Replies to post #38929 on A.I.M. Users Bulletin Board (AIMUSERS)

[SFSecurity]

Hi Clive, Very interesting that Newport does the math that way. I checked and saw that you are quite correct about how Newport calculates the hold zone. I had not noticed. However the buy price is slightly different than what your spreadsheet gives, $86.207 versus $86.956.

In any case I went and checked the online calculator using $10,000 for Portfolio Control, 100 shares, 10% Buy and Sell Safe, $500 minimum trade, and a 1% minimum share Buy/Sell quantity to attempt to match the Newport figures. I did not see where PC.

And, as you can see, the online calculator gives different numbers than either Newport or the percentages that I used!



So what gives, or did I use the wrong figures for the online calculator? No matter how I fiddled around with the figures near the values shown could I get the same results as either Newport or my AIM spreadsheet

In any case, I wonder if it really matters which of the three we use. What does everyone think?

There is another online sample calculator but I can't recall the URL and don't see it in my list or resources. Perhaps someone can tell me where it is and I'll check it as well to see what happens.

Best to you and yours you hold most dear throughout the New Year,

Allen

[OldAIMGuy]

Hi Clive, In your Newport example, the $500 Minimum Trade value is the controlling factor, not the 1 share minimum. With this, the following will be the results:

PC = 10,000 (portfolio Control)
SO = 100 (shares owned)
MSO = 1 (minimum Shares traded)
1.1 = Buy SAFE
0.9 = Sell SAFE

Next Buy Price = PC/(SO(1.1 + (MSO/SO))) = $90.09
Next Sell Price = PC/(SO(0.9 - (MSO/SO))) = 112.36

Now if we change the formulae to account for the minimum trade of $500, then the results are as Newport suggests. Consider the $500 being added to the SAFE value.

This will give you $86.96 for the buy price and $117.65 as the next sell price.

Newport looks at both the min. share and the min. dollar values when coming up with its suggested price. It has to satisfy the minimum that is the larger value of the two. So, with the share minimum at 1 it only seeks to satisfy the minimum of $500. It also does a bit of rounding in there, too. If I remember correctly it rounds to the nearest whole share in making the calculation.