When a company pays a cash dividend, the stock opens down the amount
of the dividend on the "X" day. Your net worth has not changed. The
stock is automatically worth less. You just lost money on the stock
but what you lost is now in your pocket for a net zero change.

Naturally the stock price is constantly changing after the opening
price. I do not want to get into a long debate but perhaps this might
change your view of the world.

To see this in large numbers, do you remember that big MSFT dividend?
Did you follow that? I think it was a 10% cash dividend ... MSFT
would have dropped 10% when it opened on the X dividend day. Now if
the shareholders immediately bought stock equal to the distribution
they would be right back where they were before the happy
distribution. No change, no cost basis difference. Btw, MSFT Put and
Call Strike prices were adjusted 10% for the dividend.

arthur
==

On Wed, 26 Apr 2006 23:17:01 -0400, "- Bobb -" <bobb[at]netscape.netwrote:
- quote -

an FYI - I'm gonna contact Fidelity to see if I can change it. ( Unless
someone can tell me " been there , done that" )
My register Year-end info shows download info of 'Cap Gain' followed by
a 'BUY' vs 'ReinvLTCapGain'. Any way to prevent this ( other than me
manually changing the download info) ? It DOES make a difference when
calulating return on investment, Cost basis, Gain etc. So pay
attention to correct the Fidelity downloads.( Not sure of other brokers)


Details: (or skip to next paragraph )
I'll make up some numbers ... rounded off. In portfolio view, I just
noticed one fund: Mkt Value $35,000, Gain=6050 ??? I know that I bought
into it for $30k so that's not right! The gain can't be $6050 ! So I
checked the register and I see original buy =$20,000, later buy =
$10,000. No sales of the fund.
The first year, the December entry (Year-end Distribution) shows Div=
$10, LTGain= $500, STCapGain =$400 followed by a BUY for the $910. (Data
download from Fidelity) The next year for the Year-end Distribution,
it appears as "Reinv Div" of $10,"Reinv LTCapGain"= $800, "Reinv
STCapGain" = $500.(Either I did it manually or changed the download to
be a REINVESTMENT)
In portfolio view again - I added PURCHASES and APPRECIATION. ( Normally
I don't display these; I only care about cost basis (if want to sell )
or " what is my gain so far?" ( a "how am I doing" column for me)

I went back and changed the Year-end Distribution BUYS to be
REINVESTMENTS, and now it's right :
The PURCHASES column shows $30,000 and a GAIN of $5000: (these act as a
pair)
Cost Basis column = $32220 and Appreciation column shows $2780. (these
are another pair)

Now that I see the problem, I need to change a LOT of entries. I hadn't
paid attention to the data feed from Fidelity - I have a lot of funds
with year-end distributions, so I probably just accepted them all. But
declaring a dividend and a Dist - and then a BUY, is different from a
Reinvestment and it will change a lot of my onscreen Portfolio info.

Bobb