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Author: GoogleThis Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 66  
Subject: Total Average Returns Date: 5/26/2006 2:16 PM
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Question 1: On the Hidden Gems Scorecard, are the "total average returns" annualized, or cumulative? More precisely, how are the total average returns calculated?

Question 2: Why is the performance of Hidden Gems measured against the S&P 500, rather than against a small-cap index such as the Russell 2000?

Thanks,
GT

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Author: easmith Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 54 of 66
Subject: Re: Total Average Returns Date: 6/29/2006 2:33 PM
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Re: Question #1, the returns are cumulative. If they buy the stock for $10 and it goes to $40, that's a 300% return. One of the columns in MSN Portfolio Manager would consider that a 200% return, since you are going from 10 -> 20 -> 40.

Re: Question #2, good question...don't know that one.


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Author: kahunacfa Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55 of 66
Subject: Re: Total Average Returns Date: 7/2/2006 7:40 PM
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I think the answer to Question #2 why the S&P500 rather than the Russell or the Wilshire Index is that it is quite common to measure returns relative to the S&P500. The decision to invest in small stocks is a decision, in part, based on the observation that over most long periods of time (5+ years) small capitalization companies out-perform larger companies, represented by the S&P500. By investing in HG stocks you are choosing to invest outside the Large cap universe. Measuring the performance against the S&P500 indicates if you chose wisely.

Kahuna,CFA

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