I'm trying to find the formula for Cost Averaging could you
please help? I'm trying to lower my cost/share average and
get it as close to the current cost. I've tried one I made
up for myself but it doesn't seem to work it goes like this:

x = total # of shares to purchase
y = current # of shares

x+ y = total # of shares

The Formula I need to figure out is for X:

x + y = (initial cost/share * y)+(current cost/share *
x))/(current cost/share)

For Example: I purchased 100 Shares at $10.00/share
the current price/share is $5.00.

x + 100 = (($1000)+($5.00 * x))/$5.00

But it doesn't work out... Please help...

Michael...

I'm not that clear about what it is you want to determine, but your average
cost is the total cost for all the shares you have, divided by the total
number of shares you own. If you buy new shares at a price below that
average cost number, then your average cost will fall. You can calculate
the new average cost after the purchase by using the same formula... total
cost (for all the shares you own) divided by total shares you own.

John Munn




----- Original Message -----
From: "Michael Hall" <mdhall2@bivio.com>
To: <club_cafe@bivio.com>
Sent: Monday, March 04, 2002 5:28 PM
Subject: club_cafe: Formula for Cost Averaging


> I'm trying to find the formula for Cost Averaging could you
> please help? I'm trying to lower my cost/share average and
> get it as close to the current cost. I've tried one I made
> up for myself but it doesn't seem to work it goes like this:
>
> x = total # of shares to purchase
> y = current # of shares
>
> x+ y = total # of shares
>
> The Formula I need to figure out is for X:
>
> x + y = (initial cost/share * y)+(current cost/share *
> x))/(current cost/share)
>
> For Example: I purchased 100 Shares at $10.00/share
> the current price/share is $5.00.
>
> x + 100 = (($1000)+($5.00 * x))/$5.00
>
> But it doesn't work out... Please help...
>

the reason it isn't working is because you are missing a
variable: your target average price.

the equation should look like:

Z=(y/(x+y))*a + (x/(x+y))*b

where:
Z= target average price.
a= cost of original shares.
b=current price.

solve for x and you get the formula:

x= ((a-z)y)/(z-b)

i hope that helps

Michael Hall wrote:
> I'm trying to find the formula for Cost Averaging could you
> please help? I'm trying to lower my cost/share average and
> get it as close to the current cost. I've tried one I made
> up for myself but it doesn't seem to work it goes like this:
>
> x = total # of shares to purchase
> y = current # of shares
>
> x+ y = total # of shares
>
> The Formula I need to figure out is for X:
>
> x + y = (initial cost/share * y)+(current cost/share *
> x))/(current cost/share)
>
> For Example: I purchased 100 Shares at $10.00/share
> the current price/share is $5.00.
>
> x + 100 = (($1000)+($5.00 * x))/$5.00
>
> But it doesn't work out... Please help...

John,

Sorry about the confusion. What I'm trying to figure out is
how many shares at the current price will I need to buy in
order for my avg. cost/share to equal the current price.

Thanks

Mike

John R. Munn wrote:
> Michael...
>
> I'm not that clear about what it is you want to determine, but your average
> cost is the total cost for all the shares you have, divided by the total
> number of shares you own. If you buy new shares at a price below that
> average cost number, then your average cost will fall. You can calculate
> the new average cost after the purchase by using the same formula... total
> cost (for all the shares you own) divided by total shares you own.
>
> John Munn
>
>
>
>
> ----- Original Message -----
> From: "Michael Hall" <mdhall2@bivio.com>
> To: <club_cafe@bivio.com>
> Sent: Monday, March 04, 2002 5:28 PM
> Subject: club_cafe: Formula for Cost Averaging
>
>
> > I'm trying to find the formula for Cost Averaging could you
> > please help? I'm trying to lower my cost/share average and
> > get it as close to the current cost. I've tried one I made
> > up for myself but it doesn't seem to work it goes like this:
> >
> > x = total # of shares to purchase
> > y = current # of shares
> >
> > x+ y = total # of shares
> >
> > The Formula I need to figure out is for X:
> >
> > x + y = (initial cost/share * y)+(current cost/share *
> > x))/(current cost/share)
> >
> > For Example: I purchased 100 Shares at $10.00/share
> > the current price/share is $5.00.
> >
> > x + 100 = (($1000)+($5.00 * x))/$5.00
> >
> > But it doesn't work out... Please help...
> >

John,

I'm sorry but I put in the numbers and this formula doesn't
work either. It's actually the same formula...

