This sounds like an impressive success story! Let’s take a closer look at the calculation and the background:
1. Performance in Detail
9,081% Performance means that from an initial investment of 100 CAD, the final value is:
\[ 100 \text{ CAD} \times (1 + 90.81) = 100 \text{ CAD} \times 91.81 = 9,181 \text{ CAD} \]
But beware: Often, such figures are given as a “factor” – so 90.81-fold return. That would indeed be an increase by a factor of 90.81, that is:
\[ 100 \text{ CAD} \times (1 + 90.81) = 9,181 \text{ CAD} \]
However, in the financial world, it is common for a return of, e.g., 9081% to be calculated as a multiplier with the factor \((1 + \text{Return}/100)\) – but that would actually only be an increase to the 91-fold. In practice, many media often simply mean:
“From X to Y”, where Y/X = factor.
So if you read:
“From 100 to X”, and it says “Performance: Z%”, it usually means:
\[ X = 100 + (Z\%\cdot\frac{100}{100}) \]
But with very high percentages like here, it is often just meant:
\[ X = Z\%\cdot\text{starting value}/10^2 \]
This leads to confusion!
Correct Calculation
If it is really meant: Performance over the entire period is ×90.81, then from 100 CAD → about 9,081 CAD.
However, if a percentage increase of 9081% is indeed meant (thus on the initial capital plus this percentage increase), then:
\[ \text{Final Result} = \$(1+\frac{9081}{100})\times\$ = \$(91.81)\times\$= \$9180,\$\approx\$9180 \]
So in both cases, you reach about the same result.
2. Comparison to Warren Buffett
Warren Buffett’s long-term average annual return is about 20% p.a. over several decades – which is absolutely extraordinary! A one-time performance of over 9000% can, on the other hand, also arise from a short-term stroke of luck or an extreme individual value.
3. What can private investors learn from this?
- Long-termism: Buffett invests for the long term and often holds his positions for decades.
- Value Investing: He looks for undervalued companies with solid fundamentals.
- Diversification: Even if individual stocks can perform strongly, one should distribute their portfolio widely.
- Risk consideration: Extremely high individual returns are rare and usually associated with high risk.
Conclusion
A Canadian fund manager has apparently turned a small amount into multiple times – similar to Buffett in his best years of individual investments! For private investors, it remains important: Such successes are rare and should not tempt imitation without careful analysis of one’s own risk profile.
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