Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Side Project
Old 08-26-2004, 10:42 AM   #1
Full time employment: Posting here.
 
Join Date: Aug 2004
Posts: 911
Send a message via ICQ to Marshac Send a message via AIM to Marshac Send a message via Yahoo to Marshac
Side Project

I have been working on a small calculator as a side project during my "free time". Basically, there is a chart of the market from 1930-> ~6/2004, and you can set up your monthly contributions, slide a "slider" up and down the chart, and see how your "portfolio" would have done during those years.

The first version is here:
http://thealterego.com/market/

The second version (which now includes Aaa bonds) can be found here:
http://thealterego.com/market/index2.html

The first one seems to be right, but I'm not sure about the math for the bond returns... I think they're right, but if anyone would like to eyeball it and tell me what you think, that would be great. Someone previously asked me if contributions are adjusted for inflation.... they are not.
Marshac is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Side Project
Old 08-26-2004, 10:38 PM   #2
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Side Project

It's just plain scary to look at a chart of the Dow in linear scale. *Most charts use log scale. * A 1000 point increase from 500-1500 (200%) shouldn't look the same as a 1000 point increase from 9000-10000 (10%+).

Your calculation of annual percentage gain is incorrect. * I looked at the 25-years from 1975-2000, and you told me that the market went up 50%/year. * I wish *

Other than that, pretty cool -- nice use of client-side scripting.
wabmester is offline   Reply With Quote
Re: Side Project
Old 08-27-2004, 05:30 AM   #3
 
Posts: n/a
Re: Side Project

Quote:
It's just plain scary to look at a chart of the Dow in linear scale. Most charts use log scale. A 1000 point increase from 500-1500 (200%) shouldn't look the same as a 1000 point increase from 9000-10000 (10%+).
Wab,

You're right on that one. Maybe that's what ***** has been doing
  Reply With Quote
Re: Side Project
Old 08-27-2004, 07:12 AM   #4
Full time employment: Posting here.
 
Join Date: Aug 2004
Posts: 911
Send a message via ICQ to Marshac Send a message via AIM to Marshac Send a message via Yahoo to Marshac
Re: Side Project

Quote:
Your calculation of annual percentage gain is incorrect. * I looked at the 25-years from 1975-2000, and you told me that the market went up 50%/year. * I wish *
Are you talking about the number in between the two years on the old version? Yeah, that number isn't the annual gain, it's simply the gain between the beginning year, and the end year.... I can't remember why I put it there (It's gone in the second version http://www.thealterego.com/market/index2.html).... the number doesn't mean anything =) As for the effective RR, I calculate a RR of about 21% between 75 and 2000, and a bond RR of about 9.3%.... is that about right?

Thanks for the input
Marshac is offline   Reply With Quote
Re: Side Project
Old 08-27-2004, 09:25 AM   #5
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Side Project

Quote:
As for the effective RR, I calculate a RR of about 21% between 75 and 2000 ... is that about right?
Only if your name is Warren Buffett *

Hopefully a math-wiz will chime in here to help you out, but the ERR calculation is more complex than what you're doing.

Assuming you're calculating the final balance correctly (it looked OK to me when I glanced at your source), then you want to find the rate that would have given you the same balance with simple compounding, right?

The formula to calculate the balance B after periodic contributions C for N periods at rate R is:

B = C[((1+R)^(N+1) - (1+R))/R]

You know B, C, and N -- find R.
wabmester is offline   Reply With Quote
Re: Side Project
Old 08-27-2004, 10:26 AM   #6
Full time employment: Posting here.
 
Join Date: Aug 2004
Posts: 911
Send a message via ICQ to Marshac Send a message via AIM to Marshac Send a message via Yahoo to Marshac
Re: Side Project

All I did was take the total gain / total contributions, and then divide that % by the number of years :-/
Marshac is offline   Reply With Quote
Re: Side Project
Old 08-27-2004, 10:48 AM   #7
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Side Project

In other words, you ignored both the effects of compounding and DCA'ing. * I believe you *

I'm tempted to offer more help, but my dogs keep barking at me every time a deer or raccoon wanders into the yard. * It makes working damn near impossible. * Good dogs *
wabmester is offline   Reply With Quote
Re: Side Project
Old 08-27-2004, 10:55 AM   #8
Thinks s/he gets paid by the post
Hyperborea's Avatar
 
Join Date: Sep 2002
Location: Silicon Valley
Posts: 1,008
Re: Side Project

That's wrong for a number of reasons. *Even if the contribution was a lump sum at the beginning of the period of n years you would need to take the nth root of the returns %age. *Now if as in your case the contributions are on an ongoing basis you will need to account for each of the contributions separately using a series. *There should be something out there on the web explaining this in more detail if you google for it or a finance book will have it too.
Hyperborea is offline   Reply With Quote
Re: Side Project
Old 08-27-2004, 11:10 AM   #9
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Side Project

Quote:
Now if as in your case the contributions are on an ongoing basis you will need to account for each of the contributions separately using a series.
The series simplifies to the expression I gave above.
wabmester is offline   Reply With Quote
Re: Side Project
Old 08-27-2004, 11:22 AM   #10
Thinks s/he gets paid by the post
Hyperborea's Avatar
 
Join Date: Sep 2002
Location: Silicon Valley
Posts: 1,008
Re: Side Project

Quote:
The series simplifies to the expression I gave above.
Missed it but you are correct. This the formula for the calculation of the sum of a geometric series.
Hyperborea is offline   Reply With Quote
Re: Side Project
Old 09-08-2004, 04:39 PM   #11
 
Posts: n/a
Re: Side Project

Nice application Marshac,

Are you taking dividends into account ?

--John
  Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Computer Geeks - Is this true or a prank? "Dark porcelain" project dex Other topics 9 04-01-2007 11:16 AM
Anyone buy a side of beef to save $$$ before? thefed FIRE and Money 13 01-12-2006 02:05 PM
TIAA CREF = teachers annuity side mangodance FIRE and Money 3 07-02-2005 10:42 AM
Help with the bond side of things Roger_R FIRE and Money 16 07-06-2004 03:58 PM
The Dark Side of Volunteering arrete Other topics 2 04-30-2003 05:57 PM

» Quick Links

 
All times are GMT -6. The time now is 08:32 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.