No. of Recommendations: 11
The value shown as of the end of 2020 of 409719 looks to be inconsistent with the value shown in the chart at www.stonewellfunds.com/PriceAndWMAofValue.png. I'm sure that it's not, and that I'm just reading the chart wrong, but could you please help me?I haven't delved into it, but it's the same method.
The two most likely differences are
* I probably used a different multiplier constant. The
rate of change of increase should be the same between the two summaries.
* This is a different year, with a difference CPI level, so the inflation adjustment to the level of 2023 dollars gives different numbers.
Again, it should be the same slope with a slightly different final multiplier.
For any given analysis, just make sure that the prices are adjusted for inflation with the same final CPI number as the value estimates : )
It doesn't matter which date--which size of dollars--you use as long as it's consistent between the two.
Speaking of currency effect adjustments---
Though I'm sure nobody cares, I don't track my portfolio or net worth in US dollars.
The dollar itself is a bit volatile cyclically.
I calculate my portfolio value in dollars, then also convert it to euros, and take the simple average of the two numbers for each date.
The biggest currency movements are usually one of those two (usually the dollar), so the midpoint is a much better track of true purchasing power over time.
I nicknamed the simple average "mid Atlantic currency units", or MACU.
It sounds bizarre, but it gives a much less volatile and (I believe) more meaningful result.
No matter who you are or where you live, if the dollar tanks for a couple of years then a mattress full of euros has more purchasing power than a mattress full of dollars.
And vice versa, of course.
For a sense of the swings in the US dollar, check out this graph.
https://stockcharts.com/h-sc/ui?s=%24USD&p=D&st=20...The US dollar index is the level of the dollar relative to all its trading partners, which is in effect a measure of the dollar movements since the average of all others can be considered a constant.
There is a big difference between the purchasing power implied by level 72 and the purchasing power implied by level 114.
Jim
