1. When more stock in a company that is already owned is purchase 3 or more months after the previous purchase or at a price that differs by more than 30% from the previous purchase it is treated as a separate purchase. This only happens when something important has changed, such as the stock's price going down significantly.
2. Some but not all of the original position has been sold. The part of the position still held is valued as of 12/31/08
3. None of the original position has been sold. Position is valued as of 12/31/08.
4. So recently purchased that annualizing the return would not be meaningful. In calculating the average annual return the holding period return was used.

When reading the table above, it is important to remember that the areturn on the average stock in a portfolio is always greater than the accepted measure of portfolio returns, which is the geometric average. Dr. Wertz does not have the records needed to calculate the geometric average return for his entire portfolio. He does however, have the records to do this for his IRAs. For the period 1/1/2000 to 9/30/2009 his IRAs are up approximately 230% while the market is down 28%. This translates into a geometric average annual return of 13.0%/year for Dr. Wertz's IRAs compared to a -1.3% average annual return for the S&P 500, a difference in annual return of 14.3% in favor of Dr. Wertz.

Some of the reasons for differences between the return as measured by the average stock and the geometric average return for the IRAs.

• A standard average, which was used to calculate the average stock's return, is always higher than the geometric average.
• These returns are for stock investments only. The IRAs were never 100% in stocks.
• A portfolio’s return depends not only on the securities in it but also on the relative amounts of these securities. The risk of a security is one of the criteria used in determining the amount of a security to purchase. This weighting process can reduce portfolio returns below average security returns.
• The process for calculating the average stock's return implicitly assumes that when a stock is sold the proceeds are immediately reinvested in another stock. In practice there is often a significant period of time until a suitable stock is found.

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During 2006 and 2007 Dr. Wertz was unable to find stocks that meet his time tested and very successful selection criteria. To test alternative criteria, he put relatively small amount of money into the stocks listed below. Events showed that he should have stuck to his proven stock selection process. These stocks were not used in calculating the average return.