Cost Average per share after selling shares

[Pecunia]

Hi,
Question regarding PP and its calculation regarding Cost Average per share.
From what I’ve seen it looks like PP only looks at „buys“ and calculates the avg price based on those but PP does not seem to look at the average price if you’ve sold shares along the way which by not doing this can really give a wrong image of reality.

What I did is take a cost basis calculator from StockRants.com and entered in some buy and sell orders: http://www.stockrants.com/average-cost-calculator

When only looking at buy orders the Cost Average price per share is about $39
When taking the sell order into account the avg. price jumps to $53 !!

As you can see PP has the same avg price when you only look at BUY orders :

but the correct way (in my opinion) is to also take into account the SELL orders

Any thoughts on this?

[Ragas]

I recommend the following article:

How to Calculate the Average Price of Your Stock Positions

[Pecunia]

@Ragas,
Thanks for the link. I don’t think that article takes into account selling shares and then calculating your avg. share price.

[Ragas]

Determine Your Number of Shares

First, add up the number of total shares you own. Most brokerage statements will list your total position, but you can also calculate it by adding up the share amounts in each of your individual purchases. For example, if you bought 100 shares of a stock at $10 per share, 200 shares at $7 per share and 250 shares at $8.50, you have 550 total shares. Don’t forget to subtract the number of any shares you have sold since you purchased them.

[Pecunia]

Yes but I don’t get the point
Let me put it another way, My question is:
Does PP give you the average price of your shares when you bought and sold shares or does it only account for the buying of shares?

Reason of asking is because I showed that using the Excel sheet above it looks like PP only looks at the buying of shares and not keeping score of selling to determine the avg. price?

[chirlu]

@Pecunia

Does PP give you the average price of your shares when you bought and sold shares or does it only account for the buying of shares?

It depends on where you are looking. PP offers numerous different kinds of reports.

[Pecunia]

@chrilu I’m looking at the Security Performance Standard.
Can you tell me what other views are available that show different numbers. I need to know if I’m under water on a position by gauging the average shareprice.

@Ragas In the example the price is show to be 8.23 (4525/550 shares)
Lets say I sold 200 shares for 8 , what is now my average shareprice?

[chirlu]

E.g. in the “trades” view, or in the chart (where you can add the acquisition price based on FIFO or a moving average).

[Pecunia]

Hmm @chirlu not really.
What I’m looking for simply is I want to see if I’m up or down on a position where I’ve bought and sold shares in the past.
If I know my average shareprice after buying and selling shares in the past, I just have to look at the current price to know if I’m up or down

[dariottolo]

@Pecunia

If I know my average shareprice after buying and selling shares in the past, I just have to look at the current price to know if I’m up or down

In my opinion, the average share price should not change depending on the sale.
If you sell, it does not influence how much you spent to buy the shares in the past, you are just reducing the number of shares you currently have. It does not change the amount originally invested in the shares you currently have. Once the shares are sold, they should not influence the value of your investment.

[Pecunia]

@Pecunia

@Ragas In the example the price is show to be 8.23 ​​(4525/550 shares)
Lets say I sold 200 shares for 8, what is now my average shareprice?

@dariottolo with regards to the example I laid out above how would you calculate the avg shareprice?

[dariottolo]

Still 8,23 but for 350 shares.
edit for clarification:
you start with 550 shares each worth 8.23, for a total value of 4.526,5
you sell 200 at 8, which means you receive 1.600 from the sale, but lose 46 because you sell each of them 0.23 below your average price (therefore 200*0.23).
Now your asset value is 4.526,5 - 1.600 - 46 for 350 shares. Guess how much is the new average price?

[Pecunia]

thank you @dariottolo that is what I was looking for.

After searching some more, I believe looking at the Abs. Performance tab is probably the only reliable way to tell what the status is of a position.

[NilByte]

As far as I can see, none of the performance tabs gives the same result as the banks and tax authorities here in Denmark for stocks that have Sell transactions. Banks and tax authorities use the weighted average method and when you sell a stock it’s calculated at the weighted average quote value.