In the exhibit below, we track the progress of this portfolio over a ten-year holding horizon. As time progresses, stock B declines to irrelevance while the portfolio value starts converging to the value of holding in stock A. Even with the assumed 50 per cent strike rate with symmetry around the magnitude of winning and losing returns, the portfolio compounds at a healthy 17.6 per cent per annum over this ten-year period, a pretty healthy rate of return. This example demonstrates how powerful compounding can be for investor portfolios if only sufficient time is allowed for it to work its
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