Fascinating math in trading and investing

 Rule of 72

The rule of 72 is a useful rule to calculate how long it takes for a particular investment to double given a certain return. The rule  is very simple: time to double = 72  divided by the annual return

• A portfolio with a 12% annual return will roughly take ~ 6 years to double (72 divided by 12)
• 8% return ~9 years
• 6% return ~12 years

The mathematics of investment losses

No one wants to sell at a loss, but sometimes it is better to take a small loss, than take a devastating decline that is impossible to recover from. To get back from a 50% loss, you will require a 100% gain and from there the numbers simply get more depressing...