[Patch] reworked advanced-portfolio.scm

[Mark Johnson]

Andrew Sackville-West wrote:

>On Sat, 18 Feb 2006 10:20:24 -0700
>Mark Johnson <mrj001 at shaw.ca> wrote:
>  
>
[...]

>>True.  What about the possibility of reports based upon the pricedb 
>>entries?  Eg. a graph of the price history.  Such entries would produce 
>>unwelcome blips.  I'm just thinking here about possible future features, 
>>and, I suppose, the meaning of pricedb entries.
>>    
>>
>
>In thinking on this more, as I understand the way the report currently
>works, that shouldn't necessarily cause a blip. The report takes the
>txn and converts it from whatever commodity it is currently represented
>in to the final display commodity(currency). Frankly, I don't
>understand the currency exchange function well enough yet to know, but
>it may be that it correctly shows a conversion. so for example if you
>have 10 units stockA @ $10 and trade it for 5 units stockB @ $20, then
>the value should line up at $100 either way. What if your trade is not
>1:1. hmmm.  10units A @ $10 becomes 7 units B @ $20. well your value
>jumps from $100 to $140. but this is still accurate as that is what the
>stock is worth. What am I missing here?
>
>  
>
The bit that you are missing is that the conversion from one fund to 
another uses the cost basis rather than the market value as the dollar 
amounts.  Suppose I bought the fund some years ago (true), and suppose 
it has gone up in value significantly since then (sadly not true).  Now 
if the conversion from one fund to another at original cost places an 
entry in the pricedb, that entry will be the cost of the mutual fund, 
not the current market value.  Since the cost and market value are now 
significantly different, this entry would produce a large, short, 
downward blip in a (hypothetical) graph of the prices in the pricedb.

The point I am trying to make is that we should not automatically create 
entries in pricedb for transactions that do not reflect the current 
market value.

Mark

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