Gain to pain
Everything the portfolio won, divided by everything it lost.
In the demo portfolio
0.58
How it is computed here
The sum of monthly returns over the absolute sum of the negative ones. Monthly, because Schwager's rule of thumb — 1.0 respectable, 2.0 very good — is stated on monthly data.
Worked example
- The sum of all daily returns ÷ the sum of all daily losses, taken as positive.
Demo portfolio: four invented companies, generated prices, measured by the real engine. Past returns do not predict future ones.
Where it misleads
Computed on daily returns the same portfolio scores far lower, because a steady month nets out inside itself while every bad day still counts below the line. A figure without its convention is unreadable.