IRR on Advanced Portfolio report

[Franco Mossotto]

I see your point, but what's your suggestion?
I don't think that the actual information on Advanced Portfolio are useful
to take a decision on the investments because there is no information
considering the duration of the investments. And for me this is the main
missing feature in gnucash compared to the product I was using before. Do
you agree?

Franco



On Mon, Jan 10, 2011 at 5:54 PM, Donald Allen <donaldcallen at gmail.com>wrote:

> On Mon, Jan 10, 2011 at 11:38 AM, Franco Mossotto
> <franco.mossotto at gmail.com> wrote:
> > Yes,
> > you are right, IRR can be misinterpreted because it assumes reinvestments
> > with the same return rate, but this is anyway widely used and is present
> on
> > other products.
>
> What Prof. Baker is pointing out is that you can be fooled by IRR
> comparisons, which are dependent on the shape of the NPV v. discount
> rate curves (concave v. convex). If you are comparing situations where
> large costs/outgoing flows occur late in the game, it can be the case
> that inferior investments have higher IRRs than superior ones. If you
> don't look at the NPV/discount rate curve, you might not know this and
> make an incorrect decision, by assuming blindly that a larger IRR is
> always better, which is not true.
>
> /Don
>
>
> > NPV can be easily added starting from my code (we just need to add an
> option
> > to take the rate to calculate NPV, and add the column), but I think this
> is
> > more complex to use since it requires to think first to which is the
> > expected return rate.
> > Regards,
> > Franco
> >
> >
> > On Mon, Jan 10, 2011 at 4:42 PM, Donald Allen <donaldcallen at gmail.com>
> > wrote:
> >>
> >> On Mon, Jan 10, 2011 at 3:22 AM, Franco Mossotto
> >> <franco.mossotto at gmail.com> wrote:
> >> > I was looking for the ability in gnucash to calculate the IRR
> (Internal
> >> > Rate
> >> > of Return) for investments. This is something that other products has
> >> > and
> >> > that I found essential in order to evaluate the investments in my
> >> > portfolio.
> >>
> >> IRR is certainly useful, but can be misinterpreted. See
> >>
> >> http://hadm.sph.sc.edu/courses/econ/invest/invest.html
> >>
> >> I realize that what I've said here is a bit off-topic, but since
> >> Professor Baker explains the issues very clearly, I thought I'd
> >> mention it.
> >>
> >> /Don
> >>
> >> > I've found some old request to add this capability on the advanced
> >> > portfolio
> >> > report, but I didn't find any implementation for that.
> >> >
> >> > I've tried doing that by myself on 2.2.7 that is the version I'm
> >> > currently
> >> > using.
> >> >
> >> > Attached there are my scm version and the patch file for 2.2.7. It
> >> > works,
> >> > even if this probably doesn't comply with your coding standards (this
> is
> >> > my
> >> > first implementation using Scheme)
> >> >
> >> > I was trying to port it on trunk, but I've some issues with advanced
> >> > portfolio shipped on 2.4.0 that I need to investigate first.
> >> >
> >> > Regards,
> >> > Franco
> >> >
> >> > _______________________________________________
> >> > gnucash-devel mailing list
> >> > gnucash-devel at gnucash.org
> >> > https://lists.gnucash.org/mailman/listinfo/gnucash-devel
> >> >
> >> >
> >
> >
>