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There’s not much I like about Yahoo, but I know Yahoo Finance is wildly popular among individual investors. It’s just about all they got. If I were them, I’d sell it to a brokerage.

I don’t have the exact details, but their historical quotes are massively screwed up. When you click on historical quotes, you can see an adjusted price column that accounts for dividends. That’s great, but I don’t think the dividends are ever adjusted for stock splits. As a result, you get massively wrong historical numbers.

As I said, I’m not sure about this but let’s look at Public Service Enterprise Group (PEG) which is one of those great performing utilities that no one ever talks about. The dividends have increased every year like clockwork. Since 1982, there have been two splits; a 3-for-2 in 1987 and a 2-for-1 last year.

Here's a log chart since 1982. The black line is the regular price adjusted for the two splits, the blue line is the dividend adjusted price:

As you go back in time, the lines get wider apart to adjust for dividends but there's no way it should move that dramatically.

Looking at their numbers, the stock price rose 147% during the 1990s while the adjust price rose 648%. That means that dividends accounted for gains of over 200%, or an average of 11.7% a year. There’s no way that can be right.

I know people use Yahoo Finance to get track of their gains and losses. Don’t do it.

Posted by edelfenbein at April 16, 2009 2:52 PM