Gordon from CO posted over 6 years ago:

You have a typo in the opening definition of the arithmatic average, i.e.,

"Most people ....., which adds ......, and then dividends by the number of listings.

Should be "divide", not "dividends".

Jean from IL posted over 5 years ago:

Thank you; the error has been fixed. Jean at AAII.

Jon from AL posted over 5 years ago:

Shouldn't the geometric average be calculated this way???

(1.1 * 1.15 * 1.12 * 1.02 * .7) ^ (1/5) - 1

= .0023 = 0.23%

The article mentions taking the n'th root, but the chart shows simply multiplying by (1/5).

John from PA posted over 5 years ago:

The geometric problem states the third year return is 0.02% which in the calculation should be 1.0002 yielding a final answer of -.16%

Opal from CA posted over 5 years ago:

So when I see the term "average annual return" on a fund, am I seeing the geometric average? I had always wondered why the figures never added up to the actual result over a period of several years.

Jean from IL posted over 5 years ago:

Jon - We've fixed the box so that the geometric average is now showing to take the nth root. Thanks for pointing that error out. Jean from AAII

Jean from IL posted over 5 years ago:

John - The third year return is 0.2%, which is correctly shown in the box as 1.002 in the geometric average calculation. Jean from AAII

Rick from IL posted over 5 years ago:

Where would a weighted average be useful? Calculating the return of the S&P 500 where some companies are far larger than others?

Dave from WA posted over 5 years ago:

I am not "embarrassed" to admit it, but I can't wrap my head around how +100%, +100%, -100% is equal to a 50% average return.
100+100-100=100/3 = 33.3% return over the 3 years. ??

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