First apologies for being hyperactive on the forum. This is temporary I've read your article explaining how PS works out CapGain% vs CapGain. Still I am no sure I can follow example from the attached screen shot. Can Captal Gain be positive and Capital Gain % negative?
Yes, it is possible to have positive CapGain and negative CapGain%. At the start (the year 2008-2009), your equity value is very low(2-10k) and you have a large loss, then later, with larger equity value you have a slight gain. Lets look at example: 2020-09-01 start value is 1000$ and ending value for 2020-09-30 is 200$. Capital gain is -800$. CapGain%= -800/1000 = -80% 2020-10-01 you buy 10,000$ value of the same equity (200$ was left from before) and at the end of the month the value is 11,200$. So capital gain for October is 11,200$-(10,000+200$) = 1000$. CapGain%= 1000/10200 = 9.8%
Got it. I have been using a dollar weighted return method for years in my Apple Numbers spreadsheet. Reason was that the personal finance software I use, also adopts the same methodology. It is also presented on Investopedia's web site here: https://www.investopedia.com/terms/m/money-weighted-return.asp I was then annualising my returns using CAGR method: https://www.investopedia.com/terms/c/cagr.asp Thanks for the explanation Vidas, your help is much appreciated - now I'll need to reconsile all that in my head
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Lets look at example:
2020-09-01 start value is 1000$ and ending value for 2020-09-30 is 200$. Capital gain is -800$. CapGain%= -800/1000 = -80%
2020-10-01 you buy 10,000$ value of the same equity (200$ was left from before) and at the end of the month the value is 11,200$. So capital gain for October is 11,200$-(10,000+200$) = 1000$. CapGain%= 1000/10200 = 9.8%
CapGain over 2 months: -800+1200=400$
CapGain% over 2 months (https://www.investopedia.com/terms/t/time-weightedror.asp):
(1+(-80%)) * (1+9.8%) - 1 = 0.2*1.098 -1 = -0.7804 = -78.04%
When equity value is volatile, CapGain% value makes less sense.
I was then annualising my returns using CAGR method: https://www.investopedia.com/terms/c/cagr.asp
Thanks for the explanation Vidas, your help is much appreciated - now I'll need to reconsile all that in my head