After examining our original analysis of ShareFinder's recommendations and the summary that followed, a reader writes:

Richard Cluver replies:

You need to understand that in analysing the ShareFinder recommendations we are not concerned with promoting any of our products, but rather with what these statistics can teach us in order that we might make the greatest possible returns upon our investments.

I publish them^†, furthermore, so that users of my ShareFinder programmes and E-Mail share prediction services might understand the best strategies to use to suit their own particular investment needs.

Let me start by summarising four approaches to the share market and, statistically, what returns one might expect from them.

1. Short-term trading
   Analysis of the average trading profits yielded by the ShareFinder Trader programme suggest that one might expect to make 42.26 percent in an average of 25.5 days. In order to render this figure comparable with other share market methods, we need to annualise it. So, working on 250 trading days a year the 25.5 day average cycle implies one could theoretically achieve ten such transactions a year, compounding your money on each occasion to reach a total gain of 3395 percent a year.

2. Medium-term trading
   Using the Royals management module to select only the bluest of blue chip shares and the Trader to highlight the optimum selling point we have shown that the average gain would be 39.44 percent in an average period of 21 weeks which implies 2.5 trades a year which compounds to 232.8 percent.

3. Long-term investment
   Again using the Royals management module to select only the bluest of blue chip shares and the Trader to indicate secondary or tertiary market peaks, we have observed that a 143.79 percent gain is possible in an average period of 83.8 weeks, the implied annual return would be 77.6 percent.

4. Ultra-long-term investment
   Here the process is to use the Royals programme exclusively to select a balanced portfolio of the top five shares which would be held until such time as they achieved their full growth potential from grossly underpriced and subject to technical signs of accumulative buying to grossly overpriced and subject to dispersal selling which would trigger the Royals programme into issuing a "Sell" signal, a phase which could last seven years or more. Here I have ignored the underpriced/overpriced figure and sinply taken the five year compound average growth average of the portfolio as a whole and derived an annual 65.46 percent gain potential annually.

Hopefully then I have made the point that there are four distinctly different styles of using the share market and the ShareFinder analysis tools. Plase, however, do not take these numbers as absolutes. All assume, for example, that the day you sell you immediately re-invest whereas this is is not always a practical option.

Furthermore, to be strictly accurate one should include brokerage into these comparisons, but that is such a variable number these days that the exercise would probably be misleading. Furthermore you should note that the gains made by the first technique would be taxable while the second might render you liable for taxation unless you were very careful about documenting your reason for selling and could prove that your sales were capital defensive. Methods three and four are unlikely to be taxed.

Now, accepting that these figures are not absolute but can provide reasonable illustrations of what is theoretically possible using differing approaches to the share market, let us take R25 000 - that is the cost of creating a balanced Royals portfolio of five shares at the time of writing - and let us project these four growth rates to determine how long it would take to make you a billionaire.

Method 1	3395.0% PA	3 years
Method 2	232.8% PA	9 years
Method 3	77.6% PA	19 years
Method 4	65.5% PA	22 years