Cost Basis

[glenm]

I have several stocks in a portfolio where the cost basis does not fall in proportion to the number of shares sold. For example if one half of a position is sold the cost basis should fall by one half, in most instances this is the case. However there are several holdings for which this does not happen and the cost basis is significantly higher or lower than it should be.

Any idea what's happening?

Thanks for your help

glenm

[Mark]

Hi glenm,

Which "cost basis" are you looking at? There is a "tax" cost basis, and also 2 different versions of an "OOP" cost basis. The "OOP" cost basis stands for "Out Of Pocket", and is meant to show your overall break even point. I suspect you are looking at the historical OOP cost basis. Here is an example:

Buy 10 shares for $1,000
Sell 5 shares for $600

Your tax cost basis for the un-sold 5 shares is $500, but your historical OOP basis on those same 5 shares is $400. There is both a historical version of OOP cost, and also a "current" version. In this example, your historical OOP cost is $400, but your current OOP cost is $500. The historical number is showing your break-even point over the life of the investment, where the current number is showing your break-even point for just the shares owned currently.

The current OOP cost basis can differ from your tax cost basis because of distributions. If you receive a dividend, this lowers your OOP cost basis, but does not change your tax cost basis. For more on this, see:

http://fundmanagersoftware.com/help/def_oop.html

[glenm]

Thanks Mark, I was viewing Basis, switching to AVG Basis seems to have fixed the problem.
glenm