@nthorwir I see what you mean. I think it helps split the question/problem in two: (1) portfolio issues caused by corporate events in and of themselves (regardless of subportfolios/labeling techniques), and (2) their implications on labeling strategies. When I said “couple minutes max”, I was referring to the additional work involved to make sure strategies remain well labeled on a typical corporate action.
Issues Caused by Corporate Events
I agree with you that it is often tricky to troubleshoot portfolio issues when there’s an ongoing corporate action on one of its holdings. The main problem is that complex corporate events (like spin-offs) don’t impact the portfolio all at once, as one “atomic” event. Instead the portfolio can transition through several (incomplete) states: corporate event’s ex-date, date at which symbol trades at post-event price, corporate event’s pay date, date(s) at which the broker (partially/fully) reflects the corporate event in the user’s portfolio… For the broker & the clearing house, the only real deadline by which everything needs to be in order in the user’s portfolio is several days later, when the corporate event settles (when hard money & cusips exchange hands at the clearing house…
If it makes you feel any better, I know for a fact that traders at top financial institutions face some of the same problems.
While there is no silver bullet to guard against such issues, portfolio management tools can help you troubleshoot these issues faster (e.g. trading desks at investment banks use such tools every day to reconcile their P/L):
- P/L Attribution Tool (see thread)
- Filtering by Symbol (see thread)
- e.g. if you’re analyzing the impact of LB splitting into BBWI & VSCO, you can filter on a set of symbols (LB / BBWI / VSCO) and look at the evolution of that subset of your portfolio.
- Temporarily Disabling Transactions / Inserting Temporary Transactions
- If a corporate event has been partially processed it can be helpful to temporarily disable / temporarily add a transaction in your portfolio to put it in a more consistent state while waiting for other
Implications for Labeling
You raise a good point that any portfolio
activity that isn’t directly initiated by you won’t be labeled automatically. That’s true of corporate events activities, but also of e.g. TAF & REG fees.
The way I see it, tagging your strategies only gives you more info to troubleshoot your portfolio issues. E.g. your labels will point you to which strategy is affected by the issue. I am not saying that labeling will always be effortless. If your trading strategies involve holding positions on many different symbols, there will come a time when a particularly thorny corporate event makes you reconsider the fact that you not only have to troubleshoot the issues caused by the corporate event, but also keep your strategy labels updated throughout that mess. However, over the long run, I think the benefits will outweigh the additional work for many of us.