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Old 02-10-2015, 01:08 PM
 
Location: Florida -
8,767 posts, read 10,864,802 times
Reputation: 16651

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I somewhat understand the mathematical terms mean, median, average and am not so much looking for a definition. I am wondering about the 'simple' implications of why one investment company might report their long term performance as a "median ending value of AAR results" ... and another might simply report theirs as "average annual return." (Same time frame).

For example, does reporting results as "MEV of AAR" better permit a company to conceal wider year-to-year performance swings? --- Or is this a common industry reporting method. If so, what does it mean to a potential investor who is interested in an 'average annual return' over a longer period of time?

Perhaps this should be in Personal Finance, rather than Retirement? -- Mod., please move if applicable. Thanks.
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Old 02-10-2015, 02:55 PM
 
Location: Copenhagen, Denmark
10,531 posts, read 8,784,204 times
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Look up the all the charts for any purchase you are considering and read Moody's, as a minimum.
Market Enterprise Value of Average Annual Return makes no sense to me, since MEV is a measure of a company's minimum willingness to be compensated for a buyout, while AAR measures the rate of growth of an asset over time. It maybe techno babble.
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Old 02-12-2015, 08:02 AM
 
Location: Florida -
8,767 posts, read 10,864,802 times
Reputation: 16651
Not so much looking to buy as evaluating the long-term investment results reported by a management company. They have used a casino (random) method of selecting months and years and then reported on the Average Annual Return during each period and finally selected the median value.

Since most of this type company tend to report the most favorable picture of results, I'm looking for some insight into how this might make returns look rosier than they were. The well known company says they calculate it this way in order to keep the results as random as possible, without unduly slanting things one way or another. That may be exactly what they are doing, but, if so, ... then I am wondering how reliable the numbers are as a future forecasting model.
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