If you have more than one purchase of those stocks, or have sold some of the shares, then it is altogether possible to have a gain on the total and a negative compound annualized return of the stock.

Compound Annual Return takes into account the cash flows, so a lengthy period where you have held the stock in one purchase at a loss followed by a second purchase with a short period where the stock increased, thus finally showed a gain on your total investment could result in a negative CAR. In that case, your holdings were mostly going down, so the annualized return is negative.

There could also be a case where you bought a stock, sold it, then bought it again. If set in preferences, the program will calculate the returns based on the earlier ownership as well as the current ownership, so the CAR might not be what you expect.

Does that make sense or seem applicable to your situation?

Doug

 If that's the case, then it's likely that you have several purchases and/or sales of the stock. Depending on the timing of the purchases, you could still show a gain and have a negative CAR. If you want to send your individual security history for the stock in question (a report of all the transactions, we can take a closer look for you.

Yes, it's as I expected. For each of these stocks, you have several purchases and at least one sale, the latest in December. On each of the sales, you sold and registered a significant capital loss. Since each sale, though, the price has risen above the cost of the remaining shares, so you should a gain on the remaining shares, but a compounded, annualized percentage loss on all of the shares you own now or owned and sold.

Let's look at ONN Semiconductor.

You purchased 200 shares on 2/17/11 for $2,267 (block #1), share price $11.30.

You purchased 200 shares on 4/14/11 for $1,927 (block #2), share price $9.60.

You purchased 200 shares on 8/16/11 for $1,497 (block #3), share price $7.45.

You sold 400 shares on 12/20/11 for $2,899  (blocks #1 and #2), share price $7.23, for a $1,295 loss, leaving only your block #3 shares.

Then, on your 2/10/2012 valuation statement, the share price of ONNN was $9.39, showing a total gain on the remaining shares (those purchased on 8/16/11 for $7.45).

Without getting too deeply into the math, you can probably see that for 10 months, from February to December, the price of this stock declined from a high of $11.30 to as low as $7.23. The average cost per share for those first two blocks was about $10.45.

From December to February, the share price increased from $7.23 to $9.39. For your block #3 shares, the price grew from $7.45 to $9.39 in about 6 months.

This gives you a 10-month holding period where you recorded a loss of about $3/share on a big portion of your holdings and a 6-month period where you recorded a gain of about $2.26/share on the remaining holdings. The losses outweigh the gains, so the Compound Annual Return is negative, -22.2%.

Over time, if the share price of your remaining holdings continues to go up sufficiently, the CAR would turn positive. But for now, the CAR is telling you that if you were to repeat the above purchase and sale pattern at the same prices every 12 months, then you would lose 22.2% a year.

Hopefully that will help you and your club members to understand this report.

Doug

No, you can't simply delete and re-enter the transactions. That wouldn't accomplish anything.

It seems to me that maybe you're trying to only display the data that will give you a positive result, and trying toignore data that gives you a less positive result. The return calculations that the program is giving you are a "true" story of how each of your holdings has performed over the lifetime of all related buys and sells for that security.

However, if your club is really intent on displaying separate return calculations for each separate purchase, then there is a way that you can do it. In Club Accounting 3, you can Add a New Security for each separate purchase with the Security Name and Ticker Symbol being different, by being numbered (Microsoft #1, Microsoft #2, Microsoft #3, etc.) or perhaps with the purchase date (Microsoft 2009/03/23, Microsoft 2010/07/18, etc.). Note that you must now manually enter the price for this new security whenever you create a Valuation Statement, since the ticker symbol will not be correct.

In myICLUB, this is much easier since you can retain the "Quote Symbol" while changing the ticker and name that appear on reports, allowing you to download new share prices and still track various lots.

This is considered an advanced technique. It should only be used by clubs and treasurers that are aware of all of the implications. This method makes things more complicated for treasurers and members, since your valuation statement will become much more complex and some additional recordkeeping will be required when entering dividends, and other related security transactions. You must take special care when selling to ensure that you are recording the same lots sold as are being sold by your brokerage (with respect to FIFO vs. specific lot methods of accounting) or your records won't match what your brokerage will be reporting.

Again, however, I reiterate that if you're doing this so that you can overlook the poorly-performing lots while congratulating yourself on the better-performing lots, then this is probably not a good idea.

Doug