In the same way that investing in the stock market can be a great opportunity to achieve a higher rate of return, it can be a great opportunity for those of us who think it is a bad idea to invest in stocks. Why? Because the stock market is a big, big black box. It’s not a person. It’s a set of numbers and calculations and formulas and percentages and figures that we don’t have control over.
The dollar weighted return is a measure of how the stock market treats other people’s money. If you’re making money from your stocks, you’re probably not giving a great deal of importance to your own financial health. When it comes down to it, people who invest are going to give more attention to other people’s investment gains than others. When it comes to investing, your job is to find the most valuable company to invest in.
By the standards of the stock market, when it comes down to it, most investors are terrible at it. And that is a big problem. It’s not a secret that the only people who have a good track record when it comes to investing are rich, famous, and/or successful. Not only is that a bad track record, it can also make you waste a lot of money.
The only way to figure out how to figure out the value of the company you are investing in is to figure out what the company is worth. This is where the value of the company is determined. That is, how much the company makes. This is the key to understanding the value of your company, which is the most important part of any investing strategy.
When you look at the companies in your neighborhood or city, you realize that the value of their products will depend on the total value that they produce. Some of the products are better than others, and some of the companies do better than others. For example, a large company produced something better than a small one. This makes sense if the money you make in your portfolio comes from the company. The value is determined by how well it is made.
How do I know this? The company is a corporation.
A corporation is a legal entity created by the government and controlled by a board of directors. So the company’s products are produced by the corporation. A company produces those products for the money that you can make from those products. How do I know that? Because the company’s value is based on the value of the company. As the same company sells the same products over and over again, the value of the company is kept the same.
One of the things I love about a dollar weighted return is that it doesn’t care where a company comes from. Your dollar-weighted return is based on the value of the dollar you spent on the product. So if a company makes a product with a dollar value of $1,000, you buy the product and the company pays you $1,000 (or as close to $1,000 as possible). Then, you sell the product.
Dollar-weighted returns can be a real pain because the company makes a product, lets say a product that sells at a price of $1,000. You buy the product, you sell it, get paid $1,000, and then you sell it. But hey, if I were to sell you a $5,000 product that has a dollar value of $1,000.00, then of course there would be a $5,000 dollar-weighted return.
This is more of a “what if this happens?” scenario because it doesn’t take into account the fact that the company might take a slightly higher share of the first sale for itself versus re-investing in the company. Some companies that are profitable sell their products at a price of 1,000, while others sell their products at a price of 1,001. Or maybe they just don’t make any other products.
