Portfolios operation - is it just me?

Friday, May 03 2019 by

OK - so I'm probably being stupid but I've just realised that the information showing in my Portfolios has been misleading me and as this has presumably been happening for years, I'm not very happy. Whether that should be with myself or with stocko, I'm not sure.

I now know that I should have been aware that stocko operates a "first in, first out" methodology and, to me that seems OK for a "trader" but not so good for an investor who might take time to build up a holding in a share, hopefully buying more as the "story" unfolds, selling a bit when I feel the SP has got ahead of itself or it's percentage of the portflio has become too large and buying more when the SP dips.

But, assuming that the share price basically goes up over time those sales later on don't reduce the "cost" of the overall holding by the value of the sale but rather reduce the cost by their value at the earliest cost price (hope that makes sense and hope that I understand what happens correctly).

So, for me, the "Cost", "Gain £" and "Gain %" figures are now meaningless.

It now seems that the only way to get the figures to accuratly reflect the performance of my investment in a share over a number of years is, after buying or selling, to delete the "Holding" from the portfolio then add the share again with the total number of shares held and the running total of what that holding has cost me after allowing for value of any sales along the way.

Or am I doing it all wrong and (a) there's a better way to keep track or (b) I'm wanting to do things the "wrong" way and really the stocko method is the correct and best way to monitor share holdings and their performance.

Of course, none of the above applies if I just buy a holding once and then don't sell any.

Any help much appreciated - I've been doing this a long time but still keen to learn.

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12 Posts on this Thread show/hide all

jonesj 3rd May 1 of 12

I believe it is normal practice to show the purchase cost as the AVERAGE, so sum the total purchase costs and divide by the number of shares held.

Sales make no difference to the average cost of the holding, since once sold, the share sold are no longer part of the holding.  

As I see it, calculating the average cost in this way is both logical and convenient for any capital gains planning.

Also, when evaluating the remaining holding, confusing the issue by considering what profit has already been made on the trade goes against an awful lot of theory on investing.

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ISAallowance 3rd May 2 of 12

Hi Laughton,

No, it's not just you, I have also noticed that the gain/loss percentage on Stocko portfolios differs from others such as Morningstar when holdings of the same stock have been bought and sold over time. As far as I can tell, others average the purchase cost of all holdings ever held of a given stock, whereas as you say Stocko discards the earliest purchases first from the calc.

It seems to me that neither is wrong - they are just different. I'm not really that bothered which way they do it - as jonesj comments above, the gain/loss from your arbitrary purchase price that is now in the past could bias clear decision making going forward. I know at least one competent investor who deliberately hides that information from their portfolio tracking for that reason.

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sharw 3rd May 3 of 12

There are so many ways of doing this. Most brokers will deduct for a sale at the average price paid. Different prices are used - some take the mid some the bid. Stocko has a bizarre last trade price so an illiquid share with a spread 97-103 that remains unchanged all day will ping pong between -3% and +3%.

My main problem is that few systems allow for total return. If I hold share A for a period of time and its value increases by 10% but pays no dividends and share B for the same period and it goes up 5% but also gives 6% in dividends as far as I am concerned B is the better share. In the end the only way to get exactly what you want is to set up your own spreadsheet. Mine gives total return - value now (no. shares x bid price - commission) - purchase price + dividends received. If there has been a part sale it can remain in the value now box if required. I put prices in manually so only do it once a week using Friday's closing prices but it gives me exactly what I want.

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herbie47 3rd May 4 of 12

I also have found Stocko figures misleading, it can be showing I'm making a profit on shares that I'm well in the red and others where I have made large profits as in the red. An average figure for buys and sells would be more accurate method in my opinion. You also need to watch out for share splits, Stocko can't handle these. Entering the figures manually would one way of doing it.

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Graham Ford 3rd May 5 of 12

In reply to post #473751

Herbie, there is a section in Help, Product Guide, Folios on handling splits. Does their method not work?

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doug2500 4th May 6 of 12

HMRC would need you to use average cost for capital gains so that is the method that would make sense to me.

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Effortless Cool 5th May 7 of 12

The Stockopedia portfolio system is simply not a suitable to monitor portfolio or individual share performance. I use an Excel spreadsheet that I have designed myself to take proper account of dividend payments and the timing of any cash flows into or out of the portfolio.

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rpannell 5th May 8 of 12

In reply to post #473886

HMRC would need you to use average cost for capital gains so that is the method that would make sense to me.

I don't think this is correct as HMRC require you to net sales against the shares last purchased unless you sell and buy again within 30 days. Rules for VCT sells are different.

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Laughton 6th May 9 of 12

Many thanks for all your replies.

Looks like it's back to good old Excel spreadsheets.

Taken on board what's been said about anchoring to original buy price even though it's nice to keep track of those all too rare multibaggers.

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xcity 7th May 10 of 12

I don't pay a lot of attention to the more esoteric detail (I rarely do part sales or trade in and out), but I prefer to use Sharepad for portfolio magagement. Partly because it has all my stocks (Stockopedia doesn't) and partly because it will calculate and add dividends automatically which saves time. I do have to add bond interest manually, but I have fewer of those. My guess is that it would average purchase prices on a salek, but I haven't checked.

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Silver Moon 7th May 11 of 12

I use a number of spreadsheets to track what's happening in my investments. The main one tracks the prices of my shares weekly and records both sales and purchases. Another one records the number of shares held and the average cost, this is updated immediately upon a sale or purchase so I am bang up to date. A third spreadsheet records dividend dates and amounts paid. Different pages within the spreadsheets are used to record capital gains and capital losses as they happen etc. Other spreadsheets are mainly to record research. Being retired helps to find the time for this practice.

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Maddox 9th May 12 of 12

In reply to post #473906

Hi rpannell,

Doug2500 is correct in the way HMRC will expect you to calculate a pooled average cost of shares purchased at different times and different prices to arrive at a capital gain. See https://www.gov.uk/tax-sell-shares/same-company
Regards Maddox

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