How to correct a bond's downloaded present value

Change it in the Investing Center Portfolio tab in any "Quote/Price" column where it appears; or from the Security Detail View, select the security and Update > Edit Price History.

Well I was going to ask you how you downloaded an incorrect bond price in the first place. Quicken's Quote downloads don't download bond prices; as far as I can tell, the only way to get bond prices downloaded is from your financial institution, and I don't think there is any way to choose which prices you get unless they use a dummy "register" transaction to supply it, in which case, just don't accept that transaction.

Thanks for replying John.

Thanks. I look to find that screen.

It's because I am discussing GNMA (Ginny Mae) bonds. My FI (Smith Barney) downloads end up with Quicken listing the face value instead of the actual remaining amortized market value of these bonds (thus grossly exaggerating the value of these bonds in the portfolio, by a factor of thousands). My FI downloads do seem to include both the periodic return of principles and interest (because Quicken shows them correctly in its transactions as RtrnCapX and IntIncX), but somehow Quicken still lists the face value instead of the real present value. This is a longstanding problem which Quicken apparently has with GNMA type bonds. Pete Prossen explained it best in his 2002 email below. As he states for his Schwab account, my FI's monthly paper statements also clearly show the total return of principle (RtrnCapX) and interest (IntIncX) for these bonds as well as the "factor" Prossen discusses below, but Quicken Deluxe 2005 does not seem to take them into account. For someone who owns GNMA bonds this is an enormous headache.

I was trying to find out how to specifically implement the advice Pete Prossen gives to deal with the problem (that is how to manually enter the "factored quote" market value). When I tried to change the value of these bonds in some Quicken screen I found it asked me to also fill in additional values such as highest value, etc. (before it would accept the new value) which did not seem relevant and which I did not have to enter.

I've been fighting with this problem since I started to use Quicken 4-5 years ago and I cannot believe I am the only one to have it, but I never get answers when I ask about it on this forum.

I would greatly appreciate your advice and help if you can do so.

Jeff (Prossen's 2002 message follows)

........................................................ Pete Prossen's email from 2002.

Try thinking of a GNMA as a somewhat specialized bond. Here's how it works:

When you purchase a GNMA security it is, as you say, a bond. And since no individual is likely to purchase the entire pool, it is apportioned to all the investors in some kind of units. It seems to be customary in the bond market to call 100 of these units a "share", perhaps for lack of a better word. In any case, the name matches that of the column in Quicken investment register where you should enter it.

Suppose you purchased your GNMA from, say, Charles Schwab and lets say you purchased 59,500 units (595 shares) at a share price of $100. Through the life of the GNMA, mortage holders will be paying down and refinancing, so the principal amount is gradually recovered. You receive your proportional share of this in the form of Return of Capital payments, and of course the value of the investment declines. So does the size of the fixed-rate interest payments you receive. But your proportion of the entire issue never changes. It will always be 59,500 units and this will always appear on your brokerage statement. Your Quicken register will always show 595 shares.

Since GNMA's can be sold, your brokerage will report a share value each month (not a 100x unit value). Since GNMA's are a relatively stable investment (as compared to .com tech stocks), that share value will hover around the $100 original issue price. How, then, do we cope with the declining value issue?

It's called "the Factor", and your brokerage statement will include it on each monthly statement. Multiply the face amount of the bond by the factor and you will obtain its remaining amortized value. Multiply the current price per share (available daily from your broker's bond desk but not included in Quicken quotes download) and you will have the "factored quote" value to manually enter in Quicken to establish the market value for the GNMA that day.

In summary, treat your GNMA as you would any other bond in Quicken and update the quoted share price manually like you must for any other bond. But if you want to keep the account market value accurate be sure to adjust the quoted share price by the factor. I do this monthly from the data provided on the statements, but I suspect you could examine the downloaded holdings and valuations and deduce the factor for any day of the month for which you download.

Oh, and if your GNMA happens to be held at Schwab and you download account transactions into Quicken, the return of capital transactions will already be marked with the RtrnCapX action code. And of course, the interest component will be marked with the IntIncX action code. Other brokerages, Fidelity for one, aren't yet smart enough to do this. I think they mark the return of capital as Xin, which must be then edited.

Eventually, your returns from the GNMA will slow to a trickle because of those few steadfast mortgage holders in the pool who are determined to pay off their 25-year loan. You'll wonder if it is worth the trouble to keep updating it in the portfolio. .....................

Based on your later comment about being required to enter the high price for the day, I think you have already used that screen. I believe that Quicken requirement to enter values for high/low prices for the day when modifying a price history record is a bug. You can delete the record and re-enter it (New price history records don't require the high/low prices), but that is more inconvenient.

I suggest you use the Portfolio tab of the Investing center to modify security prices; no concerns about high/low there.

While it is certainly possible that Quicken is not doing its part, I think it is premature - based on the evidence you and Pete Prossen have provided - to assume that is so.

My knowledge of investments is limited; and of GNMA's even more so ... I'm basing my comments on what you and Pete Prossen have said ... and my knowledge of Quicken and OFX (and the OFX part is important, I believe).

First, I don't think that RtrnCap transactions are intended to directly change market value; I may be mistaken, but I don't think this is a Quicken flaw. I think that Quicken -properly - determines market value by the simple formula: number-of-shares

• price. For bonds, the only basic source of price in Quicken is from your fi (or you enter it manually).

I do not see any place in Quicken to enter a "factor", nor do I see any way for an fi to download one using OFX (though I grant, I am no OFX expert and I could have missed it in my read through the specs). If that assumption is true (that there is no way for Quicken to utilize a "factor"), then it seems to me, the place to look is at your fi's download. (And I don't understand why your fi can not apply the factor to the price supplied in the download).

As I suggested earlier, I believe there is more than one way for an fi to cause a price to be entered in your Quicken price history - but it has been a while since I actually checked out one of those methods, so I could be wrong.

One certain way for an fi to cause a price to be entered in your Quicken price history is to download a dummy transaction that contains a price; when I have seen such transactions they have been "Shares Added" transactions that added zero shares at zero cost, but contained the correct price for that security for that date. (You can even delete those transactions after you Accept them and their prices will remain in your price history).

I believe that the other way your fi can supply prices is in the "Holdings" section of the OFX download. Actually, I know they can supply prices there, I just don't know whether Quicken will use those prices.

Perhaps just as importantly, the Holdings section of the OFX file should contain the number of shares of each security and their market value ... when those values are present and when they differ from your Quicken values, Quicken normally reports that when you finish processing the downloaded transactions. It's not clear to me from your post whether you get such a notification.

It sounds as if you manually enter a correct price for November, say, then download for December and the download price does not have the factor applied, so your price history is updated with an incorrect price ... supplied by your fi.

See my earlier comment; use the Portfolio tab to change prices. Just be VERY careful to change the As Of date on the Portfolio tab to the date of the price you want to enter before you input the price.

Not sure what else to tell you.

One note: if your incorrect prices are coming from downloaded Quicken transactions, you can prevent them from ever being entered in your price history, if you already have a price in your price history for that date. In other words, any time before you Accept the transactions, you can manually add the correct price for a security for the date of a downloaded transaction and the transaction price will not update your price history ... it won't replace a price already in your history.

Another note: you can see exactly what your fi downloaded by checking the OFXLOG after your download (Help > Product and Customer Support > OFXLOG). Better yet, you can "save" that log so you can open it in a word processor, format it for easier reading if necessary, and refer to it at your leisure.

Thank you very much. You have been very helpful - as usual,

Thanks.

Jeff