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Adjusted Closing Prices

I've been downloading historical stock prices from Yahoo for an older version of a program. The data comes down in a csv file with the columns as follows: Date,Open,High,Low,Close,Volume,Adj Close I thought I should be using the Adjusted Closing values but then I looked at the older years and am confused as to why they differ so much from the Closing values. I thought I new the difference between the 2 values but my understanding does not account for the large differences. What am I missing or is the downloaded data incorrect? Examples: FMAGX

2009-03-02,36.87,43.86,36.40,42.64,000,42.64 2009-02-02,42.24,45.50,38.92,39.18,000,39.18 2009-01-02,47.39,48.65,41.37,42.40,000,42.40 .. .. .. 1986-11-03,52.13,52.31,50.39,52.28,000,8.73 1986-10-01,49.70,51.76,49.70,51.76,000,8.64 1986-09-02,53.18,53.59,48.51,49.19,000,8.21

VFINX

2009-03-02,64.83,73.57,62.65,71.20,000,71.20 2009-02-02,76.05,80.25,67.99,67.99,000,67.99 2009-01-02,85.75,86.02,74.17,76.10,000,76.10 .. .. .. 1987-05-01,28.90,29.67,28.00,29.23,000,16.90 1987-04-01,29.29,30.26,27.99,28.93,000,16.73 1987-03-27,29.66,29.66,28.97,29.22,000,16.90

Thanks, JW

Reply to
JW
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I'm not going back through 23 years of dividends, but spot checking the most recent four years, the data looks fine and quite believable that the dividend distributions (both capital gains and ordinary dividends) account for a trebling of values over a quarter century.

Instead of downloading, look at these monthly figures on the screen. In that format, Yahoo shows you the dividend distributions. You'll see that Magellan had a 10.4c distribution last December 5. So the adjusted value for Nov is around 10.4c less than the actual close ($43.72 vs. $43.83). That's because if you'd purchased $43.72 worth of the fund in Nov, you'd have bought almost a full share; the dividend you'd have gotten (almost

10.4c) would have been enough to buy the remaining fraction of a share.

So, the adjusted price of $43.72 represents the price you would have had to pay then to wind up with exactly one share now.

Look at the June 08 prices. The adjusted price is $79.87, while the actual price is $80.07. That's a difference of 20c, nearly double the original difference of 10.4c. The reason is that the price of the share in June was nearly double the price of the share when the dividend was paid. Everything doubles, including the spread. Then (going backward in time) a $2.87 dividend was paid in May. So the spread increases from around 20c to around $3.04 in April '08. And it just keeps going like this.

Given dividends of substantial size (7% in Dec 07, 5% in May 07, 3% in Dec

06, 20%(!) in May 06), it is quite believable that the adjusted price 23 years ago is as low as Yahoo reports.

Mark Freeland snipped-for-privacy@nyc.rr.com

Reply to
Mark Freeland

Thanks for taking the time to respond in such detail. I get it now. Could you recommend a newsgroup that I could post some math questions with respect to the data I am downloading. I'm trying to calculate an Annualized Standard Deviation from the downloaded data and the SD that I come up with just doesn't seem right. I calculated SD's before and when I throw know data into the program I've created the answers come out right but when I put calculate monthly values, or daily values, for say VFINX , Vanguards S&P 500, for last year I get 2.25 which doesn't seem right.

Thanks again JW

======================================= MODERATOR'S COMMENT: Please trim the post to which you respond. "Trim" means that except for a line or two of the previous post to add context, the previous post is deleted. Thank you.

Reply to
JW

I apologize for answering my own post (and also for not trimming) but I figured out what I was doing wrong with the Std Dev calculation. I was basing it on the calculated monthly returns as opposed to the prices. I would still be interested in a link to a newsgroup or forum devoted to the math associated with financial planning.

Thanks again, JW

Reply to
JW

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