UnThreaded | Threaded | Whole Thread (318) | Ignore Thread Prev | Next
Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: Re: Hi gang... wow!!! Date: 9/16/2013 7:26 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 5
then it's risk-adjusted returns are its gross returns times 1-drawdown.
There are a bunch of standard ways that risk-adjusted returns are calculated.
Average return divided by MaxDD is not one of those ways.
In fact, MaxDD is virtually useless because it is just a measure of the one-time worst case event.

CalMar, StdDev, Sortino, Sharpe, Ulcer Index, Ulcer Performance Index -- these are all common measures.

Just eyeballing the 40 year balance on the IUL I ran, versus the 40 year balance on the spreadsheet... looks to me like the IUL finishes with more money.
The spreadsheet uses actual historical data.
I can't cut-paste from your pdf, but it says, "reflect a hypothetical rate at the average historical rates". I don't see anywhere where they state what the rate they used. So you cannot compare the two, since one uses real data and the other uses an average.

How *did* you create that PDF? I can't cut/paste from it, which is rather annoying. [...sounds of typing, grumbling in the background...]
YES! HA! WHO'S THE MAN!
Got it!
I checked the Illustration at 4 different dates 10 years apart, and every one computed as an annual gain of 8.8%.

This illustration is garbage and arguably fraudulent. They don't show any years where the return is zero, nor any years where the return is 12%. Yet we know from the historical data that 25% of the annual returns are < 0% (and therefore would be floored at 0%) and 45% of the annual returns are > 12% (and therefore would be capped at 12%)

In order to do a like-to-like comparison, you'd have to compare their illustration with a S&P500 B&H spreadsheet with a fixed 10.8% annual return. Or 9.2% for a 60/40 asset allocation.

Oh, hmmm, very interesting. My spreadsheet computes the CAGR for the IUL portfolio and it computes as [....drum roll ....] 7.0% to 8.5%, depending on the exact starting date. So it appears they not only bogusly used a constant annual gain, but they put a bit of thumb on the scale.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (318) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
2013 Feste Award Voting Begins!
Who will win the 2013 Feste Award? Vote now for the Fool that most exemplifies the Fool Community mission of Learning Together!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Berkshire Hathaway

Reestablishing the Middle Class
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement