The harsh portfolio!

I track 2 metric, monthly return (which I call absolute return) and IRR return.

Monthly return: For a given month if my starting portfolio value was 100 and I bought stocks worth 10 and at the of the month, my portfolio value is 90 then the monthly return is (90-100-10)/(100+10) ~ (-18.18%). This is what I call absolute return.

IRR return is computed by putting all transactions on an excel sheet along with their respective dates, and use the XIRR function.

Generally, both these returns are quite close, if there is not a large amount of influx/outflux from the portfolio.

2 Likes