HOW ONE iTuliper IS INVESTED?

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

lol ... Jim I'm really sorry to say I wasn't really commenting on your table or how the totals were derived at all. I was just asking a slighty related question for my own curiosity, and it happened to come to me while I was reading this thread.

Basically, I'm trying to figure out how to calculate a single number that reflects an annualized return across all investments. I like annualized numbers just so I can compare them to other numbers I hear routinely (stocks for the year, inflation, etc). And to make pointless projections about what would happen if I continued doing X% for Z years.

I guess at some we'll get on the same wave length, sorry for my not being more attuned.

Do you use a spreadsheet, I guess most people who do use Excel? I don't own any Microsoft, I don't think, but in my opinion anyone who is serious about investing should use a spread sheet to track their activities. I'm sure there are other methods, but to me spreadsheets are the most interesting thing I have ever happened upon in computerdom. I love my spreadsheet.

Please answer.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

lol ... Jim I'm really sorry to say I wasn't really commenting on your table or how the totals were derived at all. I was just asking a slighty related question for my own curiosity, and it happened to come to me while I was reading this thread.

Basically, I'm trying to figure out how to calculate a single number that reflects an annualized return across all investments. I like annualized numbers just so I can compare them to other numbers I hear routinely (stocks for the year, inflation, etc). And to make pointless projections about what would happen if I continued doing X% for Z years.

I agree with the significance of your concern here, and I don't know of any way to attempt to do it with economy of time except to use a spreadsheet, but maybe Quicken or MS money will do it. I use MS money for tracking expenditures and stuff, but I don't use it seriously to track my investments.

[zoog]

Re: HOW ONE iTuliper IS INVESTED?

lol ... Jim I'm really sorry to say I wasn't really commenting on your table or how the totals were derived at all. I was just asking a slighty related question for my own curiosity, and it happened to come to me while I was reading this thread.

Basically, I'm trying to figure out how to calculate a single number that reflects an annualized return across all investments. I like annualized numbers just so I can compare them to other numbers I hear routinely (stocks for the year, inflation, etc). And to make pointless projections about what would happen if I continued doing X% for Z years.

I agree with the significance of your concern here, and I don't know of any way to attempt to do it with economy of time except to use a spreadsheet, but maybe Quicken or MS money will do it. I use MS money for tracking expenditures and stuff, but I don't use it seriously to track my investments.

I use MS Money for personal finances and including my investments. I also use Excel spreadsheets though as Money is rather limited, and I like to make pretty pictures (charts) with the data.

In particular as relates to WDCRob's quest for an annualized number, in my experience when Money calculates an annualized return for something you have not yet held for twelve months, it comes up with a wildly inaccurate number, usually fantastically optimistic. For example, you've held an investment for a month and it's up 5%, Money thinks your annualized return is 60%. Basically, MS Money is the most bullish investor on the planet. The YTD and other short-term calculations are accurate. It is a little frustrating trying to compare different investments in your portfolio when the numbers for relatively recent investments are dubious future projections while numbers for your longer-term investments are more reliable annualizations of past-to-date performance. I have never determined if the overall annualized return number for the entire portfolio is accurate or not.

Note: I am still using, I think, Money 2002, so perhaps newer versions have fixed this.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

I use MS Money for personal finances and including my investments. I also use Excel spreadsheets though as Money is rather limited, and I like to make pretty pictures (charts) with the data.

In particular as relates to WDCRob's quest for an annualized number, in my experience when Money calculates an annualized return for something you have not yet held for twelve months, it comes up with a wildly inaccurate number, usually fantastically optimistic. For example, you've held an investment for a month and it's up 5%, Money thinks your annualized return is 60%. Basically, MS Money is the most bullish investor on the planet. The YTD and other short-term calculations are accurate. It is a little frustrating trying to compare different investments in your portfolio when the numbers for relatively recent investments are dubious future projections while numbers for your longer-term investments are more reliable annualizations of past-to-date performance. I have never determined if the overall annualized return number for the entire portfolio is accurate or not.

Note: I am still using, I think, Money 2002, so perhaps newer versions have fixed this.

Don't know what happened to WDC, perhaps I succeed, unintentionally, in offending him

Zoog, if you invested 10,000 and made 500 in 30 days, then I would divided the 500/30days and get 16.67 gained/day. I would mulitply that by 365days/year and that would give me 6083.33. I would divide the 6083.33 by 10,000 and that gives me 60.83% which I think would be the correct annualized yield. That is pretty close to what you are saying MS money returns, not so?

[WDCRob]

Re: HOW ONE iTuliper IS INVESTED?

Jim, you have to work pretty hard to offend me. On most subjects anyhow.

