![]() If I had continued with the same 550 times increase the results would have been: second year $3B and in the fourth year all the money in the world plus. So in little less than one year I had, rounding down, a 550 fold increase through pyramiding profits from the right side of a bull market in gold and gold mining company’s share options. Then I took $250k of those profits and pyramided that into $4.5m. ![]() I started with $10k in the futures market and turned it into $1.3m. I combined both futures and options on gold and gold shares for a year in a prior bull market. Options however have to be liquidated before the profits can be used to buy more and you pay a time and risk premium over what a futures contract costs. You cannot lose more than you have paid for the option. That risk is illuminated if you buy options. The big negative is that there are margin calls when the market turns in the other direction that can cause serious losses. ![]() Your profits are computed on all positions at the end of each day and so available for additional speculation the next day. The most efficient form of pyramiding is available in the futures market. Never the less, compounding has its appropriate application in making both short and long term financial planning. Nothing in the real world is linear forever. It is important to keep in mind that economic activity is, like all things, cyclical. If however you compound just six percent the $24 each year from 1550 until today the amount would far exceed the value of Manhattan real estate. For instance: Manhattan was bought in 1550 by the Dutch East Indies company from the Indians then living there for $24 in beads and other trinkets. There are many methods and examples of how it is possible to enjoy an extra ordinary rate of return by reinvesting your short term gains into a longer term trend in business operations, investment or speculation. ![]()
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