Post by 4aapl on Aug 5, 2019 7:50:46 GMT -8
The simple rule of selling the stock at when RSI is at 75 and buying at 30 will give you at least 25% return every year. The last 5 years buy and hold folks got 12%.
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FWIW, your return calculations aren't 100% accurate either, Lucky. You want to use annualized returns instead of averaging it.
As an extreme example, let's say you made 100% a year for 2 years in a row. Starting at $100, that would be $200, and then $400.
But using your average returns figure, you'd want a 200% total return from the initial value, or $300. But dividing that 200% by 2, you'd initially think you also got 100% returns per year, when you didn't.
Luckily the calculations are easy on Apple's Calculator, on the Mac OS or iOS. View the calculator in scientific mode (instead of basic), on a Mac by selecting it, and on the iPhone by turning your phone sideways. Put in your return as a decimal, so 10% is 1.10. Then push the x^Y button and enter the years. 5 years at a 10% annualized rate gives 1.61, or a 61% total return.
Reversing the calculation, you use the button below it. The proper verbiage might be taking the y'th root of x. Or not. But using the same example, put in a 61% total return, so 1.61. Push the button, and then put in 5. And (without the slight extra value above 1.61), you get 1.09993. Call that 10%.
Try that on the AAPL stock valuation over the past 5 years. That gives annualized returns of something around 16.2% without dividends, and 18.2% with dividends. Not bad at all, though one has to be careful with longer stretches to make sure that most of that appreciation wasn't concentrated, or that the values used weren't at the very extremes. If AAPL had made 60% the first year and only 8% on subsequent years, that would be a lot different than if it roughly made that consistently, if using the 5 year annualized return as guidance for the next 5 years. We all know that, but AAPL has had some more extreme moves over the years, so sometimes the "random" pickings line up with what one would also use for cherry picking, in either a sweet or sour choice.
Like today's valuation vs a few days ago.