In the investment world, it’s common to discuss average rates of return. It’s not sufficient, however, to simply add up historical returns and divide by how many there are. The proper way to calculate ...

Of all the ideas we've forgotten from math class, the most important to relearn — because it illuminates our most urgent challenges — is the difference between arithmetic and geometric progressions.

When talking investment portfolios, the geometric mean is also sometimes referred to as compounded annual growth rate or time-weighted rate of return.

Kirkland B. Stewart, Situations in Which the Arithmetic and Geometric Moving Averages Are Inefficient Estimators, Technometrics, Vol. 14, No. 3 (Aug., 1972), pp. 619-633 ...

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...