this profit, but I never required more than $1000 of liquidity. Now if we were discussing capital turnover on the other hand, that would be a different matter.
The difference between the author's aforementioned scenario and yours is that, ostensibly, you have a starting bankroll and are betting a percentage of that bankroll each time. In your scenario, your starting bankroll (principal investment) is equal to the aggregate purchase price of your portfolio required to make the investment.
To illustrate, if I start out with a bankroll of $1000 and turn a profit of $100 in 1 year's time, my ROI is 10%. I could have $100,000 worth of aggregate wagering activity in the process to achieve this profit, but I never required more than $1000 of liquidity. Now if we were discussing capital turnover on the other hand, that would be a different matter.
Dr. John understands your point and it is valid. Though Return On Income has a very specific definition in a finance context. Which brings us back to the point that, profitability reporting (from a financial perspective) is not the same as simply logging the outcomes of one's bet history.
Dr. John understands your point and it is valid. Though Return On Income has a very specific definition in a finance context. Which brings us back to the point that, profitability reporting (from a financial perspective) is not the same as simply logging the outcomes of one's bet history.
correction, Return On Investment***. Dr. John is all over the map at this hour.
correction, Return On Investment***. Dr. John is all over the map at this hour.
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