Is that your average annual return? Compound annual return. So IRR is telling you that you are a good stock picker, with a 12% annual return, and simultaneously telling you that your are an idiot with a negative 6% annual return. To compute the compound annual return you add 1 to each performance, getting (1 + 400%) and (1 – 50%). Subtract 1 to get the 58% compound annual return.

Source: Forbes May 29, 2020 18:04 UTC