Here's four quality growth dashboards, covering:
$.IXIC(.IXIC)$ $Invesco QQQ(QQQ)$ $NASDAQ 100(NDX)$ $E-mini Nasdaq 100 - main 2412(NQmain)$
Which stand out to you?
Year 1 - you invest $20 and make $10
Year 2 - you invest $10 and make $5
Year 3 - you invest $5 and make $2.50
Your ROC is 50%, but your annualised growth rate is -50%.
That’s why ROC and growth both matter. Look for both.
Year 1 - you invest $20 and make $10
Year 2 - you invest $30 and make $15
Year 3 - you invest $45 and make $22.50
Now your ROC and growth rate are both 50%
There’s been no payout and no new capital required.
Year 1 - you invest $100 and make $5
Year 2 - you invest $200 and make $10
Year 3 - you invest $400 and make $20
Now your annualised growth rate is 50%, but your return on capital is 5% and you’ve had to issue new capital each year to generate these returns, which either increases your leverage or dilutes your shareholders.
That’s why ROC and growth both matter. Look for both.
Comments