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January 28th, 2012, 08:53 PM   #11
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Re: Problem with evaluating S&P Return using Excel

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Originally Posted by Erimess
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Originally Posted by DynamiCAM
I was thinking Geometric as well. However, as you said, this would cause my "return" to be even lower. I know for a fact that I've heard in the last decade the S&P has returned around 0.4%-1%, and this number is w/o dividend reinvestment.
But your time period isn't "the last decade." Change time periods even slightly, depending on what's been going on, can have drastic changes in the returns. The market was pretty hot the last of the 90's and peaked around beginning of 2000. It was up to 1400 something, and then went down under 900 in the post-911 crash. Comparing the last decade is starting in the middle of that big crash when the thing was lower, and yeah, we're back down to about that point with little return. But if you compare today to 1999, you're hitting when it was near the peak and there's going to be a loss.

And yes, it would be without dividend reinvestment, because an index doesn't have dividends. But there are absolutely different ways you can define a return. I get stuff off Morningstar and while it might be interesting to know exactly how they calculate stuff, I've always been more concerned with things on a comparative basis, and they already have risk numbers on there.

You're in finance and interning at Merrill Lynch and they've never taught you how to do this?
I also calculated Jan 00' to Dec 31 2009' FYI. And no, they don't teach us pre-made tools created by companies for "investors" to aimlessly point and click and blindly assume correctiveness. I've been taught to think and do my own work which provides me a true understanding. That being said thanks for the condescending help you offered.
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January 28th, 2012, 09:05 PM   #12
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Re: Problem with evaluating S&P Return using Excel

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Originally Posted by DynamiCAM
I've been taught to think and do my own work which provides me a true understanding.
Agree....well put
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January 29th, 2012, 10:46 PM   #13
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Re: Problem with evaluating S&P Return using Excel

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Originally Posted by DynamiCAM
I also calculated Jan 00' to Dec 31 2009' FYI. And no, they don't teach us pre-made tools created by companies for "investors" to aimlessly point and click and blindly assume correctiveness. I've been taught to think and do my own work which provides me a true understanding. That being said thanks for the condescending help you offered.
I wasn't in any way attempting to be condescending. I was just talking simple facts. If you're going to talk about 12 year returns not being what you expected for "a decade," you have to expect someone to point that out.

And I was also not talking about pre-made tools created for people to just point and click blindly. Far from it, and you're assuming. I didn't ask if they pointed you to some tools online that you could use. I'm very much against tools as a method of "learning" how to do something, but rather the understanding behind it. You can ask anyone here exactly how much I hate memorizing processes and using pre-fab stuff.

I was talking about actually learning how it's done, the math behind it, the concepts behind it, etc. I said "how it's done" not "what tools exist." If you're in finance, you should be taught this. "Average return" can be defined in different ways, and you can't figure out how it's done if you're not understanding the meaning behind it. That is what I'm talking about in terms of being "taught this stuff," not some silly tool. Yes, I mentioned Morningstar - I also said that's where I go - there's already tons of stuff out there for the non-finance majors like me. I wasn't implying you should go there - if you're going to do finance, I would highly suggest you learn the stuff, not go to Morningstar.

You weren't getting the returns you expected to get - I was tossing my two cents in about some reasoning behind it. Did you even pay any attention to what I was saying?
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