No. of Recommendations: 4
I'm no fan of putting money into bitcoin, to say the least, but this is innumeracy. To match the "compound return", it has to have the same start-to-end CAGR. By definition. That will of course vary with the time period chosen, for both choices, but the size of the squiggles along the way don't change your ultimate annualized rate of return.
They are perhaps thinking of risk adjusted returns using volatility as a proxy for risk? That's an entirely difference species of idiocy.
I think they do. A simple example will explain it better than a verbal explanation.
Stock 1. you start at 100. It goes up 20% year 1, and 0% year 2. You have 120.00
Stock 2. It starts at 100 and goes up 10% year 1, and you have 110. It goes up 10% year 2, and you have 121.00.
Example 2. Stock 1 starts at 100, and goes down 50%, and you have 50.00. It then goes up 50% and you have 75.
Stock 2 starts at 100, and goes up zero, and you have 100.
