When I look at my cost basis, I want it to reflect actions I've taken. Otherwise I'm not truly a full partner in the process.
In adding over the final few weeks of a quarter with distributions pending, I'm very aware of that payout on the horizon and oftentimes wouldn't even consider the purchase were it not for the coming payout. Receipt of each distribution or dividend is immediately backed out, leaving me with a cost basis reflecting my buying acumen, prices that may or may not prove to have been smart choices, and a bunch of other things, too. In the end, I want to know how effective I've been as my own manager.
If I were paying a CFO, I'd sure as Hell need to see his performance record! I'd be examining passive income first and foremost. The simplest way of assessing his effectiveness would involve a hard look at the cost basis resulting from his buys, sells, his eye's ability to demonstrate a feel for how our investments will fare down the road.
I pick stocks that pay high yields for the most part. This is something I personally engineer. This legitimizes my backing out distributions in order to arrive at a true cost basis. To do less would leave me feeling like a clam adrift in the surf. I must be in control of my investment program!
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