The Basics - Rate of Return From Charts
StockScores.Com Rate of Return has two parts; cash paid to you and growth of the ETF.

includes
The dividend is cash paid. Growth can be seen as an upward slope.

dividends
. Yahoo Charts The Yahoo chart slopes down. Stockscores' chart to the left slopes up because dividend is mixed in.

exclude them
.

Here is the HAC.TO Chosen because it pays no dividend. The upward slope is your total return.

chart again
, with a red dotted line drawn in after you hit annotate:

Evidently the Horizons has funds of many types and HAC buys fast-growing funds for part of the year.

When 7% has been achieved, it switches to holding bonds.
fund manager
has returned it to its If the upward slope is not maintained, return is less than 7%/yr.

straight line
after the Horizons did not predict COVID and its holdings fell.

HAC.TO rode the rebound back up to 7% and locked it in as bonds.
COVID crunch
. Let's see if the slope of the line checks out to be 7%/yr as predicted:

Removing Up and Down Price Jumps:

The red dotted line has been moved to JUST TOUCH the red EMA200 line in two places (eliminating volatility). Any straight line on the chart behaves like a bond yielding interest and the dotted line follows the price growth of the ETF, ignoring noise.

Picking Principal and Final Total Off the Chart:

The  site lets you enter three known values, but first of all,

  • set the top Calculate box in the calculator, to interest Rate(R), which is the unknown variable this time. (You would have to sell the ETF to get the gain as cash.)

    Next get the Total value A, which is picked off the right hand end of the dotted line after value accumulates for five years. Measure that by pointing at the end of the red dotted line with the mouse.

  • Enter the little gray number at the bottom, $24.64, in the second box.

    Now pick off the left hand end of the dotted line, which in our example, was $17.13.
  • In the third Principal box, enter this as the starting value

  • Make sure the compound rate in the fourth box is "Continuously".

  • The time you enter in the fifth box is five years, the width of the above plot. Press Calculate,
    and: . Voila!

    That ETF is indeed like a 7%/yr bond, doubling your holding every ten years. Here is how to enter these numbers above:


  • Obtaining Slope of Other Metrics:

    It is also possible to enter X and Y points for dividends, earnings, book value etc. in a
    spreadsheet, prepare a Ln(Y) column, and then run a straight (logarithmic) line among the points using the SLOPE() function. Multiplying by 100% will then yield an average R.O.R. for whatever metric you obtain.

    Be aware, though, that if X is expressed as dates, you need to divide by 365Days/Yr. The sample spreadsheet provided will then recalculate two fitted data pairs on the new line to enter in the boxes above.

     
     
     
     
     

    The Basics: Measuring Chart Volatility

    The math is
    obscure, but the resulting procedure is something we can easily DO. Open up two independent tabs: a chart and a calculator.

    The same formula for Rate Of Return can give the amount of Up - And - Down variation within one year; just measure top-to-bottom at the end rather than side-to-side:

    N.B. if one measures the Rate Of Return we get 9%/yr for this particular stock; ZLB.TO. Thus it jumps up and down by about twice the growth each year; and we need to decide whether entering now will be better than waiting.

    ZLB.TO means "Low Beta", which is also a measure of jumpyness. The doubling-time is a little over eight years. Its reliability is very good compared to most single stocks.


    Here is how to enter the numbers above, with the corresponding date where they were measured:
    The program calculates the mid-point, along the green line shown below, and projects it to the current date (trend). Below that projection the volatility is shown, first as a percentage relative to the green line and then as the number of years it takes the green line to climb from bottom to top of the trend:
    This gives us something to go on when deciding whether to buy it. The most one can gain by waiting is half of the volatility, or 0.9 yr

     
     
     
     
     
    The Basics - Choosing an Entry Point
    Above the middle of volatility,
    store new $$$ in bonds etc.
    Buy and Hold after corrections. (Don't trade after that.)


    Here is the chart for Low Beta again, with

    There are several other things to check for when choosing ETFs to buy and hold rather than trading in and out of. First, the EMA200 should touch the red dotted line at BOTH up and down wiggles. Secondly the volatility, as measured below, should be less than three times the annual growth. Finally the dividends should grow steadily at roughly the same %/yr rate as price.

    The list of ETFs above is not totally up to date. When funds are contributed to an RRSP, they should be held in cash until there is time to construct this RGB figure and up-date the location of the green lines.

    Note too that the volatility in the list above does not agree with the measurement below. That is because the market has gone up strongly since the measurement was made for the list. The bottom blue line has been placed above the COVID dip this time, reducing the volatility.


    Here is how to enter data for the Low Beta ETF and test for predicted entry advantage for buying below the green trend line:


    If the entry price was higher then the green line this will be shown:.


    Buy At the EMA: The EMA200 (Exponential Moving Average) is delayed by 187 days, and in the process strongly filters out volatility. Thus it locates a trend, and if the price is rising, it will lie below the current price (green line) most of the time. ASIDE: most "chartists" and brokers use the SMA200 - avoid doing that too because the EMA gives better R.O.R. measurements.

    The image to the right shows four approximate straight-line segments, with arrows pointing to the "corners" showing up after a run-up in the Price Chart starts or ends. The ETF holds only banks and its chart combines market price and dividend yield.

    The overall Price Growth rate plus dividends (it is a StockCharts.com plot), was 8.5%/yr just before the 2019 pandemic, measured as shown above.
    Secular Bull and Bear markets alternate every 16 to 20 years, and the plot to the right shows that four years ago we just left a flat spot (Bear) like the one above. The market should rise for another ten years or so.

    However, during 2019 and 2020 COVID-19 has resulted in money-supply inflation. The price of gold is saying that Market Sentiment predicts inflation will result. It would be wise to expect a flat period in the next year or two and invest defensively.