Mike


John Medio wrote:
> the reason it isn't working is because you are missing a
> variable: your target average price.
>
> the equation should look like:
>
> Z=(y/(x+y))*a + (x/(x+y))*b
>
> where:
> Z= target average price.
> a= cost of original shares.
> b=current price.
>
> solve for x and you get the formula:
>
> x= ((a-z)y)/(z-b)
>
> i hope that helps
>
> Michael Hall wrote:
> > I'm trying to find the formula for Cost Averaging could you
> > please help? I'm trying to lower my cost/share average and
> > get it as close to the current cost. I've tried one I made
> > up for myself but it doesn't seem to work it goes like this:
> >
> > x = total # of shares to purchase
> > y = current # of shares
> >
> > x+ y = total # of shares
> >
> > The Formula I need to figure out is for X:
> >
> > x + y = (initial cost/share * y)+(current cost/share *
> > x))/(current cost/share)
> >
> > For Example: I purchased 100 Shares at $10.00/share
> > the current price/share is $5.00.
> >
> > x + 100 = (($1000)+($5.00 * x))/$5.00
> >
> > But it doesn't work out... Please help...

"in order for my avg. cost/share to equal the current price"

sorry mike, but thats mathematically impossible, because you
will always have a portion of your position whose cost is at
the previous price. you can make that percentage incredibly
small simply by buying more and more at the current price,
but your actual average price will always fall between
(never AT either one) the two prices.

Michael Hall wrote:
> John,
>
> Sorry about the confusion. What I'm trying to figure out is
> how many shares at the current price will I need to buy in
> order for my avg. cost/share to equal the current price.
>
> Thanks
>
> Mike
>
> John R. Munn wrote:
> > Michael...
> >
> > I'm not that clear about what it is you want to determine, but your average
> > cost is the total cost for all the shares you have, divided by the total
> > number of shares you own. If you buy new shares at a price below that
> > average cost number, then your average cost will fall. You can calculate
> > the new average cost after the purchase by using the same formula... total
> > cost (for all the shares you own) divided by total shares you own.
> >
> > John Munn
> >
> >
> >
> >
> > ----- Original Message -----
> > From: "Michael Hall" <mdhall2@bivio.com>
> > To: <club_cafe@bivio.com>
> > Sent: Monday, March 04, 2002 5:28 PM
> > Subject: club_cafe: Formula for Cost Averaging
> >
> >
> > > I'm trying to find the formula for Cost Averaging could you
> > > please help? I'm trying to lower my cost/share average and
> > > get it as close to the current cost. I've tried one I made
> > > up for myself but it doesn't seem to work it goes like this:
> > >
> > > x = total # of shares to purchase
> > > y = current # of shares
> > >
> > > x+ y = total # of shares
> > >
> > > The Formula I need to figure out is for X:
> > >
> > > x + y = (initial cost/share * y)+(current cost/share *
> > > x))/(current cost/share)
> > >
> > > For Example: I purchased 100 Shares at $10.00/share
> > > the current price/share is $5.00.
> > >
> > > x + 100 = (($1000)+($5.00 * x))/$5.00
> > >
> > > But it doesn't work out... Please help...
> > >

John,

That's what I thought but I wanted to be sure before I try
to bring my cost/share down by using this formula...

