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I can't wrap my head around this:

In late 2011 I used EUR to purchase stock valued in USD.

Dividend yield aside, the stock advanced a lot. However, EUR/USD also changed quite a bit. I am considering selling this position and I am unable to calculate how much net gain in EUR I would have made.

Can someone help with this, assuming 10,000 € were invested back in 2011 and based on only USD valuation, the stock price increased from $10 to $40 ? Not considering any intermediate dividend payout.

Thanks.

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    The value in EUR will be $40 x number-of-stock-held x number-of-EUR-per-USD (currently 0.88). Take 10,000 EUR from this for your gain. Is that not what you want?
    – TripeHound
    Commented Nov 16, 2018 at 9:39
  • @TripeHound Looks like it. Please make this an answer.
    – Dheer
    Commented Nov 16, 2018 at 9:59
  • @Dheer It almost seems to simple to need one, but will do so.
    – TripeHound
    Commented Nov 16, 2018 at 10:09

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Your net gains in Euros can be calculated by working out what you would make from selling the stock (in USD) and converting to EUR:

current-EUR-value = current-USD-price x number-of-shares x USD-to-EUR-rate

and then deducting the initial purchase price in EUR:

current-EUR-gain = current-EUR-value - original-EUR-price

In your case, assuming you originally bought about 1,390 units (using an average EUR-to-USD rate from 2011 of 1.39), and a current (as at 16 November 2018) USD-to-EUR rate of 0.88, then:

current-EUR-value = $40 x 1,390 x 0.88 = 48,928€

current-EUR-gain = 48,928€ - 10,000€ = 38,928€

Therefore, your profit if you sold today (ignoring any commissions and dividned) would be 38,982€.

From clarification in comments, you could make a "what if?" conversion back at the old exchange rate: use 1/1.39 (~=0.72) for the USD-to-EUR-rate. This would give a figure of 40,000€ for what the shares would have been worth if the 2011 rate had stayed the same. Under this assumption, the "profit" would have been 30,000€ which is worse than the "real" figure.

However, this calculation is somewhat meaningless, as the rate has changed. Indeed, the change in relative strengths of the two currencies might be one factor in why the price of the stock has risen as much as it has.

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  • My bad. My main issue is this: Comparing EUR/USD to today from 2011, did the exchange ratio development positively or negatively affect the gains on the stock ?
    – user431806
    Commented Nov 16, 2018 at 11:41
  • You could make a "what if?" conversion back at the old rate (use 0.72 ~= 1/1.39) for the USD-to-EUR-rate to get 40,000€, for a "profit" of 30,000€, which is worse than the "real" figure, but that's somewhat meaningless... the rate has changed. Indeed, the change in relative strengths of the two currencies might be one factor in why the price has risen as much as it has.
    – TripeHound
    Commented Nov 16, 2018 at 12:13

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