Jeff Altman, The Big Game Hunter offers an answer to this cute little brainteaser.
I'm Jeff Altman, The Big Game Hunter. And let's do one more brain teaser before I go off into different tangents, okay, so, excuse me I'm going to read it all a screen.
You invest $100 in a company. You earn 10% in your first year, but lose 10% in the second year. At the end of the second year, you have more or less or the same as you started with?
So, here's the idea again. 10% If you have $100 you make 10%. The first year you lose 10%. The second year, do you have more or less or the same as when you started?
You have less. Here's why.
After one year you made 10% or $10, That's $110. Then, you lose 10% or $11. Remember, it's $110 dollars by 10%. That's $11.
So you are now at $99. In other words, you have less than what you started off with. I know the instinct is to think in terms of 10% up. 10% down. It's the same money, but you have less.
