Replies to post #45212 on A.I.M. Users Bulletin Board (AIMUSERS)

[AIMStudent]

Re: Help with Equation

Hi Vitali,

I'm not certain I entirely understand your ask, but I'll take a shot using your example

Where:
Current Cash Value = $1,179.80
Current Cash Reserve Percent = 59%
Desired Cash Reserve Percent = 43.5%
Current Share Price = $13.08

Step 1: Convert Current Cash Value to 100% Cash Value
100% Cash Value = Current Cash Value / Current Cash Reserve Percent
Ex: $1,999.66 = $1,179.80 / 59%

Step 2: Calculate Cash Reserve Delta Percent
Cash Reserve Delta Percent = Current Cash Reserve Percent - Desired Cash Reserve Percent
Ex: 15.5% = 59% - 43.5%

Step 3: Calculate Dollar Amount to Sell
Dollar Amount to Sell = 100% Cash Value * Cash Reserve Delta Percent
Ex: $309.95 = $1,999.66 * 15.5%

Step 4: Calculate Number of Shares to Sell
Number of Shares to Sell = Dollar Amount to Sell / Current Share Price
Ex: 23.7 = $309.95 / $13.08

Proof:
Desired Cash Reserve Percent = (Current Cash Value - Dollar Amount to Sell) / 100% Cash Value
Ex: 43.5% = ($1,179.80 - $309.95) / $1,999.66

Note: New Cash Value = $869.85 = ($1,179.80 - $309.95)

This example will only work when Desired Cash Reserve Percent < Current Cash Reserve Percent, but can be easily modified.
It will be difficult to achieve this in a single Excel equation without computing one or more of the intermediate values noted above (or without writing a macro.)

Let me know if this is what you're looking for. Otherwise, I'll make another attempt.

-AIMStudent

[Toofuzzy]

Hi Vitaali

If you want the cash to be a certain % of the total of stock and cash.

1) add stock value + cash value.

2) multiply the above by whatever % you want. $10,000 total x .60 ( 60 % ) = $6,000

The difference will be stock value. Subtract present stock value and divide the answer by current stock price = # of shares to buy.

Instead of figuring cash amount

If you want 60 % stock = $6,000
Subtract current stock value and divide answer by current stock price = # shares to buy.

QUESTION :

Assuming you have been selling and raising cash while a security has been going up, why would you want to reduce cash and buy more when a security is at a high ?

Just wait for the next market crash to soak up the cash.

Toofuzzy