I'm only half joking when I say Excel may be the single best thing ever invented. I use it for everything.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

Jim, you have to work pretty hard to offend me. On most subjects anyhow.

I'm only half joking when I say Excel may be the single best thing ever invented. I use it for everything.

Great! I hope I am not going to tell you something you already know. Menu: Insert: Function: choose financial functions and scroll down to RATE

=RATE(3,, - beginning amount, ending amount)

in what I wrote, the 3 in first field represents 3 periods or years,

the blank between the , , would accept a number representing a payment, but that is not applicable here.

- beginning amount, one treats that a negative number (which is explained somewhere in help).

ending amount = amount at the end of three years in this example.

For a trial get that formula in a cell and put in 3 in Nper box, skip entry into PMT box, Pv enter -10000, Fv enter 30000 and hit OK.

That returns on my sheet 44.22% which is compounded annual rate earned if one invested 10K and 3 years later it had grown to 30K.

If I haven't screwed it up, that should work.

Let's say you want to figure the cmpd rate after 1.5 years, in the first field, put in a formula to add (365 + 182)/365 which of course would give you 1.5 as the period. then plug in your other numbers.

I figure a rate everyday from say 12/31/99 til today. I use date math to get the number days and divide it by 365 to come up with the Nper entry.

I have no idea if this is clear, if not ask me again. Hope it solves your problemo.

[jk]

Re: HOW ONE iTuliper IS INVESTED?

jk, It sounds like you and Jim are getting a little nervous about the recent rapid rise in PM prices, right? So rather than calling a top you are just positioning for a short term consolidation?

As Fred points out on a different thread, there doesn't seem to be any change in the underlying fundamentals to change the trend of PM's. Granted, things may flatten for a while, but the fundamentals are still there.

I get lucky occasionally and can pick absolute tops and bottoms but by and large, I am trend follower. And I assume the trend remains in place until proven otherwise. Being a contrarian only works at major inflection points. Be ever cautious of a trend change but in between those major junctures, just follow the trend and enjoy the tailwind.

By the way, if the Canadian central bank is lowering their interest rates, does that mean a race to the bottom for fiat currencies, so each country can maintain an export advantage? If so, bullish for PM's?

as fred also points out on, i think, the same thread, we are in one of gold's rapid, speculative run-ups. this means that leveraged funds are buying, and it means that at some point something will cause them to sell, since they are, by definition, not long-term holders but speculators. [a more bullish interpretation is that some cb's and/or swf's are accumulating bullion.] anyway, when the shtf everything gets correlated and everything gets sold. winners are sold to meet margin calls on losers. value at risk models signal for deleveraging and shrinking positions. everything gets sold. including gold. i think there's a good chance the recession will surprise on the down side and commodities will sell-off along with equities, and pm's along with other commodities as we go through another deflation scare. i'm by no means certain, but i think there's a chance of this scenario playing out. so, long term, i am absolutely in the pm camp- evidence is that i'm 31% in pm's. that's a big allocation to one asset class. and my 5% agricultural commodity position and 18% fxy/fxf positions and 10% canadian trusts are further testimony to my anti-dollar fervor. but as i said in a post long ago, i'm neither bull nor bear, i'm just chicken.

[zoog]

Re: HOW ONE iTuliper IS INVESTED?

Don't know what happened to WDC, perhaps I succeed, unintentionally, in offending him

Zoog, if you invested 10,000 and made 500 in 30 days, then I would divided the 500/30days and get 16.67 gained/day. I would mulitply that by 365days/year and that would give me 6083.33. I would divide the 6083.33 by 10,000 and that gives me 60.83% which I think would be the correct annualized yield. That is pretty close to what you are saying MS money returns, not so?

Eh, maybe I'm just confused about how annualized return should work. It just seems like that calculation is overly optimistic because it projects, in this example, one month's gains into eleven future months of gaining that much. When you've had investments for a year or longer, then the annualized makes sense to me because it breaks down your multi-year gains into an average gain for each year. I dunno, it doesn't matter. Carry on, then.:cool:

[GRG55]

Re: HOW ONE iTuliper IS INVESTED?

Quick Q...

If you're calculating an annual return for your entire portfolio is it normal/appropriate to weight both for the amount of time invested and the proportion in each investment to get an all-in annualized return?

i.e. does this:

Investment One - $1,000 for 1.82 years with a annual return of 10.6%
Investment Two - $1,000 for .16 years with an annual return of 104%

Equal this?

(1k/2k * 1.82/(1.82+.16) * 10.6%) + (1k/2k * .16/(.16+1.82) * 104%)

For an 18.2% annual return?

