Compound return fallacy is the bigger framework

Criteria for ECR is as stringent as dynamic binding/dispatch 🙂

• For 20+ years, every annual return must exceed the riskfree rate by 100 bps [2]
• investor can top up but not withdrawal

From now on, I will mostly look at equities, esp. U.S. equities.

— the shoot-up .. When the annual returns are up-n-down, in hindsight we can still see a “fake exponential” curve due to one shoot-up period towards the end [1] of the holding period.

The growth curve is actually non-exponential, but at a coarse granularity, it looks exponential.

In reality, many investors miss that shoot-up phase. Their portfolio will be hopelessly non-exponential.

— [2] average annual return .. Compound return fallacy has more details.

Many analyses compute an average annual return from positive and negative annual figures. Then they plug this average into compound return formula — a blatant abuse of math. If you use the raw returns (not the average) to plot a curve it will NOT look exponential. — [1] Q: what if the shoot-up happened before the end of an observation window having up-n-down, i.e. the end phase is not shoot-up?
A: I believe the curve will NOT look exponential.

— effect of observation frequency
rEstate valuation changes quarterly, not daily. I only monitor my property NAV once a year at most.  Therefore, I don’t see up-n-down. If you have only 10 yearly observations in a time series, is it exponential?