Thanks for this post. I really enjoyed it and found it really interesting and insightful: it really made me rethink IRR in a way I hadn't thought of. Given some of the issues highlighted, I had a couple of other questions adjacent to the topic. Let's say that you have forecasted IRRs for several stocks calculated for next four years (using dividend yield, eps growth, and multiple). Can these be compared to a hurdle YTM (IRR) of a 10Y government bond (2 cpn per year), or 4Y forecast IRR of the spx index, given differences in cash flowss? Additionally, if one wanted to calculate the portfolio IRR for the same several stocks , would it be wrong to take the average weighted IRR? Or would one need to look at all of the underlying cashflow in aggregate and calculate the IRR on this? Many thanks.
Apr 22·edited Apr 22Liked by George Aliferis, CAIA
if IRR was 'the return', not only we would have beaten Buffett and all the investing legends, but doing so by a big big margin! Let that sink in ... and bring the sink ;)
Thanks for this post. I really enjoyed it and found it really interesting and insightful: it really made me rethink IRR in a way I hadn't thought of. Given some of the issues highlighted, I had a couple of other questions adjacent to the topic. Let's say that you have forecasted IRRs for several stocks calculated for next four years (using dividend yield, eps growth, and multiple). Can these be compared to a hurdle YTM (IRR) of a 10Y government bond (2 cpn per year), or 4Y forecast IRR of the spx index, given differences in cash flowss? Additionally, if one wanted to calculate the portfolio IRR for the same several stocks , would it be wrong to take the average weighted IRR? Or would one need to look at all of the underlying cashflow in aggregate and calculate the IRR on this? Many thanks.
if IRR was 'the return', not only we would have beaten Buffett and all the investing legends, but doing so by a big big margin! Let that sink in ... and bring the sink ;)