I've always taken a rather simple minded view about the the return thing, so I actually like how Jim has done it. In the same fashion that I can't necessarily retire on "relative returns", annualized or weighted returns don't put Cornflakes on my table either. A month, quarter or year is an artificial construct as markets are really an ever evolving, rather organic entity. I look at each position I have a look to the total return from the time the capital gets invested and my future expectations. Some of my oil stocks have been held since 1999/2000. I could care less what they did each and every calendar year. I only care if I have made a decent overall return, and what is the future outlook. Same goes for something that I may not hold for a year. The annualized gain or loss is of no real interes, only the absolute. I do that mental exercise with everything in my portfolio usually about twice a week. Despite this my portfolio turnover is quite low.

[GRG55]

Re: HOW ONE iTuliper IS INVESTED?

...By the way, if the Canadian central bank is lowering their interest rates, does that mean a race to the bottom for fiat currencies, so each country can maintain an export advantage? If so, bullish for PM's?

Mark Carney, the new governor of the Bank of Canada was appointed effective February 1 this year. He spent 13 years at Goldman Sachs.

What would we expect him to do with interest rates?

Long live the FIRE economy...:rolleyes:

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

I've always taken a rather simple minded view about the the return thing, so I actually like how Jim has done it. In the same fashion that I can't necessarily retire on "relative returns", annualized or weighted returns don't put Cornflakes on my table either. A month, quarter or year is an artificial construct as markets are really an ever evolving, rather organic entity. I look at each position I have a look to the total return from the time the capital gets invested and my future expectations. Some of my oil stocks have been held since 1999/2000. I could care less what they did each and every calendar year. I only care if I have made a decent overall return, and what is the future outlook. Same goes for something that I may not hold for a year. The annualized gain or loss is of no real interes, only the absolute. I do that mental exercise with everything in my portfolio usually about twice a week. Despite this my portfolio turnover is quite low.

Man, you are laid-back, I look every day. I think you made the point I was trying to make, but better.

WDC recognized the "pointlessness" of making projections of "what-if" scenarios, and I totally agree. Don't waste spreadsheet cells, I don't care how many there are on a page, screwing with "what-will-I-be-worth-if" such and such happens. Time would be better spent picking lint out of one's navel.

[WDCRob]

Re: HOW ONE iTuliper IS INVESTED?

GRG... if you don't adjust for time, how in the world do you tell if you've made a 'decent overall return?'

200% over 20 years works out to be less than 6% per year, for example. Or am I completely missing your point?

Maybe I just don't trust my judgement enough, but there's no way I'd be able to think about this stuff without doing something similar to this.

[WDCRob]

Re: HOW ONE iTuliper IS INVESTED?

Man, you are laid-back, I look every day. I think you made the point I was trying to make, but better.

WDC recognized the "pointlessness" of making projections of "what-if" scenarios, and I totally agree. Don't waste spreadsheet cells, I don't care how many there are on a page, screwing with "what-will-I-be-worth-if" such and such happens. Time would be better spent picking lint out of one's navel.

True enough Jim. But it keeps me off the street.

[Jim Nickerson]

Re: HOW ONE iTuliper IS INVESTED?

GRG... if you don't adjust for time, how in the world do you tell if you've made a 'decent overall return?'

200% over 20 years works out to be less than 6% per year, for example. Or am I completely missing your point?

Maybe I just don't trust my judgement enough, but there's no way I'd be able to think about this stuff without doing something similar to this.

First, WDC, did what I suggest previously work for you to figure rates?

There is nothing wrong, as I see, with converting all your gains/losses to an annualized number if it helps one better understand the place one is with an investment, and with a spreadsheet it is simple enough to do using the financial functions.

If I have a 50% gain in anything in less than a year, which is rare for me, I think, shoot, this more than 10 times what I am earning on any cash I have--and that ain't bad. I don't think I have ever sold a winner based on what might be the annualize gain at a particular point. I sell it because I am unwilling to lose my gains and my impression of whatever is the position from looking at charts, as I try to interpret them, suggests there may be more downside potential than upside potential. I can guarantee you I am not always correct, but who is? I never met him.

GRG can answer for himself.

[jk]

Re: HOW ONE iTuliper IS INVESTED?

re: following one's portfolio

i record the changes in each holding once a week, and note the total value of my portfolio. i thus see each holding's movement over that week, but i don't bother computing a return for each separate holding, and i don't even record the prices at which i've purchased something. some holdings may be losing money, but perhaps i'm holding them as hedges on some other holdings. i just ask myself what i want my portfolio to look like NOW. is this asset something i still want to own NOW? that includes my cash holding btw. so i'm adjusting my portfolio based on what i think a good allocation is, but recording my aggregate performance only.