20 Year Returns Because returns compound, what you're computing is a multiplicative, or "geometric" average, rather than an additive, or "arithmetic" average. But the concepts are the same, so I'll try to address your question using the more familiar arithmetic average.
If I start with $100, and just add amounts every year (say, by savings, not by earnings), after 5 years I can ask: on average how much did I add per year?
Say I add $20, $50, $30, $40, $35. You can compute the average increment by adding them all up (to $175) and dividing by 5. (It's $35).
If I already know the ending amount of $275 (which is $100 + $20 + $50 + $30 + $40 + $35), then I know that all the yearly additions added up to (end value - start value) = $275 - $100 = $175. I divide by the number of years (5).
The point is that if you have the start and end values, you know what the difference is and you don't have to use all the individual values to compute their sum. If you don't have the end value, then it's easier to add up year by year. Either way, you divide by the number of years.
Same idea with annualized returns, except we're dealing with multiplication instead of addition.
For instance, if my $100 earns 10% one year and 20% the next, then after 1 year I've got $110 (10% more than $100), and after two years, I've got $132 (20% more than $110). That's 32% more than I started with. I don't get this by adding 10% and 20%, but by multiplying
(1 + 10%) x (1 + 20%) = (1 + 32%).
As with the arithmetic average, if you've already got the end value, you can get the result of all the multiplications by dividing the end value by the start value. But if you don't have the end value, you multiply (1 + annual return pct) for each year, take the nth root (where N is the number of years), and subtract 1.
In my shortened example above, I multiplied the two years (10% and 20%), and got 132% (before subtracting 1). The 2nd (square) root of 132% is 1.1489, so the average annual yield is 0.1489, or 14.89%. A little less than you get by simply "averaging" 10% and 20%.
On the other hand, if I know that I started with $100 and ended with $132, I don't have to know how I got there. I just take 132/100 (i.e. 132%), and calculate as before. The 2nd (square) root is 1.1489, so the annualized yield is 14.89%.
Buffet investing in Japanese Companies https://www.mutualfundobserver.com/discuss/discussion/55234/japanese-stocks-are-well-placed-to-confound-the-skepticsSince I posted the above story 6 months ago, Price’s PRJPX is up about 9.4%. YTD it’s up by 10%, and for one year It’s up 26%. Their Nikkei stock market is still recovering from one of the greatest boom & bust cycles in recorded history. I’m not recommending it as an investment, though I do like multi-nation funds that have maybe 10-2
5% exposure to Japan.
(Above cited data from Yahoo and Lipper)
The 2018 Accord Hybrid I bought 2 years ago is a superbly designed auto for its price range (mid-20s). Probably the best overall build-quality of anything I’ve owned. The car was assembled in Ohio, but the engine was imported from Japan.
Sony still makes some fine electronics. I have two of its SRX series bluetooth speakers. It’s amazing what the SRX-XB41 can do. (Completely waterproof too, in case I decide to take it swimming.)
+1
@MikeM -
Barron’s is still a fine read. Nice broad education in financial & investment thinking. When you get down to it, the ability to weigh data and compare subjective opinions and than fashion your own investing approach is much more valuable and longer lasting than the latest “hot tip” on what to buy. I hear Barron’s doesn’t have the charts / data it once did. That’s probably true. Who needs it with everything on the internet now?
20 Year Returns Here's a streamlined online calculator that just does powers. You enter the number, e.g. 7.1
58868, and then the power 0.0
5 (1/20th). That will get you the 20th root of the number.
https://www.calculatorsoup.com/calculators/algebra/exponent.phpScientific calculators often have power functions (x^y) and may have root functions, i.e. y-th root of x.
You can use the power function to get the 20th root by taking a number to the 0.0
5 power. If there's a root function, you take the 20th root directly.
For example, here's an online scientific calculator:
https://calculator-1.com/scientific/Enter 7.1
58868, press the x^y (power) key, enter 0.0
5 (1/20th), close paren ')', and =.
Or enter 7.1
58868, press the y√x (root) key, enter 20, close paren ')', and =.
20 Year Returns You can coax 20 year data (or any other performance data you want) out of M* by using its charts and selecting the desired start and end dates. This works with both the legacy charts and the new ones. The granularity is one day.
To find a legacy chart for a fund, use the link below, replacing FLPSX with your fund's ticker.
http://quotes.morningstar.com/chart/fund/chart?t=FLPSXHere's the
20 year legacy chart (9/7/2000 through 9/6/2020) for FLPSX.
It shows that $10K grew to $71,
588.68. That's 7.1
58868 x the original value. To annualize, just take the 20th root (and subtract 1 to get the percentage increase). If you prefer, in Excel that would be EXP(LN(71
588.68/10000)/20) -1. That's 10.34%.
You can do the same thing with the new M* pages, but it's a little harder to set the dates, and one can't link to the chart.
No M* login, not even basic, is needed to get these charts.
Saving for Retirement Is Never Easy. The Covid Pandemic Has Made It Even Harder.
What Is a Silver Nickel Worth? (More Than You'd Expect!)
20 Year Returns What is the best source for finding 20 year returns for mutual funds? 15 years is the longest term the main Morningstar site provides. The only place I have found the 20 year returns is on the wells fargo site. The information is provided by and branded as Morningstar. It's calculated once a month at the conclusion of the month and takes a few days to appear. Any alternatives?
sp500 at 3250 at year end? https://m.benzinga.com/article/17371269?utm_referrer=https://www.google.com/&utm_source=https://www.google.com/The S&P
500 and the SPDR S&P
500 ETF Trust (NYSE: SPY) have been on a tear since the stock market bottomed back in March. BofA Securities analyst Savita Subramanian said Thursday that investors should be prepared for the S&P
500 to give back some of those gains as it enters what could be a volatile final four months of 2020.
BofA's Year-End Projection: BofA has set a year-end S&P
500 target of 3,2
50, suggesting roughly 8.2% downside from current levels.
I remembered reading articles like this late 2009, 60% of them are wrong..
Anyone buying more if continues this level or lowered?