In what respect is this statement misleading?
A portfolio manager announces that the average of the returns realized in each year of the last 10 years is 20% per annum. In what respect is this statement misleading?
From my derivative math class.
A portfolio manager announces that the average of the returns realized in each year of the last 10 years is 20% per annum. In what respect is this statement misleading?
From my derivative math class.
+324 | BOFA ALREADY TRYING TO COVER UP THEIR TRACKS | 45 | 48s | |
+153 | Investment Banking US League Table YTD 2024 (FactSet) | 84 | 14h | |
+144 | Big Layoff at Barclays - 5/1/24 | 85 | 2s | |
+87 | “Americans just work harder” | 53 | 1d | |
+83 | Would comitting to ATL İB be stupid? Please give feedback. | 45 | 3d | |
+69 | Sleeping on Jefferies??? | 33 | 4h | |
+66 | A shitter's comprehensive guide to sophomore year recruiting | 7 | 22h | |
+59 | NEED NY RESTAURANT RECOMMENDATIONS | 38 | 3d | |
+59 | What's up with RBC nowadays? | 24 | 23h | |
+50 | 5-Step (Borderline Psycho) Pre-Superday Routine I Used to Land Every IB Internship Offer | 4 | 2d |
Career Resources
Because average returns don't reflect compounding.
Consider a Portfolio worth $100 that is worth $300 after year one and stays at that number for 10 years. Or, consider a portfolio that makes you 20% every year.
Both have average returns of 20%, one portfolio is worth a whole lot more after 10 years.
CAGR would be the true story teller...
(Ending Value/Beginning Value^1/No. of years) subracted from 1.
have to love that CAGR
Repudiandae expedita pariatur quaerat. Tempore beatae deleniti et similique reprehenderit quia enim. Minima voluptas dolorum sit velit omnis.
Quasi sed quo consequatur laborum et. Nesciunt enim quas quas. Provident rerum libero beatae vero quia nisi autem et.
Atque tempore consequuntur voluptatem perferendis et qui iure. Praesentium ut nemo atque itaque iusto molestiae et est. Praesentium distinctio voluptatem delectus laudantium aut consequatur. Optio sit a magni dolorem fugit. Consectetur nesciunt quia id in. Sed sit explicabo commodi quam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...