Remember when we talked about Drawdown?
>No!
We looked at the maximum stock price over the past umpteen years and compared it to the most recent price to see ...
>To see how much we would have lost. Yes, I remember now.
Well, that was a negative look at the past, so now we ...
>We take a positive look, right?
Yes. We now look at the minimum stock price over the past umpteen years and compare it to the most recent price to see ...
>To see how much we would have gained!
Stop interrupting!
If Max is the maximum and Min is the minimum price over the past umpteen years,
and P is the current price, we look at:
LOSS = 1  P / Max
and
GAIN = P / Min  1

For example, if the price dropped from a maximum of $50 to the current price of $30, then LOSS = 1 30/50 = 0.4 or a loss of 40%.
If, over the same time period, the price increased from a minimum of $20 to the current price of $30, then GAIN = 30/20  1 = 0.5 or a gain of 50%.
>I'll take the gain!
Pay attention.
There's a spreadsheet that looks at the daily prices over a 5year period. It looks like this:
>I take it you just click on the picture to download the spreadsheet?
Yes, as usual. A measure of how good or bad the stock has been is the Ratio: Average Gain/Average Loss.
G/L Ratio = Average[P / Min  1]
/
Average[1  P / Max]

>And if that's a big number, you buy the stock, right?
Of course! Everybody knows the future is a replica of the past!
Of course, you might also want to use this.
Here are a few G/L ratios (for the period June/03 to June/08):
DOW 7.0 
Nasdaq 6.2 
MSFT 3.2 
GE 5.6 
XOM 21.8 
WMT 0.8 
PFE 0.7 
VZ 2.8 
JNJ 5.9 
C 1.7 
KO 2.6 
MRK 2.1 
IBM 2.8 
TSX 19.0 
Brazil 30.4 
Japan 6.7 
U.K. 11.9 
Australia 17.3 
Shanghai 6.2 
>Guess I'll buy the XOM.
ExxonMobil? Go right ahead ...
