Investor A	Investor B	Investor C
Annual Returns
Year 1	21%	21%	21%
Year 2	- 55%	-27%	6%
Year 3	30%	20%	18%
Year 4	30%	21%	15%
Year 5	25%	20%	18%
Year 6	100%	50%	13%

Investor A is a typical risk taker who seeks a high annual return no matter what the risk. In five out of six years, A’s portfolio recorded attractive gains of between 21% and 100%, but A was the poorest performer of the lot. His second year loss of 55% has caused him to underperform the others despite his sixth year gain of 100%! A $100,000 investment grew to $230,051 achieving an annual compound return of 14.9%.

 

Investor B’s results were less volatile and he suffered only one down year. His second year loss of 27% caused him to come in second. A $100,000 investment grew to $230,859 achieving an annual compound return of 15.0%.

 

Investor C was the most consistent investor who did not suffer any down years. He kept a close eye on investment risk and tried to minimize it. Perhaps he invested in one of Bay Capital’s defensive investment programs. Even though he substantially underperformed A and B four out of six years, he was the best performer over the entire period and probably slept better at night than either one. A $100,000 investment grew to $232,077 achieving an annual compound return of 15.1%.