Index
Copyright 1999 thru 2005                           Hamill Web Book
Contents
Random Walk Down S&P 500 Back
Monte Carlo Simulation
 This page displays the yearly valuation of a portfolio that is hit with random fluctuations
like that experienced over a stretch of 76 years (1926-1998).
 The variability of the results according to the order in which losses and gains occur is
striking.  Doing this in a spreadsheet and recalculating often is even more striking.
 After 10 years, you could have a small gain to 4 or more times higher.
Year Amount Amount Amount Amount Amount
0 100,000 100,000 100,000 100,000 100,000
1 125,000 125,000 125,000 90,000 100,000
2 156,250 112,500 156,250 99,000 125,000
3 195,313 123,750 195,313 123,750 156,250
4 175,781 154,688 244,141 136,125 195,313
To recalculate
5 219,727 193,359 219,727 122,513 244,141
Press F9
6 241,699 241,699 197,754 110,261 268,555
Recalculate only
7 302,124 302,124 247,192 121,287 241,699
works with the
8 377,655 377,655 308,990 151,609 302,124
spreadsheet, not the
9 339,890 472,069 386,238 189,512 332,336
web page
10 424,862 472,069 482,798 170,560 232,635
11 382,376 590,086 603,497 213,200 255,899
Send me an email
12 420,613 531,077 543,147 266,501 255,899
if you'd like a
13 378,552 584,185 678,934 266,501 319,874
copy of the
14 340,697 730,231 611,041 239,851 287,886
spreadsheet.
15 425,871 912,789 611,041 299,813 316,675
16 532,339 1,140,987 549,937 374,766 395,844
17 372,637 1,426,233 604,930 468,458 494,805
18 465,796 1,782,792 665,423 585,573 618,506
19 582,245 2,228,489 598,881 731,966 773,132
20 640,470 2,451,338 658,769 805,162 773,132
Assumptions
# years Change      
4 -30%      
13 -10%      
5 0%      
13 10%      
38 25%