PATCH: Advanced portfolio report revisions

Mike or Penny Novack stepbystepfarm at
Sun Dec 9 08:35:25 EST 2007

>We believe, but we are not sure, that the Microsoft-Money "Annual % Return" is the Internal Rate of Return (IRR).  See We believe that the IRR is the "best" measure of return, because it allows any two investments to be meaningfully compared..  The calculation is non-trivial.  I recommend "Financial Calculation Programs for Linux" by James Shapiro at  He gives C, Java, and Perl programs for calculating IRR.
Close. But just IRR by itself without including its standard deviation 
for the time period doesn't allow proper comparison of investments. Not 
that past measures of "risk" provide a certain measure for the future 
but it's the best that is available. The point here is that investment A 
with an IRR of M but a large deviation might not be a better than 
investment B with an IRR of N slightly smaller than M but with a much 
smaller deviation. The usual idea is that the real comparison gets made 
after adjusting for risk -- how much of the higher yielding would 
instead have to be invested at low yield very low risk to bring the 
blend to the same deviation -- and then use that blended yield.

The problem is that the deviation can't be simply calculated from the 
beginning and ending states but needs the history in between.


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