MIke


John Medio wrote:
> "in order for my avg. cost/share to equal the current price"
>
> sorry mike, but thats mathematically impossible, because you
> will always have a portion of your position whose cost is at
> the previous price. you can make that percentage incredibly
> small simply by buying more and more at the current price,
> but your actual average price will always fall between
> (never AT either one) the two prices.
>
> Michael Hall wrote:
> > John,
> >
> > Sorry about the confusion. What I'm trying to figure out is
> > how many shares at the current price will I need to buy in
> > order for my avg. cost/share to equal the current price.
> >
> > Thanks
> >
> > Mike
> >
> > John R. Munn wrote:
> > > Michael...
> > >
> > > I'm not that clear about what it is you want to determine, but your average
> > > cost is the total cost for all the shares you have, divided by the total
> > > number of shares you own. If you buy new shares at a price below that
> > > average cost number, then your average cost will fall. You can calculate
> > > the new average cost after the purchase by using the same formula... total
> > > cost (for all the shares you own) divided by total shares you own.
> > >
> > > John Munn
> > >
> > >
> > >
> > >
> > > ----- Original Message -----
> > > From: "Michael Hall" <mdhall2@bivio.com>
> > > To: <club_cafe@bivio.com>
> > > Sent: Monday, March 04, 2002 5:28 PM
> > > Subject: club_cafe: Formula for Cost Averaging
> > >
> > >
> > > > I'm trying to find the formula for Cost Averaging could you
> > > > please help? I'm trying to lower my cost/share average and
> > > > get it as close to the current cost. I've tried one I made
> > > > up for myself but it doesn't seem to work it goes like this:
> > > >
> > > > x = total # of shares to purchase
> > > > y = current # of shares
> > > >
> > > > x+ y = total # of shares
> > > >
> > > > The Formula I need to figure out is for X:
> > > >
> > > > x + y = (initial cost/share * y)+(current cost/share *
> > > > x))/(current cost/share)
> > > >
> > > > For Example: I purchased 100 Shares at $10.00/share
> > > > the current price/share is $5.00.
> > > >
> > > > x + 100 = (($1000)+($5.00 * x))/$5.00
> > > >
> > > > But it doesn't work out... Please help...
> > > >

please see my preceeding response, but you are correct--this
formula won't work if Z and B are the same number because
then the denominator would be zero. thats why your average
price and current price can never be the same.

Michael Hall wrote:
> John,
>
> I'm sorry but I put in the numbers and this formula doesn't
> work either. It's actually the same formula...
>
> Mike
>
>
> John Medio wrote:
> > the reason it isn't working is because you are missing a
> > variable: your target average price.
> >
> > the equation should look like:
> >
> > Z=(y/(x+y))*a + (x/(x+y))*b
> >
> > where:
> > Z= target average price.
> > a= cost of original shares.
> > b=current price.
> >
> > solve for x and you get the formula:
> >
> > x= ((a-z)y)/(z-b)
> >
> > i hope that helps
> >
> > Michael Hall wrote:
> > > I'm trying to find the formula for Cost Averaging could you
> > > please help? I'm trying to lower my cost/share average and
> > > get it as close to the current cost. I've tried one I made
> > > up for myself but it doesn't seem to work it goes like this:
> > >
> > > x = total # of shares to purchase
> > > y = current # of shares
> > >
> > > x+ y = total # of shares
> > >
> > > The Formula I need to figure out is for X:
> > >
> > > x + y = (initial cost/share * y)+(current cost/share *
> > > x))/(current cost/share)
> > >
> > > For Example: I purchased 100 Shares at $10.00/share
> > > the current price/share is $5.00.
> > >
> > > x + 100 = (($1000)+($5.00 * x))/$5.00
> > >
> > > But it doesn't work out... Please help...

John,

Thanks, but I can use this formula to get it awful close.

Thanks

Mike



John Medio wrote:
> please see my preceeding response, but you are correct--this
> formula won't work if Z and B are the same number because
> then the denominator would be zero. thats why your average
> price and current price can never be the same.
>
> Michael Hall wrote:
> > John,
> >
> > I'm sorry but I put in the numbers and this formula doesn't
> > work either. It's actually the same formula...
> >
> > Mike
> >
> >
> > John Medio wrote:
> > > the reason it isn't working is because you are missing a
> > > variable: your target average price.
> > >
> > > the equation should look like:
> > >
> > > Z=(y/(x+y))*a + (x/(x+y))*b
> > >
> > > where:
> > > Z= target average price.
> > > a= cost of original shares.
> > > b=current price.
> > >
> > > solve for x and you get the formula:
> > >
> > > x= ((a-z)y)/(z-b)
> > >
> > > i hope that helps
> > >
> > > Michael Hall wrote:
> > > > I'm trying to find the formula for Cost Averaging could you
> > > > please help? I'm trying to lower my cost/share average and
> > > > get it as close to the current cost. I've tried one I made
> > > > up for myself but it doesn't seem to work it goes like this:
> > > >
> > > > x = total # of shares to purchase
> > > > y = current # of shares
> > > >
> > > > x+ y = total # of shares
> > > >
> > > > The Formula I need to figure out is for X:
> > > >
> > > > x + y = (initial cost/share * y)+(current cost/share *
> > > > x))/(current cost/share)
> > > >
> > > > For Example: I purchased 100 Shares at $10.00/share
> > > > the current price/share is $5.00.
> > > >
> > > > x + 100 = (($1000)+($5.00 * x))/$5.00
> > > >
> > > > But it doesn't work out... Please help...

