Skip to main content
Boards Home | Best Of | Favorites & Replies | Customize | Start a New Board
Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (60) | Ignore Thread
Prev | Next
Author: TMFSlydo Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore)
of 1817  
Subject: Re: What's Your Portfolio's PIV-ER?
Date: 2/5/2007 8:43 PM
Post New | Post Reply | Reply Later | Create Poll
Report Post | Recommend it!
No. of Recommendations: 0
Zee,

The discrepancy arises from the fact that it's an average of numbers and the averages don't fit the same calculation as each individual component. For example, say your portfolio had stocks with the following prices, intrinsic values and PIV-ER's:

Price   IV      PIV        ER
-----   ---    -------   ------
100	100    100.00%	  0.00%
90	100	90.00%	 11.10%
80	100	80.00%	 25.00%
70	100	70.00%	 42.90%
60	100	60.00%	 66.70%
50	100	50.00%	100.00%
                ------  -------
Average	(Mean)	75.00%	 40.95%  (add each column and divide by number of stocks)

But if you use the formula (1-PIV)/PIV, then (1-.75)/.75 = 33%

I'm sure there's some technical mathematical explanation, but this is how it works.  Of course, we should also probably look at the weighted average of our portfolio (larger holdings count for more).

Paul (who wondered the same thing when I looked at my own portfolio)
Post New | Post Reply | Reply Later | Create Poll
Report Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (60) | Ignore Thread
Prev | Next

Announcements

Earnings Board FAQ
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! 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.