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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Wednesday, January 23, 2008

Don't Be Fooled....

The Heng Send index fell by 13.7% on Friday and Monday. Its only up 5% or so at mid-day today (Wednesday) but percentages for large moves like this can be misleading. Assume that a index or stock trades at 100 and it falls by 13.7%. Its price is now 86.3. Assume that the price then rises by 13.7% and you will see that the stock or index has not recovered all of its losses:
86.3*1.137= 98.123
So, as you can see, despite falling 13.7% and subsequently rising by the same percentage, the position has still lost 2% of its value!

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