On Tue, Jul 8, 2008 at 5:59 AM, David G. Hamblen <[EMAIL PROTECTED]> wrote:
> Charles Day wrote: > >> On Mon, Jul 7, 2008 at 8:53 AM, Derek Atkins <[EMAIL PROTECTED] <mailto: >> [EMAIL PROTECTED]>> wrote: >> >> "David G. Hamblen" <[EMAIL PROTECTED] >> <mailto:[EMAIL PROTECTED]>> writes: >> >> > A few years back (v1.8x), I had problems with these absolute >> values, and I >> > patched report-utilities.scm,and commodity-utilites.scm so that >> the balance >> > sheet would balance. In addition to completely removing all the >> numeric:abs, >> > I also had to do something about the division by zero in >> commodity-utilities >> > when there was a zero share balance. I'm using the "Nearest in >> Time" and the >> > problem went away in the 2.x updates. If anyone's interested, I >> can dig up >> > my old postings. >> > >> > Anyway, I vote for getting rid of absolute values in bookkeeping. >> >> It's not a question of book keeping. It's a question of computing >> the share price. GnuCash stores buys as a positive and sells as >> a negative. As Christian pointed out before, if you buy x shares >> for $y and then later SELL x shares for $y then a non-abs weighted >> average gives you a price of 0/share! Obviously this is wrong. >> The weighted average should be $(y/x) per share. But without >> the ABS you get: >> >> y * x + (-y)*x xy -xy 0 >> -------------- == ------ == --- = 0 >> x + x 2x 2x >> >> When you use abs() here you get the right answer. >> >> The fundamental issue here is that I don't think that the average price > should include shares I no longer own. > > My tests (all using the Balance Sheet) indicate that share prices (the y's) > are all positive and are calculated from each transaction (Total Buy/Total > Shares). The Total Buy (the x*y product) and the Total shares (the x's) are > both positive or both negative. What seemed to be happening back in 1.8x, > and is still happening in 2.4) was that when you have zero shares, the > answer for the weighted average is irrevelant, but I have a situation where > I sold all my shares (as in your example), but subsequently purchased a few > more shares of the same stock. The weighted average (without all the > abs()'s) looks like this: (I can't wait to see what Thunderbird does with my > ascii equations :-) ) > > y * x + y * (-x) + z * w z * w > ----------------------------------- == --------- == w > x + (-x) + z z > > With the abs(), I get a nonsensical average price for my holdings in this > asset. In my specific test case, with the initial purchase/sell of 100 > shares at $5 (as in your example), and a subsequent purchase of 10 shares at > $20, I get a weighted average price of $5.714, and an asset worth $57.14. > Using the "Nearest in Time" or the "Most Recent" price source, I get an > average share price of $20, and an asset value of $200. > Without the abs(), you get 0/0 for the weighted average in your example, so > that needs to be trapped. > So far as I can tell, this formula is the same as the new price source named "Average Cost" that I added yesterday (r17266). > > The good news is that in 2.4, the Balance Sheet balances in all cases (not > true in 1.8x). > Unless you have unrealized gains or losses on liabilities. I'm working on that... -Charles for sales. >> >> So it's not a question of absolute values in bookkeeping. It's >> a question of absolute values in computing share prices. Not >> the same thing. >> >> >> I agree with Derek. That is, the "weighted average" price source is not >> intended to compute the cost of your holdings, but rather to compute the >> volume-weighted average price of all buys AND sells. So it needs to keep >> using the absolute value. However, it does need to be changed: it should >> ignore exchanges with a zero "amount" in the split. >> >> So I think we need to add a new price source of "Cost" which computes >> without absolute value and does include zero "amount" splits. That's where >> taking a look at David's code might come in handy (though implementing this >> seems like a pretty simple job: copy existing weighted average function, get >> rid of absolute value, add report option). >> >> Whether to even keep the "weighted average" price source is a question >> worth asking; I don't think it is a useful way to revalue current holdings. >> Historical volumes don't seem relevant. Even if the volume weighting was >> removed, the formula also weights quotes that are clustered within a small >> period of time more heavily than quotes that are spread apart. In other >> words, if I have 30 quotes from this month and one quote from last year, the >> recent quotes practically drown out the quote from last year. If we want to >> aim for a historical price average then using something like linear >> regression seems like a better way to go. Could even add some time factors, >> like getting the midpoint of the portion of the line covering the last 30, >> 60, 90 days, whatever. But now I am brainstorming new price sources. >> >> I do think a volume-weighted average price can be useful; it's just more >> appropriate for measuring your personal trading performance. Maybe there >> should be a performance report designed around that. >> >> -Charles >> >> derek >> -- >> Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory >> Member, MIT Student Information Processing Board (SIPB) >> URL: http://web.mit.edu/warlord/ PP-ASEL-IA N1NWH >> [EMAIL PROTECTED] <mailto:[EMAIL PROTECTED]> >> PGP key available >> >> >> Of course, then you need to make sure you re-apply the negative > > > _______________________________________________ gnucash-devel mailing list gnucash-devel@gnucash.org https://lists.gnucash.org/mailman/listinfo/gnucash-devel
