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Re: How did you do in 2004?
Old 01-12-2005, 03:35 PM   #61
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Re: How did you do in 2004?

Quote:

The main problem with looking at net worth increase, is that it is a meaningless number.

While I agree that the number can be skewed as in your example, it is FAR from a meaningless number. It is what tells people that they have finally reached FI. As it is a function of your investment returns, earnings (if any) and gifts (ie the piggy bank example) less your spending; it would be very difficult to make a comparison from person to person.

Since the question in the thread was "How did YOU do in 2004", I think the change in net worth can be a pretty good measure for most of us.

So, when I say that my net worth went up by about 25%, from 1.2mil to 1.5mil, after taxes and after spending all I wanted to, I think that I did pretty good (and was very fortunate 8)).
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Re: How did you do in 2004?
Old 01-12-2005, 04:01 PM   #62
 
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Re: How did you do in 2004?

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So, when I say that my net worth went up by about 25%, from 1.2mil to 1.5mil, after taxes and after spending all I wanted to, I think that I did pretty good (and was very fortunate *).
Well ya sure! *- You gave me the amounts and that does mean something!

Hey kindergartners! this is a very simple point.

If I asked you - 'what would you like to have 10% of X or 90% of Y' ? - what would you answer?

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Re: How did you do in 2004?
Old 01-12-2005, 06:15 PM   #63
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Re: How did you do in 2004?

I Imagine the children would take either, assuming that X and Y are monetary amounts (as that is what we are discussing), they can't loose.

The fact is, your post was not accurate (IMHO). Increase in net worth is very meaningful to the person in question, which is what the thread was about. Whether or not they provided us with enough information to evaluate their performance is our problem. IOW, if a person says there net worth increased by X percent that is meaningful to them, if not to you.

Heck, if I lost 50% on all my investments, but I won the lottery, I would STILL consider it a good year.

Also, I disagree that everyones net worth should be steadily declining. At 37 years old I prefer that mine continue to rise so that my income will keep pace with (or exceed) inflation.

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Re: How did you do in 2004?
Old 01-12-2005, 06:24 PM   #64
 
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Re: How did you do in 2004?

I hear the Geese Honking!

Bum don't be difficult.

The original poster said:
Quote:
Just finished the 2004 calculations, and aside from some out-of-balance sectors that are due for rebalance in the first quarter, my portfolio looked like the below this year. *Actual performance was a little over *14% in 2004, after paying fees of about 0.4%. *
He was talking about 'Investment Performance'. If I said to you. Investor A's net Worth increased 28% and Investor B's Net Worth increased 16% - Which had the best Investment performance - You don't have enough information to determine.

The original poster was interested in your Investment performance as compared to his. Again, Percent Increase of Net Worth can not do this.

I am assuming that you took and Understood Jr. High Algebra?
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Re: How did you do in 2004?
Old 01-12-2005, 08:29 PM   #65
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Re: How did you do in 2004?

My net satisfaction went up 23% just reading this thread and witnessing CT try to teach junior high algebra. . .
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Re: How did you do in 2004?
Old 01-13-2005, 07:08 AM   #66
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Re: How did you do in 2004?

I realize that ESRBob was thinking investment performance when he asked the question "How did you do in 2004" based on his post. However, there were quite a few posts from people that based how they did on increase in net worth. This is a very important number for those in the accumulation phase and investment performance is only part of it. It is also earnings and LBYM, etc. Also, as one guy stayed, he was paying down debt, thereby increasing his net worth. While it is possible, it becomes more difficult to calculate 'investment performance' in these instances.
In my case, it would be damn near impossible and certainly not worth my time.

If you had stated that "percentage increase in net worth" is meaningless to YOU, then I would have concurred. As, I have stated before, comparing net worth increase, percentage or amount, from person to person serves little purpose; but when an individual looks at how THEY did, it is a great measure.

BTW I did pretty good in Jr. high algebra (top of the class). I could respond with a childish comment also, but I'll refrain....

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Re: How did you do in 2004?
Old 01-13-2005, 07:43 AM   #67
 
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Re: How did you do in 2004?

sigh............... :
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Re: How did you do in 2004?
Old 01-13-2005, 07:50 AM   #68
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Re: How did you do in 2004?

The reason increase in net worth is important is because giving a ROI without also stating your increase in net worth doesn't necessarily show you accomplished anything.

For example, you may think that a 20% ROI is fantastic, especially if I tell you I made 20% year after year for 5 years in a row, especially if I tell you I started with $100K 5 years ago.

Here's the importance of net worth increase: The above paragraph fails to inform you that while I was having fantastic ROIs, I was also spending WAY beyond my means to the point where I spent all of the 20% each year plus all of the original $100K plus I had to finance some of my spending with credit cards that now have a $10K balance on them.

So, great ROIs for the past 5 years, but now my net worth is negative.

Conclusion: Tracking ROI is fun, but tracking net worth is crucial.
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Re: How did you do in 2004?
Old 01-13-2005, 07:58 AM   #69
 
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Re: How did you do in 2004?

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Conclusion: Tracking ROI is fun, but tracking net worth is crucial.
And who said it was not?

