"Working out Average Purchase Price on Shares". Who Is Right and Who Is Wrong?

Aerith-Waifu on 04/08/2020 - 15:52
Last edited 04/08/2020 - 18:10

Hi, here is an odd one, this is about working out the average purchase price on shares.

My uncle recently been using this website called Sharesight, on this website you can put in your buy and sell and it will workout whats your average purchase price including fees:

Here are his trades:

Date Quantity Price Fees Total Excluding Fees
27.9.2018 Buy 5000 $0.600 $19.95 $3000
15.7.2019 Buy 34883 $0.430 $0.00 $15000
11.10.2019 Buy 5117 $0.470 $19.95 $2404.99
25.10.2019 Buy 5000 $0.470 $19.95 $2350
4.12.2019 Buy 15000 $0.395 $19.95 $5925
2.3.2020 Buy 3333 $0.300 $10.00 $999.9
9.3.2020 Buy 3508 $0.285 $10.00 $999.78
13.3.2020 Buy 5000 $0.200 $10.00 $1000
13.3.2020 Sell -4255 $0.235 $10.00 $999.93-
23.3.2020 Buy 5000 $0.200 $10.00 $1000
1.7.2020 Buy 12414 $0.235 $9.50 $2917.29
15.7.2020 Sell -12414 $0.235 $9.50 $2917.29-
17.7.2020 Sell -7586 $0.235 $9.50 $1782.71-
Total: 70000 $168.75 $29916.98

Total share in holding: 70000
Fees: $168.75
Total Costs (after sell event): $29916.98

The method I used are:

($29916.98 + $168.75)/70000 = $0.43

According to my calculation, his average purchase price works out to be $0.43 per share including brokerage (including the sell event), however on Sharesight, his average is showing at $0.349 per share as cost base.

He is insisting Sharesight is right and I am wrong.

Was my average wrong at $0.43? If so, whats the correct step to calculate it?

Update:

Ok after reading all the wise points people bought up I realised where my mistakes are, firstly I should not have included those sell orders in the total to work out the average costs. Secondly, what I did instead was to work out how much the shares needs to be trading in order to recoupe all his loses, rather than working out the average price NOW after the sell event.

Poll Options

  • 4
    His average is: $0.349
  • 0
    His average is: $0.43
  • 4
    Other
Financial

Comments

  • Bonbi on 04/08/2020 - 16:07
    +6

    you are wrong because his average is the PURCHASE price average

    yours combines buy and sell…

    • netjock on 04/08/2020 - 16:19
      +4

      Rookie mistake.

      Looks like buy high and sell low too.

      • [Deactivated] on 04/08/2020 - 16:21

        Ditto

      • Gorodemon on 04/08/2020 - 16:25
        -1

        Are you a fellow autist from ASX Bets as well?

      • Aerith-Waifu on 04/08/2020 - 17:05

        Yes, looks like he bought too much without getting a good base support

      • whooah1979 on 04/08/2020 - 20:38

        He is going short.

        • Aerith-Waifu on 04/08/2020 - 22:17

          Oh that explains it also

    • [Deactivated] on 04/08/2020 - 16:20

      Hope OP isnt an accountant.
      You can also elect which parcels of shares you sell when you sell - ie higher cost base shares to limit capital gain / loss - so track it properly.
      Also include fees in your cost base.

      • Aerith-Waifu on 04/08/2020 - 16:49

        I am no accountant at all, to be honest, I buy shares and hold it for 5+ years. When I sell I sell the whole amount not in batches. I dont do trades as my uncle does so this FIFO method is something new to me

    • Aerith-Waifu on 04/08/2020 - 16:49

      So no combine buy and sell, point taken, thanks

      • [Deactivated] on 04/08/2020 - 18:25

        Goodo

  • friedsnowdays on 04/08/2020 - 16:08
    +1

    Why would you include the "Sell" events when calculating the average purchase price?

    • Aerith-Waifu on 04/08/2020 - 16:50
      +1

      I am trying to work out how much he is losing based on today's price of $0.22 so I included in the total. I am wrong obviously like many has pointed out.

  • trex on 04/08/2020 - 16:09

    Something is wrong with your table as the fees (5th column from the left in the table) and total (6th column from the left) is not adding up to $168.75 and $29,916.98 respectively.

    Your calculated average price of $0.43 includes offsetting purchase price with selling price which is not correct so Sharesight's average should be correct.

    • Aerith-Waifu on 04/08/2020 - 17:01

      Not sure what happened there, I pasted the entire excel my uncle sent me here. Must click something during the paste to have that error. I might give sharesight a go now everyone says its correct.

  • Ocker on 04/08/2020 - 16:13

    The average cost of the remaining shares will depend on which purchases you allocated to the sale transactions.

    • Aerith-Waifu on 04/08/2020 - 16:51

      I think Sharesight is Fifo

      • SgtBatten on 07/08/2020 - 14:09

        I think you can set it

  • mick1 on 04/08/2020 - 16:33
    +1

    Ocker and Tim are right.
    When working out your capital gains, you can choose which purchase parcels are used to calculate the cost price of the 24255 shares which were sold.

    Sharesight has used the FIFO method - first in first out.
    If you deduct the cost of the first 24255 shares which were bought, the remaining balance of the total purchase price divided by 70000 = approx $0.349.

    • Aerith-Waifu on 04/08/2020 - 16:52

      ok, so that doesn't mean if the remaining shares of 70000 are sold at $0.35 today, he will get the money back on the 70000 shares he originally purchased. But he still lost around $5000 on the 24255 he already sold, right?

