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InvestWELL Report |
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Question:
What is the meaning of Return on Investment?
Answer: The Return on Investment (ROI) is often used to compare benefits of different investment alternatives.
Here is the formula:
ROI = (Gain on Investment / Cost of Investment) * 100
An investment with a higher ROI is preferred over a lower ROI.
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(Cumulative %)
Investment Strategy – MEMBER SECTION
Chart 1.
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- During the last month,
the US equities kept on going up and up (Chart 2 & 3) and any type of a pull-back, however small, was seen by the market participants as a buying opportunity.
Charts courtesy of StockCharts.com
- During the last month,
the Canadian equities performed very well and rose in tandem with the US market.
Charts courtesy of StockCharts.com
- Last month,
the US employers added 111K new jobs, which was slightly below analysts’ expectations. However, the December number was revised upward, resulting in counterbalancing the January figure.
- The U.S. economy grew at the fastest pace in a year last quarter as declining energy costs helped boost consumer spending and contain inflation. Other economic data confirms that manufacturing and construction are still struggling to shake off a slowdown.
- The figures of Canada’s Labour Market will be released next week. We expect that the numbers will confirm a steady growth in the Canadian economy and a number of new jobs.
- A growing chorus of industry analysts is contending that long-term performance records of actively managed mutual funds should be restated downwards by as much as 3 percentage points. The restatement is related to the survivorship bias, which allows mutual fund companies to take out of the mutual funds that have underperformed without including their results in the data available to investors. The index mutual funds are not a subject to the survivorship bias since they reflect the performance of an index.
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(see
explanation)
Charts 6 - 8: Advancing/Declining Line, AAII and Equity Put/Call Ratio
Charts courtesy of StockCharts.com
and DecisionPoint.com
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C is correct.
ROI = (Gain on Investment / Cost of Investment) * 100 = ($3 / $20) * 100 = 15%.
The holding period was one year. Hence, it is also a one-year ROI.
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Thank you for reading InvestWELL Report.
InvestWELLFinancial.com
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