Tracking Net worth Percentage Increase is worthless. *It cannot correlate to anyone else or even yourself from year to year.

You guys also seem to have a problem with reading comprehension.
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Re: How did you do in 2004?
Old 01-13-2005, 08:21 AM   #70
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Re: How did you do in 2004?

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Tracking Net worth Percentage Increase is worthless. *It cannot correlate to anyone else or even yourself from year to year.

You guys also seem to have a problem with reading comprehension.
I thought I comprehended your quote from a few posts ago saying
Quote:
The main problem with looking at net worth increase, is that it is a meaningless number.
By the way, I also got straight As in algebra and calculus
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Re: How did you do in 2004?
Old 01-13-2005, 08:32 AM   #71
 
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Re: How did you do in 2004?

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By the way, I also got straight As in algebra and calculus *
A documented case of Grade Creep!
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Re: How did you do in 2004?
Old 01-13-2005, 08:35 AM   #72
 
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Re: How did you do in 2004?

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Does anyone here keep track of their IRR (Internal Rate of Return)? I'd be curious to know what the average IRR is for people who want to ER. I don't know if there is a source showing what the average IRR is for the average person in the US, but I would assume it's in the low single digits.

Here are my stats on a year by year basis:

1996: 11%
1997: 14%
1998: 15%
1999: 29%
2000: 26%
2001: 12%
2002: 8%
2003: 10%
2004: 16% (YTD)

And this is meaningless drivel.
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Re: How did you do in 2004?
Old 01-13-2005, 09:05 AM   #73
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Re: How did you do in 2004?

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A documented case of Grade Creep!
No golf today. (Raining).
Just cranked up my computer, and ran headlong into this "battle of the Retire Early Nerds". Entertaining, but a few rules please.
Remember to go to your neutral corner on any knockdown. No rabbit punches, and no hitting below the belt.
Let's have a good clean fight, and may the best nerd win
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Re: How did you do in 2004?
Old 01-13-2005, 09:06 AM   #74
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Re: How did you do in 2004?

Well, we've gone from "net worth increase is a meaningless number" to percentage increase in net worth is meaningless to "tracking net worth percentage increase is meaningless". At least we're making progress.

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Re: How did you do in 2004?
Old 01-13-2005, 09:20 AM   #75
 
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Re: How did you do in 2004?

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You did not read my post again. I did not say 'Net Worth' I said 'Net Worth Increase'. Net Worth is a very meaningful number. Net Worth Increase stated as a Percentage is not!
Well, this was yesterday afternoon. - Remember reading comprehension.
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Re:  How did you do in 2004?
Old 01-13-2005, 09:26 AM   #76
 
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Re:  How did you do in 2004?

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Well ya sure! *- You gave me the amounts and that does mean something!

Hey kindergartners! this is a very simple point.

If I asked you - 'what would you like to have 10% of X or 90% of Y' ? - what would you answer?
And then there was this post defining the differences between amounts and percentages.

Maybe you should just go back and read All of the words very slowly and comprehend them.
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Re: How did you do in 2004?
Old 01-13-2005, 10:26 AM   #77
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Re: How did you do in 2004?

Quote:

The main problem with looking at net worth increase, is that it is a meaningless number.
This was your quote. I'm pretty sure I comprehended it and that was what my original post was in response to. Ever since, as you were so kind to prove in your last post, you have been backtracking and changing your words in defense of your statement.

Although I am growing tired of your childish remarks, I'm trying real hard not to stoop to that level. However, there are courses on effective writing skills that you might to check in to.

I think that is about enough on this topic though, don't you?


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Re: How did you do in 2004?
Old 01-13-2005, 10:28 AM   #78
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Re: How did you do in 2004?

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BTW I did pretty good in Jr. high algebra (top of the class).
Well, I can't speak for the others, but I want you to know that I am very impressed.

Quote:
By the way, I also got straight As in algebra and calculus
Kudos to you too, amigo. Way to go!

Both of you guys must have totally knockout resumes.

Mikey
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Re: How did you do in 2004?
Old 01-13-2005, 10:51 AM   #79
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Re: How did you do in 2004?

Mikey,
It was just a nice response to a not so nice comment, and I don't need a resume because I'm retired. 8)
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Re: How did you do in 2004?
Old 01-13-2005, 12:01 PM   #80
 
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Re: How did you do in 2004?

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This was your quote. I'm pretty sure I comprehended it and that was what my original post was in response to. Ever since, as you were so kind to prove in your last post, you have been backtracking and changing your words in defense of your statement.

Bum,

You only took part of my statement and you are changing my words to try and win the arguement. Here is exactly what I said: And I was talking about percentages. And you did not Comprehend what I said.

Quote:
The main problem with looking at net worth increase, is that it is a meaningless number. IOW - A guy can have a net worth of $1 at the beginning of the year and at then end of the year he has 100 bucks. His Balance sheet has a 10,000 percent increase. It does not correlate to anything or any investment vehicle as far as performance.
You have stooped very low. You cannot win the debate, so you choose you change it.

The original post asked about investment performance stated as a percentage. That is what we have been discussing this entire post.

Am I communicating with a 12 year old, that's got his hands on his mommy's computer?


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