      • mick1 on 04/08/2020 - 22:17

        right

  • tomleonhart on 04/08/2020 - 16:35

    Correct Step:

    1/ Number of shares x Cost per share + Fee = Total cost
    2/ Number of shares x Cost per share + Fee = Total cost
    3/ Number of shares x Cost per share + Fee = Total cost
    4/ Number of shares x Cost per share + Fee = Total cost

    Cost per share avg = sum(total cost) / sum(number of share)

    You do not include sell event.

    • Aerith-Waifu on 04/08/2020 - 16:53

      Do not including sell event. Noted!

  • Donaldhump on 04/08/2020 - 16:41

    I dont think this is what you were after but for the working out on tax I have not including fees ( i think )

    using FIFO method

    13.3.20 sell 4255 @ -.365 capital loss = -1553.05
    15.7.20 sell 12414 {
    745 @ - .365 capital loss = - 271.925
    11669 @ - .195 capital loss = - 2275.455
    }
    17.7.20 sell 7586 @ - .195 capital loss = - 1479.27

    capital loss = $ 5,579.70

    this is why shares a fricken nightmare

    • Aerith-Waifu on 04/08/2020 - 16:55

      Indeed nightmare.

      So if he wants his entire original investment back which is: $35161 + $168 in fees. The remaining 70000 shares he still holds needs to be sold at $0.50?

      • Donaldhump on 04/08/2020 - 17:14
        +1

        including fees

        with dat as
        (
        select '27.9.2018' thedate,'Buy' what,5000 qty,0.600 uprice,19.95 fees union all
        select '15.7.2019', 'Buy',34883,0.430,0.00 union all
        select '11.10.2019', 'Buy',5117,0.470,19.95 union all
        select '25.10.2019','Buy',5000,0.470,19.95 union all
        select '4.12.2019','Buy',15000,0.395,19.95 union all
        select '2.3.2020','Buy',3333,0.300,10.00 union all
        select '9.3.2020','Buy',3508,0.285,10.00 union all
        select '13.3.2020','Buy',5000,0.200,10.00 union all
        select '13.3.2020','Sell',-4255,0.235,10.00 union all
        select '23.3.2020','Buy',5000,0.200,10.00 union all
        select '1.7.2020','Buy',12414,0.235,9.50 union all
        select '15.7.2020','Sell',-12414,0.235,9.50 union all
        select '17.7.2020','Sell',-7586,0.235,9.50
        )
        select what,sum(qty*uprice+ (case when what = 'Buy' then 1 else -1 end *fees))/sum(qty) from dat
        group by what

        what avg_price
        Buy 0.379035
        Sell 0.236195

        • Aerith-Waifu on 04/08/2020 - 17:40

          Ok, I will give it a shot. Thanks

        • kiitos on 05/08/2020 - 08:28

          Why are fees excluded when you're calculating average sell price?

      • SgtBatten on 07/08/2020 - 14:11

        Don't fall for the sunken cost game.

  • tomleonhart on 04/08/2020 - 17:20
    +1

    If this is how people buy and sell shares, no wonder Warren Buffet won that 1 million buck bet.

    • Aerith-Waifu on 04/08/2020 - 17:41
      +2

      True, that's why I don't trade, I just buy and hold for 5 - 7 years. And sell the lot when its time. Way better than trading

      • Ghost47 on 05/08/2020 - 16:24

        i.e. Investing.

  • Donaldhump on 04/08/2020 - 17:24

    1.7.2020 Buy 12414 $0.235 $9.50 $2917.29
    15.7.2020 Sell -12414 $0.235 $9.50 $2917.29-

    was a bit mad

    • Aerith-Waifu on 04/08/2020 - 17:43

      Mad yes. But not the worst decision he made on this occasion, the shares are now worth less than $0.20.

      So even though he did buy and sold at the same price, at least he has avoided some losses if you fact in the shares is now 3.5c lower than he sold.

      Either way, he has a long way to crawl back to get his initial investment back, if ever…………..

      • netjock on 04/08/2020 - 18:56

        Either way, he has a long way to crawl back to get his initial investment back, if ever…………..

        Anyone has the skill to be a decent stock picker. Unfortunately it is the lack of time to invest in it. He should just go and buy a listed investment company (LIC) in the sectors he is interested in. Better left to the professionals.

        • Aerith-Waifu on 04/08/2020 - 19:11

          I normally buy blue chip stock or growth stock. At the moment its all about BNPL and I am not sure if they are the right choice.

          Look at SPT for example, they only have rev of 2.5m last Q and it cost them around 30m in operating costs.

          FMG, is the one I been holding for a long time, its now 3 times the price I paid and its only going to go higher I think with the problems with Brazil.

          My uncle on the other hand, dont trust other people with his money, so he picks all these little known mining companies which some are very questionable. Recently, he bought and sold MKR at $0.45 and doubled his money.

          At the end of the day, luck and timing have a lot to do with the picking. I mean who would think Sezzle at $0.37 will jump to $9 in 3 month time????? Same goes with APT at $8 in March………………

          • Donaldhump on 04/08/2020 - 20:28

            @Aerith-Waifu: I’ve been eyeing sezzle u reckon worth a punt

            • Aerith-Waifu on 04/08/2020 - 22:16

              @Donaldhump: Nope. If i have to chose one I go with SPT on the BNPL. Still not ideal but that the one I will go if i have to chose one from the BNPL space

  • [Deactivated] on 04/08/2020 - 18:27
    -2

    Both you and your uncle need a girl 🤦‍♂️

    • Aerith-Waifu on 04/08/2020 - 18:35
      +1

      A girl can do better maths or excel you mean? LOL

      • randomusername2017 on 04/08/2020 - 20:08

        maybe suggesting you need to get out of the house more…

  • OzHunterNSW on 05/08/2020 - 10:12
    -1

    Pay the guy

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