Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
It occurred to me recently that my portfolio has current stocks, with current cost of stocks, and current value. Past gains/losses from selling stocks are not reflected in my gain/loss. So I guessed that the cash position thing would reflect the past transactions. I don't quite understand this cash position so tell me if I did this right.

I basically got my records from my very first $2000 deposit to Ameritrade. I started with a $2000 cash position. Every time I purchased a stock, I would first do a withdrawal from the cash position of the amount paid + commission, then enter the stock purchase. If I sold a stock, I would first enter the sell, then make a deposit to the cash position with the cash received. Only some stocks don't exist anymore, so I just did the withdrawal, then deposits without the stock entries. Is that how you do it?

I ended up with a rather large negative number for the cash position. I'm guessing this number is:

Amount of money invested - Money taken out

Am I correct? If so, under long term, is current value the total gain/loss from the entire time investing?

Thanks in advance!
Print the post Back To Top
No. of Recommendations: 0
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.

Ted
Print the post Back To Top
No. of Recommendations: 0
Ahhh! Thank you! I thought maybe the portfolio was doing some kind of strange finacial math or something. I hate math by the way. Thanks again!
Print the post Back To Top