I notice that on most days the number shown for the change in the value of my portfolio starts off as negative, and then gets more positive as the day continues. Is this real or is it just a due to some quirk in how the numbers are calculated? If it is real, then what is the explanation for this phenomenon?
If it is real then I should do my buying in the morning and my selling in the afternoon!
I am a keen & experienced investor. I love my spread sheets, and like to think that I know what I am doing. I wouldn't be offended to be described as a bit geeky. Mostly I do well, but I always strive to do better. Married male. Born 1957 England. Good career in industry for 35 years. Been successfully investing for about 30 years. I chose to retire from salaried employment at age 57 to look after my investments. I consider myself to be quite analytical / logical / mathematical, but also take into account how the world is likely to change & how people behave. I always follow my processes before taking action. more »
You can find that the spread between the buying/selling price is wider early in the morning in a "thin" market. If the site values portfolios at the offer/sell price if would be a possible explanation.
From what I can see, the portfolio value is based upon the "last price". So presumably that is a buy or sell price, which means that the spread does affect it then.
So, all other things being equal, if the spreads are generally wider in the morning, then it would be better to conduct all my trades in the afternoon. Any comments?
The portfolio valuation is run off the bid price, rather than the last price. We had a lot of feedback from subscribers who sensibly felt they wanted a valuation that represented what they could currently sell it for on the market. We are going to make the choice of price for valuation configurable in the new application.
There's something to be aware of though that the bid and ask prices can be quite volatile during LSE auction periods at the beginning and end of the day - so the valuation can jump around a bit at that time. We are working on a few ways to 'stabilise' valuations during this period. This behaviour is very similar during the auction at my brokerages - it's a quirk to be aware of.
The other thing is - LSE have an odd habit of quoting the 'change' on day for every share calculated from the open price, not from the previous day's close. They seem to be the only exchange that do this and it creates quite a few support tickets for us. We are considering calculating our own change on day delta - let me know if you'd prefer it and we'll get on with it.
Ed,
Thanks for your reply. I would prefer the "change on day" to be calculated from the previous day's close because I think it gives a more realistic picture of what is going on. Let's imagine a big price fall overnight due to a profit warning. The price opens much lower and then creeps up during the day. The "change on day" as calculated by LSE shows a small gain in price, whereas what has really happened is a big loss. The real loss would show up when calculated from the previous day's close.
Please can you tell me what time the auctions are take place so that I can avoid trading during more volatile periods?
Warranstar..
On the LSE SETS system, auction is 10 mins in the morning pre open (7:50 to 8am). And 5 mins or so at closing (4:30pm)
However, an auction can also be triggered at anytime during the day if certain criteria are met (a sudden large price movement is a good example).
Thus, if say a stock started tanking bigtime at some point during the day, it can be sent into auction. Not just once either. It may be triggered several times over quite a short period of time, if the large movements persist.
So in a nutshell, other than the open and close auctions, there are no "set in stone" times you can avoid.
Hi Ed
Are the changes in the indices shown on the home page also calculated from that day's start rather than the previous day's close? ( Every day I compare my portfolio % change with the all share index % change, and the comparison is only valid if they are both calculated on the same time period)
The previous change to base the valuation on the Bid price was a good move. It would be good if this could be extended so that all daily change figures were based on the same bid price data. Making it configurable would allow those with a different view to set accordingly.
