Why the common return may be deceptive | EUROtoday

Recently, a seminar participant requested me why I all the time calculated with the common return. I swallowed laborious. The common return in my calculation examples is about just like the amen in church. If you have a look at the annual returns of the worldwide MSCI World inventory index over 25 years, you get “around” 8 %. Strictly talking, it’s 8.1 %, however because the calculation examples are supposed to be easy and comprehensible, I communicate of “around” 8 % and “around” 6 % after taxes. I by no means tire of claiming that this can be a previous worth and that what was says nothing, completely nothing, concerning the future. But we have now to calculate with some values. The previous is the obvious, in any other case we would as effectively simply roll the cube.