16 ms·
Correct, because we're averaging together things that are multiplied, not things that are added. Arithmetic mean is rather meaningless here.
by fallingfrog 4y ago
Correct, because we're averaging together things that are multiplied, not things that are added. Arithmetic mean is rather meaningless here.
- getToTheChopin 4y agoThe arithmetic mean gives you a sense of the return you can expect by investing in the market for a single year. When investing over multi-year periods, the geometric average is more relevant. You can see the impact on this chart, where the average return (and volatility) drops over longer time periods: https://themeasureofaplan.com/wp-content/uploads/2023/01/Rolling-Returns-1074.png https://themeasureofaplan.com/wp-content/uploads/2023/01/Rol...