Tom,
Re: Return On Time Averaged Capital in a portfolio-------ROTAC.
Here it appears you're weighing both the investment and the side-lined cash for a time averaged return.
No, that is not the case. I only time Average the Capital Injections and the Equity Value V fluctuates on its own due to price changes and trading without any rime-averaging. If no additional capital is injected ROTAC is identical to ROI.
ROTAC only takes effect when capitalization occurs at different times during Portfolio Life Time.
The fluctuating Equity Value only come into the picture only at the current date when one looks at the PV in order to determine the Yield amount so the ROTAC can be calculated.
The essence of this is that the injected money is considered investment even before you buy any shares and the ROTAC formula would apply to a simple savings account for which you add and withdraw money and with a periodically changing interest rate. I might add that it follows that when a Dividend is received in cash it is a timed-capital injection as well. If the dividend is receives in equity nothing changes other than that the equity value rises.
Regards,
PS.
If I consider only the last part of your statement ". . .time averaged return" it can be construed that ROTAC does not differentiate between money and equity at all. . . it simply sees the cash injections and these are time-averaged to form the time averaged capitalization for the Portfolio, and it ignores completely what happens to the equity during as long as you maintain the Portfolio.