Our Calculation Process
The process by which we measure both the annualized and compounded performance of our strategies follows the industry-standard formulas and guidelines. Since we are not a fiduciary and do not take physical custody of assets, each Member uses their own brokerage company and buys and sells our recommendations at their sole discretion. That being mentioned, we have to use an exact “static” start price and end price when performing our calculations to give our Members the best possible viewpoint of actual performance. Our calculations can obviously vary from results actually achieved by our Members depending upon when they decide to buy and sell within their own respective brokerage accounts.
We use Current Data that we source from more than a dozen industry-leading data and research providers. Our Current Data is aggregated daily and is updated by 6am US-EST every business day - as of the previous business day’s close.
When we run our algorithms early each Monday morning (or early Tuesday morning if Monday is a market Holiday), we determine both the individual selections as well as their respective cost basis based upon Friday’s closing price. This information is then populated on our website by 7am US-EST.
The opening price of the selection at 9:30am US-EST will naturally somewhat vary from its closing price from the previous Friday. This common occurrence is known as ‘slippage’ and it can sometimes work in your favor (meaning you can get a slightly better entry price) and sometimes against your favor (meaning you can get a slightly less attractive entry price). We have conducted extensive testing on this over the years and have found that it works out to be almost a statistical ‘wash’ over time, meaning it appears to both help and hinder results almost evenly over time.
When you view our transactional history for each year, you will see the columns that break down each weekly period. We simply list each individual recommendation, it’s respective start price that week (derived from the previous Friday’s closing price) and its respective end price (derived from either when the stock was stopped out that given week (noted with an asterisk (*) next to the stock’s symbol) or what its closing price was that given Friday). We then list the stock’s individual % return for the week and then finally the portfolio % return which is simply the blended average return of all the stocks recommended for that given week.
Our annualized return for the given year is derived by first taking the ‘average’ of each individual week’s overall portfolio % number and then infusing that calculated value into the standard formula used for calculating annualized return.
So, in the example below, the space where you see “VALUE” will be the number we calculate after averaging each individual week’s overall portfolio % numbers all together:
For your convenience, we offer this for each individual year listed on the bottom of each strategy page as well ‘collectively’ for all years put together on the bottom of our website’s Home Page where you’ll see the vertical bar charts.
Our compounded return for the given year is derived by first taking the ‘original $ value’ at the very beginning of each individual strategy’s year and then infusing that value, along with the ‘new $ value’ at the end of each strategy’s year (or as far as it has gone so far YTD) into the standard formula used for calculating total compounded return. The formula then converts the $ gain (or loss) into % terms for you.
So, in the example below, the space where you see “ORIGINAL VALUE” will be the number we take at the very beginning of each individual strategy’s year and then the space where you see “NEW VALUE” will be the number we take at the end of each strategy’s year (or as far as it has gone so far YTD).
=NEW VALUE-ORIGINAL VALUE/ORIGINAL VALUE*100
For your convenience, we offer this for each individual year listed on the bottom of each strategy page.
Finally, it is important for us to visit the well-known subject of survivorship bias. Survivorship bias is very common in our industry as most data and research companies ‘remove’ companies from their databases after they have merged with another company or went out of business and have been delisted, etc. When this occurs, it can significantly skew the data, and thus the calculated performance data can easily become misrepresentative.
Here at the Wealth Quorum®, we do NOT remove these companies, so we do not have any survivorship bias within our performance data. Any company an investor has traded with us in the past, remains within our transactional history.
We hope you have found this information helpful. You’ll be hard pressed to find any other investment firm that offers the level of transparency we do.
Please give us a call at 212-655-9831 or 800-655-0361 or email us at [email protected] so we can schedule a call to discuss our strategies.
We look forward to working with you.
Yours in Success,
Clayton E. Anderson