Compounding, the returns were (1.2631 − 1) = 26.31% for the first year, (1.2631 . 1.0446) − 1 ≈

31.94% for the second year, and so on. The sequence compounds further into 41.26%, 39.08%, 86.52%, 124.31%. Thus, over the first 6 years, the rate of return was 124.31%. If you continue compounding, you get 193.87%, 273.22%, 346.11%, 300.87%, 248.60%, 167.13%. Thus, over the entire 12 years, the holding rate of return was 167.13%. Your second 6-year rate of return can be computed as 1.3101 .

1.2700 . 1.1953 . (1 − 0.1014) . (1 − 0.1304) . (1 − 0.2337) ≈ 19.10%. You could have also computed it from (1 + r0, 12) = (1 + r0, 6) . (1 + r6, 12), which solves into r6, 12

= (1 + r0, 12)/(1 + r0, 6) − 1 =

(1 + 167.13%)/(1 + 124.31%) ≈ 19.09%. Actually, none of these numbers are entirely correct, because the reported returns themselves also suffer from small rounding errors. In real life, the rate of return was 166.4%.