I was told that I have to constantly sell my stock then reinvest it to "lock in" profits. Is this true?

So when you sell you reinvest in different stock right? As why would same stock go to 2250 or 2500 when its same 2000 at same time…

I know. The percentages in the table outline the growth of the price.

The actual price is not important.

The scenario still doesn’t clarify why selling is mentioned and never was explained as net impact of selling is 0$ or 0%.

The selling and re-purchasing takes place instantly, ie. minimal disruption as a result of price fluctuation.

Also, the price isn’t important. The theory relies on the growth of 100% occuring twice, the first time with an initial amount; the second time with an initial amount plus the profits it made.

The end result by selling and re-buying - providing the performance of the stock is favourable - is greater returns.

@Hbomb the stock selection is irrelevant, but to your point the scenario works with the same stock or a different stock, so long as the performance continues to be aggressively bullish.

This table reminds me more of:

Having :apple: on start of both stories.

This :apple: grows 2x size.

1st story keeps :apple:

2nd story sold the :apple: and bought :tangerine: .

On end of both stories you compared :apple: to :tangerine:

The price is actually important in reality. Up until ā€œactionā€ in your example, you re comparing on the basis of the same growth rate - 1:1. After, you have two different growth rates and thats why your balance at the end differes.

Again as Dao said 1x3 != 1x2x2

And if we use apples and oranges we can say this;

Story 1: :apple: grows 200% = :apple: :apple: :apple:

Story 2: :apple: grows 100% = :apple: :apple:, sold :apple: :apple:, bought :apple: :apple:, grows 100% = :apple: :apple: :apple: :apple:

No :tangerine: in sight :eyes:

So how did buying/ selling netted anything? Except that in story two apple grows 100% from the point it was already grown 100%, while scenario 1 uses starting size. So either timeline doesn’t match or apple in 2nd story is on steroids.

Posted the table again but noticed a duff calculation. I’ll be back! :sunglasses:

At first I thought this was some fun n games. Now I ain’t sure, if for real you think selling made difference on same stock growing same amount.

Maybe @kali can enlighten us lol

Sorry the timeframe was confusing things. Timeframe isn’t important, the growth is.

See revised table;

I would say selling is the most confusing. :face_with_thermometer:

You might be right. As I’m working through this it’s becoming a bit clearer.

The timeline is key here. Especially if it’s the same stock. Less so if you switch to anotehr stock.

Scenario 2 takes longer to reach it’s goal, same as holding in Scenario 1 longer.

@Joey_Fantana your table is literally comparing two different stocks growing at two different rates regardless of your actions

timeline              1    2   3

stock price           100  200 400

a-)
you have 100 invested @1 do nothing @2 and @3 you have 400
b-)
if you have 100 invested @1 sell @2 you have 200, buy 1 share for 200 at @3 your account value is 400

Yep, just edited my post above at the same time.

It was the missing piece of the jigsaw. Couldn’t get my head round it.

For compounding to work you need to A) switch stocks, and B) have the 2nd stock grow at a faster rate than the original. Completely out of your control of course.

So I guess :apple: :tangerine: was correct story. :face_with_thermometer:

Yes but bloody Nora, man, apples and oranges isn’t an explanation! :smile: I clearly needed help.
Not sure who to thank in this instance!

Table with timeline for clarity;

I don’t know if I’m smarter or stupider after this…!

Apologies to @obrienciaran if I dragged his theory through the muck with that shitshow.

This is the crux of it really. If you open your T212 app and see you are up 200% on your initial investment of 100 pound, you will see your total cash as 300 pound. The percentage movement displayed is that of the initial sum.

@pipo gave the same scenario above except used 1000 euros and 10% as an example. Just like in your example where the second 100% gain isn’t on the 200 pounds but rather on the initial 100, in his example, the second 10% gain is still on the 1000 euro and not the 1100.

And the reason I can see why that would be the case is the compounding period is not defined. You can mathematically compound yearly, monthly, weekly, daily, hourly, minutely, secondly etc.

Like this example, there is no reason why you couldn’t do compounding by the minute here. It’s just however that T212 doesn’t display like that.

So this is the main confusion I think everyone has. Starting with 100 pounds, if you want to end up with 400 pounds, you need to profit 300%. Not 200% as @pipo or others think.

In these two examples the result will be the same. It’s just in one example you will see you are up 100%, then another 100% and in the other you will see you are up 300%.

My point is essentially the growth is on the initial starting amount and grows linearly. 100% and then another 100% does not equal 300% as some people seem to think.

From positive side, good :popcorn: material was created.

I feel like this thread essentially outlines why just flipping hold good stocks and enjoy.