P(Gain) is a financial metric that addresses a previously understated and misunderstood area of finance, one that may be the most important question to ask in investing:
What is the probability of return of capital?
Different from metrics that attempt to predict likely returns on capital, the P(Gain) metric is an innovative approach to risk quantification and management.
The 2007-2009 financial crisis was the genesis of P(Gain), a time when many investors were more concerned with evaluating their risks than with potential yield. The metric assumes, for simplicity, that project/portfolio returns are normally distributed. Typically, the normal distribution is described using historical data; the mean and standard deviation are quantified. By utilizing the shape of the normal distribution coupled with the definition of the empirical rule, the Probability of Return of Capital, i.e. P(Gain), is derived.
The team behind P(Gain) chose this metric to represent our organization because it embodies our innovative and unique approach to investment, one that moves beyond inadequate traditional metrics.