As with much of what we do in performance measurement, there are multiple opinions regarding this subject. Actually, in this case, just two that I’m aware of, and they are both presented here, though one is clearly favored by the author, who strives for clarity, meaningfulness, and avoidance of confusion. Results should be intuitive, and not require a degree of mental gymnastics to comprehend. While there may (and the author is sure there are) be merits for the alternative approach, it is evident it lacks the support one might expect. We may see one or more of its champions offering alternatives to what is recommended here, and this author looks forward to it. This journal, over the years, has served as a field for such discussion. In the meantime, this will serve at least as an introductory piece to the subject of how one should calculate returns on shorts.

David D. Spaulding, DPS, CIPM