Mike...

John Medio is absolutely correct. Think of it this way... You have some
shares you bought for $100/share and the current price is now $50/share.
All new shares will be $50, but in order to bring your portfolio, including
the $100 shares, down to an average price of $50/share, you need to buy many
shares at a price much lower than that to bring the average cost of the $100
shares down.

From another perspective, the current market price is at $10 and not less,
so you can't average the $100 shares down to market because you can't buy
shares less than market. In the scenario above, it would take a new
purchase of 3 shares at $33.33 (for example) to bring the four shares you
now own to an average price of $50/share. (3 @ $33.33 + 1 @ $100 is 4 @
$200 or an average of $50/share.)

John Munn






----- Original Message -----
From: "Michael Hall" <mdhall2@bivio.com>
To: <club_cafe@bivio.com>
Sent: Monday, March 04, 2002 6:00 PM
Subject: club_cafe: Re: Formula for Cost Averaging


> John,
>
> That's what I thought but I wanted to be sure before I try
> to bring my cost/share down by using this formula...
>
> MIke
>
>
> John Medio wrote:
> > "in order for my avg. cost/share to equal the current price"
> >
> > sorry mike, but thats mathematically impossible, because you
> > will always have a portion of your position whose cost is at
> > the previous price. you can make that percentage incredibly
> > small simply by buying more and more at the current price,
> > but your actual average price will always fall between
> > (never AT either one) the two prices.
> >
> > Michael Hall wrote:
> > > John,
> > >
> > > Sorry about the confusion. What I'm trying to figure out is
> > > how many shares at the current price will I need to buy in
> > > order for my avg. cost/share to equal the current price.
> > >
> > > Thanks
> > >
> > > Mike
> > >
> > > John R. Munn wrote:
> > > > Michael...
> > > >
> > > > I'm not that clear about what it is you want to determine, but your
average
> > > > cost is the total cost for all the shares you have, divided by the
total
> > > > number of shares you own. If you buy new shares at a price below
that
> > > > average cost number, then your average cost will fall. You can
calculate
> > > > the new average cost after the purchase by using the same formula...
total
> > > > cost (for all the shares you own) divided by total shares you own.
> > > >
> > > > John Munn
> > > >
> > > >
> > > >
> > > >
> > > > ----- Original Message -----
> > > > From: "Michael Hall" <mdhall2@bivio.com>
> > > > To: <club_cafe@bivio.com>
> > > > Sent: Monday, March 04, 2002 5:28 PM
> > > > Subject: club_cafe: Formula for Cost Averaging
> > > >
> > > >
> > > > > I'm trying to find the formula for Cost Averaging could you
> > > > > please help? I'm trying to lower my cost/share average and
> > > > > get it as close to the current cost. I've tried one I made
> > > > > up for myself but it doesn't seem to work it goes like this:
> > > > >
> > > > > x = total # of shares to purchase
> > > > > y = current # of shares
> > > > >
> > > > > x+ y = total # of shares
> > > > >
> > > > > The Formula I need to figure out is for X:
> > > > >
> > > > > x + y = (initial cost/share * y)+(current cost/share *
> > > > > x))/(current cost/share)
> > > > >
> > > > > For Example: I purchased 100 Shares at $10.00/share
> > > > > the current price/share is $5.00.
> > > > >
> > > > > x + 100 = (($1000)+($5.00 * x))/$5.00
> > > > >
> > > > > But it doesn't work out... Please help...
> > > > >