Why Numbers Matter in Investing
Most financial books and advisors share strategies without providing hard numbers to back up their claims. They offer theories, forecasts, and recommendations-but without performance data, how can you truly evaluate their effectiveness?
That’s why Earn Twice the S&P is different. This book is packed with numbers, ensuring transparency and proof behind the claims. Understanding the Stars model requires looking at four key numbers:
- Return (Compound Annual Return) – The most important number in investing. It consolidates yearly fluctuations into a single percentage, allowing you to compare different investment options effectively.
- Compounding Number – A simple way to see long-term growth. If a $10,000 investment has a compounding factor of 100, it grows to $1,000,000 over time.
- Relative Performance – This measures how much better (or worse) the model performs compared to SPY. It reflects the additional percentage points gained from using TQQQ in the strategy.
- Drawdown – The percentage drop from a peak to the lowest point in a correction. Since the Stars model follows a buy-and-hold approach, drawdown doesn’t impact long-term performance.