Annualized Rate of Return on Stock Purchased in Tranches
"So, there is no truly ""correct"" way to calculate return.  Professionals will often calculate many different rates of return depending on what they wish to understand about their portfolio.  However, the two most common ways of calculating multi-period return though are time-weighted return and money-weighted return. I'll leave the details to this good Investopeadia article, but the big picture is time-weighted returns help you understand how the stock performed during the period in question independent of how you invested it it.  Whereas money-weighted return helps you understand how you performed investing in the stock in question.  From your question, it appears both methods would be useful in combination to help you evaluate your portfolio. Both methods should be fairly easy to calculate yourself in a spread sheet, but if you are interested there are plenty of examples of both in google docs on the web."
You could think of points 1 and 3 combined to be similar to buying shares and selling calls on a part of those shares. $50k is the net of the shares and calls sale (ie without point 3, the investor would pay more for the same stake). Look up convertible debt, and why it's used. It's basically used so that both parties get 'the best of both world's' from equity and debt financing.   Who is he selling his share to in point 2 back to the business or to outside investors? "Edited: Pub 550 says 30 days before or after so the example is ok - but still a gain by average share basis.  On sale your basis is likely defaulted to ""average price"" (in the example 9.67 so there was a gain selling at 10), but can be named shares at your election to your brokerage,  and supported by record keeping. A Pub 550 wash might be buy 2000 @ 10 with basis 20000, sell 1000 @9 (nominally a loss of 1000 for now and remaining basis 10000), buy 1000 @ 8 within 30 days.   Because of the wash sale rule the basis is 10000+8000 paid + 1000 disallowed loss from wash sale with a final position of 2000 shares at 19000 basis.  I think I have the link at the example:  http://www.irs.gov/publications/p550/ch04.html#en_US_2014_publink100010601" Yes that is the case for the public company approach, but I was referring to the transaction approach:   Firm A and Firm B both have $100 in EBITDA. Firm A has $50 in cash, Firm B has $100 in cash.  Firm A sells for $500, Firm B sells for $600.  If we didn't subtract cash before calculating the multiple: Firm A: 5x Firm B: 6x  If we DO subtract cash before calculating the multiple: Firm A: 4.5x Firm B: 5x  So yea, subtracting cash does skew the multiple. It depends to some extent on how you interpret the situation, so I think this is the general idea. Say you purchase one share at $50, and soon after, the price moves up, say, to $55. You now have an unrealized profit of $5. Now, you can either sell and realize that profit, or hold on to the position, expecting a further price appreciation. In either case, you will consider the price change from this traded price, which is $55, and not the price you actually bought at. Hence, if the price fell to $52 in the next trade, you have a loss of $3 on your previous profit of $5. This (even though your net P&L is calculated from the initial purchase price of $50), allows you to think in terms of your positions at the latest known prices. This is similar to a Markov process, in the sense that it doesn't matter which route the stock price (and your position's P&L) took to get to the current point; your decision should be based on the current/latest price level. Firstly 795 is not even. Secondly - generally you would pay tax on the sale of the 122 shares, whether you buy them back or not, even one minute later, has nothing to do with it. The only reason this would not create a capital gains event is if your country (which you haven't specified) has some odd rules or laws about this that I, and most others, have never heard of before. "(Note: out of my depth here, but in case this helps...) While not a direct answer to your question, I'll point out that in the inverse situation - a U.S. investor who wants to buy individual stocks of companies headquartered outside US - you would buy ADRs, which are $-denominated ""wrapper"" stocks.  They can be listed with one or multiple brokerages. One alternative I'd offer the person in my example would be, ""Are you really sure you want to directly buy individual stocks?""  One less targeted approach available in the US is to buy ETFs targeted for a given country (or region).   