Sharing my two thoughts on @10kdiver's thoughtful post on CAGR/IRR as I went through the calculations ππ»
https://twitter.com/10kdiver/status/1457115966651830272
@10kdiver Question β
β‘οΈ Whatβs the maximum CAGR for a stock that multiplies by a factor N and taking N years to do so?
My Naive Answer β
β‘οΈ Without realising that it was a loaded question, like many ~44%, I chose βNo Limit to Max CAGRβ
β‘οΈ Whatβs the maximum CAGR for a stock that multiplies by a factor N and taking N years to do so?
My Naive Answer β
β‘οΈ Without realising that it was a loaded question, like many ~44%, I chose βNo Limit to Max CAGRβ
Reflection π€
β‘οΈ Because N = N, mathematically it < 44.2%, with the sweet spot in 2-3 years.
β‘οΈ Because N = N, mathematically it < 44.2%, with the sweet spot in 2-3 years.
More importantly, it reminded me why when I am seeking a minimum portfolio CAGR return of at least 25%, I always think about every investment if it can:
1) 3-5X in 3-5 years' time
2) 5-7X in 5-7 years' time
1) 3-5X in 3-5 years' time
2) 5-7X in 5-7 years' time
β’ β’ β’
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