Calculating investment performance (not IRR)

Well, the portfolio gain must be set against beginning- portfolio-balance-plus-deposits-and-minus-withdrawals...but the problem is that (for instance) a large withdrawal on the last day of the year would spike a previously predictable return.

The solution is a Modified Dietz...

That's just the portfolio gain set against the beginning-portfolio-balance-plus-an-averaged-daily-deposit/withdrawal-net...

An IRR ? Well, put that in your flashing neon feature matrix...The IRR is not helpful for securities held less than a year but no report of result is also not helpful...

As an example, I took quicken and created an investment account. I tried to different scenarios with only the trade date changing. I started with 100 in a brokerage account on 8/1/2004.

Scenario 1: Bought 10 shares stock X on 8/1/2004 for $10. Sold for $12 on 8/15/2004

Scenario 2: Bought 10 shares stock X on 8/1/2004 for $10. Sold for $12 on 8/1/2005.

Quicken caluclates the Avg Ann Return as 337% for scenario 1 and 20% for scenario 2!

Of course, I realize why. However, this is useless. In my mind (and in every sensible investor's mind), the returns should be the same. I started with the same amount and ended with the same amount. Returns should be the same. In scenario 1 cash sat idlea for almost a year dragging down the return if Quicken calcaulated returns properly.

I've said it many times: Quicken's return stats are unreliable and confusing. They should not be used for investment decisions.

Well, the calculation that I do is YTD but defines the period as the entire calendar year...so each YTD result is as projected to year end.

For Scenario 1, I get 48.03% if the cash deposit for the security purchase is on 8/1/2004...

For Scenario 1, I get 20.05% if the cash deposit for the security purchase is on 1/1/2004...

For Scenario 1, I get 20.00% if the cash deposit for the security purchase is on 12/31/03...