Maybe there's something similar there in Asia that would eliminate the (somewhat) higher fees associated with trading foreign stocks." If you just want to know total return, either as dollars or a percentage, just add up the total amount spent on buys and compare this to current value plus money received on sales. In this case, you spent (310 x $3.15 + $19.95) + (277 x $3.54 + $19.95). So your total investment is ... calculator please ... $1996.98. You received 200 x $4.75 on the sale minus the $19.95 = $930.05. The present value of your remaining shares is 387 x $6.06 = $2345.22. So you have realized plus unrealized value of $2345.22 + $930.05 = $3275.27. Assuming I didn't mix up numbers or make an arithmetic mistake, your dollar gain is $3275.27 - $1996.98 = $1278.29, which comes to 1278.29 / 1996.98 = 64%. If you want to know percentage gain as an annual rate, we'd have to know buy and sell dates, and with multiple buys and sells the calculation gets messier. "In case other people arrive at this page wondering whether they should enable automatic reinvestment of dividends and capital gains for taxable (non-retirement) accounts (which is what I was searching for when I first arrived on this page): You might want to review https://www.bogleheads.org/wiki/Reinvesting_dividends_in_a_taxable_account and http://www.fivecentnickel.com/2011/01/26/why-you-shouldnt-automatically-reinvest-dividends/. The general idea is that--assuming you plan to regularly manually rebalance your portfolio to ensure that all of the ""pieces of the pie"" are the relative sizes that you want--there are approaches you can use to minimize taxes (and also fees, although at Vanguard I don't think that's a concern) if you choose a ""SpecID cost basis"" and manual reinvestment. Then you can go to ""Change your dividends and capital gains distribution elections"" at https://personal.vanguard.com/us/DivCapGainAccountSelection." E.g. I buy 1 stock unit for $100.00 and sell it later for $150.00 => income taxes arise. Correct. You pay tax on your gains, i.e.: the different between net proceeds and gross costs (proceeds sans fees, acquisition costs including fees). I buy 1 stock unit for $150.00 and sell it later for $100.00 => no income taxes here. Not correct. The loss is deductible from other capital gains, and if no other capital gains - from your income (up to $3000 a year, until exhausted). Also, there are two different tax rate sets for capital gains: short term (holding up to 1 year) and long term (more than that). Short term capital gains tax matches ordinary income brackets, whereas long term capital gains tax brackets are much lower. Ok you're looking at this in a very confusing way. First, as said by CapitalNumb3rs, the dividend yield is the dividends paid in the year as a percent of the stock price. Given this fact then if the stock price moves down and the dividend stays the same then the yield increases. Company's don't usually pay out on a yield basis, that's mostly just a calculation to measure how strong a dividend is. This could mean either A. The stock is underpriced and will rise which will lower the yield to a more normal level or B. the company is not doing as well and eventually the dividends will decrease to a point where the yield again looks more normal.   Second off let's look at it in a more realistic way that still takes into account your assumptions:  **YEAR 1** 1. Instead of assuming buying 35% let's put this into a share amount. Let's say there are 1,000,000 shares so you just bought 350k shares for $700k. You paid a price of $2/share. Let's assume the market decides that's a fair price and it stays that way through the end of year 1. This gives us a market capitalization of $2 million.  2. The dividend paid out at year 1 is $60k so you could calculate on a per share basis which would be a dividend of $60k / 1 million shares or a $0.06 dividend per share. Our stock price is still at $2.00 so our yield comes out to $0.06 / $2.00 or 3.0%  **YEAR 2** Assuming no additional shares issued there are still a total of 1 million shares outstanding. You owned 350k and now want to purchase another 50k (5% of outstanding share float). The market price you are able to purchase the 50k shares at has now changed which means that share price is now valued at $1.50 / share. We have a dividend paid out at $100k, which comes out to a dividend per share of $0.10. We have a share value of $1.50 and the $0.10 dividend per share giving us a new yield of 6.66%.   **CONCLUSION:** There are many factors that can cause a company's stock price to fluctuate, some of it is hype based but some of it is a result of material changes. In your case the stock went down 25%. In most scenarios where a stock would have that much decline it would likely either not have been paying a dividend in the first place or would maybe not be paying one for much longer. Most companies that pay dividends are larger and more mature companies with a steady, healthy and predictable cash flow. Also most companies that are that size would not trade a stock under $3.00, I know this is just an example but the scenario is definitely a bit extreme in terms of the price drop and dividend increase. Again the yield is just a calculation that depends on the dividend that is usually planned in advance and the stock price that can fluctuate for many reasons. I hope this made everything more clear and let me know if you have any other questions. "I just looked at a fund for my client, the fund is T Rowe Price Retirement 2015 (TRRGX).  As stated in the prospectus, it has an annual expense ratio of 0.63%.  In the fine print below the funds expenses, it says  ""While the fund itself charges no management fee, it will indirectly bear its pro-rata share of the expenses of the underlying T. Rowe Price funds in which it invests (acquired funds). The acquired funds are expected to bear the operating expenses of the fund.""  One of it's acquired funds is TROSX which has an expense ratio of 0.86%.  So the total cost of the fund is the weighted average of the ""acquired funds"" expense ratio's plus the listed expense ratio of the fund.  You can see this at http://doc.morningstar.com/docdetail.aspx?clientid=schwab&key=84b36f1bf3830e07&cusip=74149P796 and its all listed in ""Fees and Expenses of the Fund""" ( t2 / t1 ) - 1 Where t2 is the value today, t1 is the value 12 months ago.  Be sure to include dividend payments, if there were any, to t2.  That will give you total return over 12 months. Yes though I'd likely put a caveat on that. If you take short-term investments and extrapolate the results to get an annual result this can be misleading. For example, if a stock goes up 10% in a month, assuming this will continue for the next 11 months may not be a great idea. Thus, beware of how much data do you have in making these calculations. When looking at long-term investments, the compound annual growth rate can be quite useful for comparison. "Yahoo's ""Adj Close"" data is adjusted for splits, but not for dividends. Despite Yahoo's webpage's footnote saying  *Close price adjusted for dividends and splits. we can see empirically that the ""Adj Close"" is only adjusted for splits. For example, consider Siemens from Jan 27, 2017 to Mar 15, 2017: The Adj Close adjusts for splits: On any particular day, the ""Adj Close"" is equal to the ""Close"" price divided by the cumulative product of all splits that occurred after that day. If there have been no splits after that day, then the ""Adj Close"" equals the ""Close"" price. Since there is a 2-for-1 split on Mar 14, 2017, the Adj Close is half the Close price for all dates from Jan 27, 2017 to Mar 13, 2017. Note that if Siemens were to split again at some time in the future, the Adj Close prices will be readjusted for this future split. For example, if Siemens were to split 3-for-1 tomorrow, then all the Adj Close prices seen above will be divided by 3. The Adj Close is thus showing the price that a share would have traded on that day if the shares had already been split in accordance with all splits up to today. The Adj Close does not adjust for dividends: Notice that Siemens distributed a $1.87 dividend on Feb 02, 2017 and ~$3.74 dividend on Jan 30, 2017. If the Adj Close value were adjusted for these dividends then we should expect the Adj Close should no longer be exactly half of the Close amount. But we can see that there is no such adjustment -- the Adj Close remains (up to rounding) exactly half the Close amount: Note that in theory, the market reacts to the distribution of dividends by reducing the trading price of shares post-dividend. This in turn is reflected in the raw closing price. So in that sense the Adj Close is also automatically adjusted for dividends. But there is no formula for this. The effect is already baked in through the market's closing prices." "lol, please, calculate the correlation and let me know how close to 1 it is. And then let me know what kind of sensible economic model looks like SPX Level = const + beta * Fed Balance Sheet Level. That's a great way to just throw useful statistical inference out the fucking window.  Edit: I'd also like to make it abundantly clear that this is a monumentally retarded ""correlation"" to consider in the first place. The Fed balance sheet prior to 2008 was relatively tiny and unchanging, and yet the stock market was just as volatile in prior years."