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Why is average annual return on investment negative?

Marcus Libkind
Marcus Libkind Member ✭✭
edited January 2019 in Investing (Windows)

I purchased a stock in June 2016 and have not traded it since then. It is up more than 50% in that time, but off it's highest valuation due to recent loss in valuation (last several months). I have received some dividends but they are small compared to the increase in valuation but I don't think that comes into play in the calculation of the IRR. I can see why the 1 year average annual return on investment (IRR) is negative, but I can't understand why the 3 and 5 year average annual return on investment is negative. I have owned the stock for less than 3 years and as I said it is up more than 50%. The fact that I have owned it without subsequent trading should make the calculation of IRR relatively simple, but seems to be in error. What is going on?

Comments

  • mshiggins
    mshiggins SuperUser ✭✭✭✭✭
    edited January 2019
    QMac or QWin?
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • Marcus Libkind
    Marcus Libkind Member ✭✭
    edited January 2019

    I'm using Quicken for Windows 2019 R17.6
  • I think that I know the reason for this problem, but don't know how to fix it.

    I suspect that the problem is that I used a "transfer" transaction to move the stock from one brokerage account to another. IRR is being calculated based on the date of the transfer.

    Is there a fix for this so that it uses the original date of the stock purchase?

  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    The transfer of shares between investment accounts is implemented using a Removed and one or more Added action transactions.  The Added transactions are used to provide the cost basis and the date the lot was acquired.  If you haven’t already, you may want to review: https://www.quicken.com/support/about-key-investment-performance-calculations-used-quicken
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    If you include both the old and new accounts in the analysis, Quicken should show the overall performance. 
    QWin Premier subscription
This discussion has been closed.