Wrong Total Cost
Recently, a user highlighted that Total Cost in StocksCafe was computed wrongly and he (I assumed it’s a he based on the username) is correct. I previously computed Total Cost as “Sum of [buy price x number of shares] for each stock currently in portfolio”. However, this is inaccurate as he has pointed out, and I agree.
Therefore I have changed the definitions of Total Cost and also introduced new terms:
– Current Cost (or Current Positions Cost), and
– Closed Cost (or Closed Positions Cost).
Current Cost = “Sum of [buy price x number of shares] for each stock currently in portfolio”
Closed Cost = “Sum of [buy price x number of shares] for each closed positions”
Total Cost = Current Cost + Closed Cost
Why Does It Matter?
These changes mostly affect the way percentages of various values are computed. For example, previously, “P&L + Dividends + Closed” percentage was computed based on Current Cost (previously Total Cost) and this inflates the percentage. In the extreme case, if you earned one dollar on your closed positions and you have no open positions in your portfolio, your cost would be zero, and your percentage gain would be 1 / 0 = infinite percentage gain.
Therefore, I believe, the correct approach should base “P&L + Dividends” on Current Cost, “Closed” on Closed Cost and “P&L + Dividends + Closed” on Total Cost. You can already see these changes in your portfolio percentages computations.
As always, I’m thankful to all users who are constantly helping StocksCafe become better!