How does one measure how good/determine whether the returns on a stock is considered to be good? ? - Seedly
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Anonymous

Asked on 27 Mar 2019

How does one measure how good/determine whether the returns on a stock is considered to be good? ?

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Sandra Teo
Sandra Teo
Level 7. Grand Master
Answered on 27 Mar 2019

Hello!

A good rate of return is relative. To determine whether a rate of return is good, it should be looked at in the context of the risk of the stock. If the risk of the investment is low and the returns are higher, it is considered to be good. Generally, over the long term, the return should keep pace with the standard stock market index such as the S&P500 or Dow Jones Industrial Average. The rate of return should also account for future inflation. If the absolute return minus inflation is positive, then it could be considered a good return.

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