looking for an investment formula if it exists

[EXTRAPOLATER]

I understand that the greater my potential risk is then the greater the potential return should be.

If the risks can be established mathematically then how do I compare the returns? e.g. does it make sense that if I risk losing the entire investment then I should expect a (+)100% return (ie 200% return)? How do the odds of me losing the entire investment change my required potential return? e.g. if there is a 50% chance of 100% loss then obviously (I think) I need more than a 100% return but if the chance of losing it all is greater or lower than 50% then my required return should change.

Hopefully that might make sense.
I'm wondering if there are any investment formulas that cover risk/return problems like these.

 

[selkirk]

Extrapolater not sure about an overall formual, there is so many factors that change from year to year. I mean there are certain banks/investment banks that you would deem as high risk, however 1-2 years ago most would have considered them to be blue chip (safe?) investments...safer than most.... (then along comes a credit crisis, or even the fear) and the results are quick.

there are many forumulas / methods on how to pick a portfolio. there is a series of books out (I plan to read) (The little book (series) The little book of (value investing), (beats the market), (common sense investing).

I sometimes play jr. stocks, or risky ventures, like BSC recently (though it is doing well) believe not that risky, most of your investments should be to avoid risk. invest in stocks that grow earnings, cash flow, and dividends, and the stock price goes up over time. that is simple, however most investors chase to many spec plays and lose. hard to make up for an investment that goes to zero.

hope to read some of the lttle book series for my shareclub, will post my reviews here....

finally one time bought into a small copper play in the late 90s, well 98? and did 20 pages of forumlas, and pages (Know do not understand half what I wrote), anyways in the early days of the net, found a web page that a short seller posted his top 10-20 short, (in the mining sector), mostly penny stocks on the VSE.

anyway to my shock he had the stock I bought for .75 and did all of this work, so emailed him asking him about the short and thought it had decent value...

" small company trying to develop a large project a large company could not",

he was correct, sold my stock for .30 on average (brutal no volume, hard to sell in the end). by the way sometimes a small company can get land and mining properties from a sr. that the sr. is not intested in because they are to small, and require work.

ie. HBM and FNX which traded for a few dollars and now is 16, and 30.... made far more at hbm, was to slow on fnx (both on Toronto).

by the way never dollar cost average, and glad I kept that rule, the stock went to zero....

thanks
selkirk

 

[EXTRAPOLATER]

there are many forumulas / methods on how to pick a portfolio.

...most of your investments should be to avoid risk.

thanks
selkirk

This is the part of value to me at present.

My portfolio maybe should include something riskier as the payout might be worthwhile.
I don't know if 10% sounds fair or if I should put more of it there if the payout would be high enough.
I guess that "risk" is in the eye of the beholder.

Some kind of beginners investing book might have something for me.
Might search the web for something appropriate.

thanks