Internal Rate of Return in Advanced Portfolio

[Wm...]

Wed, 11 Nov 2015 09:32:43 <20151111173242.GA13887 at iliad.caltech.edu>
Thomas Anderson <tanderson at exherbo.org> wrote...

>On Tue, Nov 10, 2015 at 07:37:27PM +0000, Wm... wrote:
>> Looking at a diff between the current
>>
>> advanced-portfolio.scm
>>    and
>> http://lists.gnucash.org/pipermail/gnucash-devel/attachments/20110110/935
>> f42b3/attachment-0003.bin
>>
>> the IRR bits seem fairly self contained.
>>
>
>Agreed; there are only a few places where the code was reshuffled that 
>I am having trouble with.
>But I
>blame my inexperience.

I'm struggling too.  I don't read Scheme well.

One idea I've had, possible for the weekend, is to compile gnc 2.2.7 
which I think the IRR scm was built for just to see what it does. [1]

>> The thing I wonder about is if an IRR wouldn't immediately result in person
>> A wanting it to be tweaked this way, B arguing it should be done slightly
>> differently and C wanting something else included or excluded.

>I don't know that that's the case; IRR is a simple calculation without 
>much tweaking, so long as
>you enter correct data on the starting dates. Perhaps you have others 
>in mind, but the only wrinkle
>I can think of is:
>
>(*) Person A wishes to treat Dividend Income separately and use IRR for 
>only price appreciation;
>Person B wants to look at the IRR of total return.
>
>I'm not sure how to handle this or if it is worth ignoring.

[1] at the moment I'm uncertain what the code in the IRR calc does.  Is 
the Scheme code sufficiently clear to you to say what sums it is doing?

>> Also, does IRR as an into-the-future calculation or tool for deciding
>> between prospective investments fit in with the rest of gnc's functionality
>> generally?
>>
>> In short, isn't this the kind of thing spreadsheets will always do way
>> better than we could ever do?
>
>I don't see IRR as an into-the-future calculation nor for deciding 
>between investments. I thought
>that tangent in the original thread discussion was a bit of a 
>mischaracterization;

noted, what I'm wondering is if you know that isn't what the code does.

>certainly
>for stock investment accounts this is not the case.

Labouring the point, do you know the code has the same POV as you?

>IRR serves roughly the same purpose as "Rate of
>Return" currently does in advanced portfolio, but is more intelligent: 
>adding $5,000 to a $1,000
>account today doesn't affect the IRR number but does affect the rate of 
>return significantly. And
>the same is true for less extreme situations, IRR is simply a more 
>robust accounting of how
>investments have previously done.

OK

>I hope that makes it clearer why I think this is a useful feature.

Sure. I'm wondering what exactly it does now.

P.S. I'm more inclined to SQL and more recently pandas[2] for analysis. 
obviously there is some gap between SQL and pandas and most people but 
is it greater or smaller than the gap between Scheme and me or you? :)

[2] http://pandas.pydata.org/ simple and fun

-- 
Wm...