Numbers we love to hate
N umber crunching is dreadful and numbers are dull, scary things for many of us. But listen carefully enough and they have stories to tell. Listen carefully and frequently enough and you might just fall in love with some of them. But some numbers are daunting, unloved creatures nobody wants to know. Most of them live in Finance-vile. With names synonymous to gene sequences, complicated formulas, confusing meanings and different interpretations for different situations, how does one love such a whimsical thing? Take CAGR for example. CAGR or Compound Annual Growth Rate is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each year of the investment’s lifespan. Though CAGR is often used to compare returns of two investment options, it does not reflect investment risk. It also is a representational figure. It is essentially a number that describes the rate at which an in...
