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Motley Fool Hidden Gems / HG: Member Suggestions & Help


Subject:  Re: My Portfolio help Date:  9/3/2005  1:46 AM
Author:  dukeblue219 Number:  7563 of 13206

Cash should be exactly that -- the amount of free cash available in your account and should always be positive unless you are buying on margin.

Whenever I have bought or sold stocks I just enter it as a buy or sell. The program automatically adjusts the cash position appropriately. There is no need to manually deposit and withdraw. You are recording twice the withdrawal when you buy, and then twice the deposit when you sell. That would balance out perfectly if you bought and sold at the same price. However, if you sell at a loss your loss will be magnified, and if you sell at a profit that will also be magnified. Also your commissions will be essentially doubled. All of this could have resulted in the negative cash position. Essentially there's no way to know how much cash you really have anymore and your portfolio (the MF version) is probably very incorrect.

I will also note that past gains and losses are included in your gain/loss. That's because if you make a massive profit on some stock, sell, and keep your money, it goes to cash. The portfolio includes that cash in your total portfolio value, which it compares to the original cost of your stocks and cash (the amount you have put into the account) to determine your cumulative gain or loss.

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