Need help with Equation to rebalance portfolio
Hello Everybody! I do scale trading, a variation of Lichello’s AIM. I manage each of the stocks in the portfolio separately with individual cash reserve for each stock. When cash reserve goes out of balanced I have to manually rebalance each stock. It’s tedious trial and error work trying to figure out how many shares I have to buy in order to bring the cash back to proper ratio. I use excel spreadsheet for this. For illustration purposes say I have Cash Value column with $1,179.80 and a Shares Value column with $819.81. The cash reserve column shows 59%. But my analysis tells me that I should have only 43.5% cash. I need to by stock worth 15.5% of my cash reserve. The purchase price for these new shares will be $13.08. What I end up doing is playing with share numbers in the buy column, trying to find out how many shares it takes at the price of $13.08 to lower the cash reserve from 59% to 43.5%. I gradually increase the number of shares until I find the right number, so that my cash reserve would show 43.5%. Sometimes it takes me 20 tries to get it right. There must be a better way of doing this. My goal is to have an equation where I input the new cash reserve ratio of 43.5% and the stock purchase price of $13.08 and have the excel spreadsheet calculate how many shares I should buy to get to my new cash reserve ratio. I hope someone here can help me figure this out.
This message board has been very helpful for me in the past. I’ve learned so much from you guys. Thank you for your help in advance. Happy Investing!
Vitali
