Big Short 2.0

[progree]

6. The Yahoo Historic data Adjusted Close can be used to figure the total return (including dividends

Last edited Sat Jul 28, 2018, 09:25 AM - Edit history (1)

etc.)

I'm glad you found it useful! There's an even bigger secret -- the Adjusted Close is the Close, but adjusted for dividend and other distributions. So using the adjusted close, one can find the Total Return between any 2 dates. I haven't found any other way or website where I can do that.

For example: VFIAX, the Vanguard S&P 500 Admiral mutual fund.

https://finance.yahoo.com/quote/VFIAX/history?p=VFIAX

Looking at 10 years ending 7/27/18:

Date ` ` CLOSE ` Adjusted.Close
7/27/18: 260.52, 260.52
7/25/08: 115.92, 93.81 (the last close on or before 7/27/08)

The Close is simply the closing price. The Adjusted.Close is adjusted for dividends and other distributions, and splits.

Using just the closing price, the price went from 115.92 to 260.52, a 2.2474-fold increase which comes to a 8.435% annualized return
(1.08435^10 = 2.2474), where "^" is exponentiation.

To calculate the annualized return in Excel: =EXP( LN(260.52/115.92)/10 )-1 = 0.084346969 = 8.435%

That would be the return if one threw the dividends away.

But using the adjusted close, the total value including reinvested dividends and other distributions went from 93.81 to 260.52, a 2.7771-fold increase.
which comes to a 10.754% annualized return (1.10754^10 = 2.7771)

To check my work, Morningstar has the annualized total return for several n year periods ending 7/27/18 (that will disappear after Monday's close)
http://performance.morningstar.com/fund/performance-return.action?t=VFIAX&region=usa&culture=en_US

10 years ending 7/27/18: 10.75% (matches my calculation to 2 places to the right of the decimal).

(I've done this kind of calculation and checking against Morningstar and other total return sources many many times)

This also works for regular stocks and ETFs too. (Note Amazon doesn't pay dividends, so that's not a good example for this). XEL (Xcel Energy) does, for example.

Note: Yahoo shows a 10.16% annualized 10 year return,

https://finance.yahoo.com/quote/VFIAX/performance/

but I think they are using end of June figures for the n-month and n-year returns (the last time I was there they specified what the period was, now there is no indication, GRRRRRR Yahoo). Unlike Morningstar which is clear that it is 10 years as of 7/27/18.

I usually use Yahoo for the historic quotes and Morningstar for everything else.

Note: at the end of Monday, 7/30/18's close, the Morningstar as-of-7/27/18 return values will be gone forever, and will be replaced by as-of-7/30/18 figures.