Dividends

aaaand sorry for clicking "heading 3" to type all of that. Was tiny on the screen as I was typing then jumped like 9 font sizes on posting lol.

Hi @tbra97 -- originally it was just to ensure we had a fair 'apples with apples' comparison on return calculations. We could just issue the cash, but in most instances it's going to be a very small amount. As noted, you can always just sell your shares if you want cash (the portfolio return figure will not be impacted, and there's no brokerage or tax considerations).

But, giving the user the choice is usually the best bet. I'll have a chat to the devs and see what we can do.

Yeah great question @Bear77

We shamelessly copied the methodology employed by Sharesight, which they outline here:

https://help.sharesight.com/au/performance_calculation_method/

I dare say the 70% figure is because the returns are annualised, and it accounts for the periods where there was no return (as you weren't holding it). You can do a manual check, but I'm 99% sure you'll get the same answer. If not, we'll dig up the code and triple check.

The important thing to note is that your overall portfolio return is based on the dollar profits generated off your $100k starting balance. So the money weighted calculation is just for individual positions.

Hope that makes sense. Whatever the way you measure it, it's a heck of a return on $CMM. Well done!

If I understand you correctly @Strawman you're saying that the 70.05% figure is a p.a. (per annum) return and that it includes all of the time since I first bought CMM in June 2018 including all of the periods in which I didn't hold any CMM shares? I'm 100% sure that Sharesight does NOT do that. They base every calculation on the period that you hold the shares, never for any periods in which you don't hold the shares.

I'm not at my desk right now, so was just speculating without having done the calculation manually.

I can take a closer look later, but the formula I linked to is the one we use. As I say, if you think we've not implemented properly (which is certainly possible) we'll examine the source code after the long weekend.

I'll look into it myself some more over the weekend @Strawman However I note that the Sharesight page you linked to starts off with the following:

Sharesight calculates percentage returns using a dollar-weighted (also referred to as a ‘money-weighted’) return methodology. A dollar-weighted return measures investment performance taking account of the size and timing of cash flows.

The other widely used approach in performance measurement is the Time Weighted Return. In this method the effect of cash inflows and outflows is removed from the calculation. This is commonly used when evaluating fund manager performance. The reasoning behind this approach is that fund managers don’t control when money flows into and out of their fund – investors control that – so it is not reasonable to include that effect when evaluating the manager.

Investors, in contrast can control the timing of when they put money in or out of the portfolio. For this reason it is widely agreed that a dollar-weighted return is the most appropriate means of measuring performance from a private investor’s point of view.

--- end of excerpt ---

So they are saying you can use a dollar-weighted / money-weighted return method OR a Time-weighted return - but not both at the same time - it's one or the other. They are also talking about total returns, not p.a. returns. The most important thing to note however is that in ALL of their examples, they are treating each total exit (sell out) as a separate calculation. There are NO examples where they are averaging returns across multiple stand-alone trades, as in my personal example where I have bought and sold CMM four times, meaning I fully exited the stock four times, and then bought back in again and still hold. Sharesight would treat that as 5 separate calculations. Has Strawman.com made 5 calculations and then the 70.05% is the average total return of those 5 calculations, or is it a per annum return?

Anyway, having read through the stuff on Sharesight that you have linked to, I am none-the-wiser as to how this site has come up with that 70.05% number for my CMM trades and current holding. Get back to me on this next week anyway. Enjoy the Easter break. Happy Easter everybody. Stay Safe!

I shouldn't have tried to do this on the fly :)

Let me ask the team to dig up the exact code and I'll share it next week.

Have a great long weekend.

No need @Strawman - I've just worked it out. Here's what the site has done - it's added up all of the money that I've invested in CMM ever, being a total of $2,118.28, then compared that to the total of all of my CMM sells ($1,742.06) and the current value of my currently held CMM shares ($1,860) which together equals $3,602.06, and makes the simple calculation that $3,602.06 is +70.05% higher than $2,118.28. So that actually does make sense. And it's not a p.a. figure, it's a total return figure.

So that is actually entirely fair. My excellent returns from my currently held CMM shares are simply dragged down by the more pedestrian returns of my earlier trades. The figure of 70.05% is the exact return I have achieved to date from all of the money I've put into CMM since 2018, and that includes both realised capital gains and unrealised capital gains. And it would include realised and unrealised capital losses if there were any. So it's simply a basic total dollar return calculation that includes every dollar invested in that stock.

Just circling back on this @Bear77

So you are right, the method you've outlined above applies when the Average Years Invested (AYI) is less than 1 year. IE a gross total return calculation

But for > 12 months we do use what i posted originally (https://help.sharesight.com/au/performance_calculation_method/)

Some added points:

• We dont annualise for AYIs < 12 months because, for example, a 1% daily move would translate into a 365% return -- or something more extreme on a compounded basis.
• The "total capital" in the sharesight formula is the sum of the cost of all buy orders for that company over time -- BUT shares acquired via dividend reinvestment are (correctly) not considered as contributing to the "total capital" (you didnt pay for them, and this improves the return, as it should)
• The AYI is calculated using a money weighted average of the time each dollar is spent invested and Sell orders are considered to sell earlier-bought stock before later-bought stock (so it's a first-in, first out queue of shares)

One thing we did notice when examining the code was that we were displaying the total return, and not the money weighted return in some instances. This has now been corrected. Let me stress though, this had no effect on portfolio returns, and indeed the return figure was accurate on a gross basis.

Hope this helps clarify everything, and thanks for pointing out it out.