Illustrated example
Raw close and adjusted close can diverge
Adjustments help a long-term chart handle splits and distributions more consistently.
Illustrative example only, not historical market data.Start here
Key takeaways
- A raw closing price is the last regular trading price of the day.
- An adjusted close changes historical prices to reflect events such as stock splits and dividends.
- Adjusted data is usually more useful for long-term total-return-style comparisons.
- Different data vendors may apply adjustments differently.
Plain-English idea
The close is the price at the end of a trading day. The adjusted close is a version of that price that has been modified for events that can make old prices hard to compare with newer ones.
For example, a 2-for-1 stock split cuts the share price roughly in half while doubling the number of shares. A raw chart can look like the stock suddenly crashed, even though each holder had twice as many shares. Adjusted prices try to smooth that accounting change.
Why WhatIf Calc prefers it
A historical what-if calculation needs prices that are comparable across time. If the app used only raw closing prices, splits and distributions could distort the calculated growth.
Adjusted close is not magic. It is still data supplied by a market data source, and data source methods can vary. That is why WhatIf Calc describes results as educational estimates rather than exact investment records.
Dividends and splits
Splits change the number of shares. Dividends move value from the company or fund to the shareholder as a cash payment. Adjusted close often accounts for these events so that historical return calculations are less misleading.
However, adjusted close is not identical to a full personal account history. Your actual result could differ because of taxes, fees, dividend reinvestment timing, fractional shares, and the broker's execution prices.
Going deeper
Intermediate users should ask what kind of adjustment is being used. Some series are split-adjusted only. Others are adjusted for both splits and dividends. Total return means price change plus distributions, usually assuming dividends are reinvested; total return indexes go further by explicitly modeling reinvested distributions.
When comparing outputs between websites, check whether both tools use adjusted close, total return data, or raw close. A difference in data treatment can matter more than the calculator formula.
References