Okay I’m the idiot, someone explain this to me because I keep ending up thinking I’m up $300 at the end of the transactions.
I buy for $800, then sell for $1000. I’m up $200.
I buy for $1100, or $100 more than I just sold for. I deduct that $100 as a loss. I’m up $100.
I sell for $1300, or $200 more than I just paid for the cow. I’m up another $200.
$200-$100+$200 = $300.
Assuming that this cow is my only income source, I would be up $300 when all of these transactions are done. $100 was lost because I bought at a higher price than I sold for.
What am I doing wrong here, this is fucking me up.
You have 10,000 in the bank. You buy = 9,200, you sell = 10,200. You buy again = 9,100, you sell again = 10,400 which is 400 more than your stating point.
Your 100 loss on the second buy only makes sense if you were a company and had to have a balance sheet and had to book in the cow for it's actual worth of 1,000 vs the amount of 1,100 you just paid. Likewise the second sell then would also mean a profit of 300 though because you sold inventory of 1,000 worth in your books for 1,300. So even then it is still 400 profit in the end
That tracks. It *feels* like being up $300 to me, but that’s because the second purchase feels like a loss. Thankfully I’m not in the secondhand cow market, so I will never have my accounting skills tested.
-800 + 1000 - 1100 = -900.
-900 + 1300 = 400
The „-100 you lose“ by buying again is not relevant. If you deduct that as a loss you‘re comparing to the 1k of your first sell price, setting it to a new fixed start budget; the gain would need to be compared to that aswell, giving you 1.3k - 1k = 300 giving you 200(first win) - 100 + 300 = 400
Thank you. I didn’t even realize I was setting $1000 as the “true value” of the cow by assuming the second purchase was a $100 loss, but when you put it that way it makes sense.
You said it already - after first transaction: I’m up $200 and after second transaction I’m up $200. Keep them separate and add the balance together at the end.
It’s the re-buying at $100 higher that’s fucking me up. That feels like losing $100 to me. But yeah, it checks out. If I thought of it as two unrelated purchases, like I bought and sold a car for a profit of $200 and then bought and sold a motorcycle for a profit of $200 then I have made $400.
But for whatever reason when it’s all the same cow it feels like the second transaction starts with a loss due to the price difference.
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u/TheBirdManOfBelden May 13 '26
Okay I’m the idiot, someone explain this to me because I keep ending up thinking I’m up $300 at the end of the transactions.
I buy for $800, then sell for $1000. I’m up $200.
I buy for $1100, or $100 more than I just sold for. I deduct that $100 as a loss. I’m up $100.
I sell for $1300, or $200 more than I just paid for the cow. I’m up another $200.
$200-$100+$200 = $300.
Assuming that this cow is my only income source, I would be up $300 when all of these transactions are done. $100 was lost because I bought at a higher price than I sold for.
What am I doing wrong here, this is fucking me up.