August 11, 2014

The Best Free Stock Charts

There are probably few investors who don't at least occasionally visit Yahoo Finance, Google Finance, MarketWatch, or one of a host of other finance sites. Visitors to each site no doubt fiddle with historical stock charts shown for every quote. Many investing decisions have likely been made partially due to those charts as well.

But are the stock charts on mainstream finance sites actually helpful? I would argue, it depends. Most charts you'll find online are standard price charts. They map the closing price of a given stock or ETF across time, but not much else.

Little girl upset about missing out on dividend reinvestmentMost importantly, most of them fail to factor in dividend reinvestment. If you're like me, you reinvest dividends from all of your ETFs to maximize gains over time. Yahoo Finance does factor this into the "adjusted close" price in the raw historical data CSV files, but no such luck in their charts. You have to create your own charts manually in Excel using the raw data if you want to see the total return of your investments over time.

What's does charting price only look like in comparison to total return? Let's take a look at two charts for the SPDR S&P 500 ETF going all the way back to January 29, 1999. The first chart is from Google Finance and shows price only. If one were to base an investing decision on this chart, he or she might thing large cap equity index ETFs are a mediocre asset choice. Dividend distributions are nicely shown along the bottom of the chart, but not factored into the price. In fact, based on this alone, it appears the SPY hit somewhere around $150/share in 2000 then didn't do so again until 2007. After crashing in 2008-2009, this ETF didn't return to peak 2000 levels until 2013. Over this roughly 15 1/2 year time period, it looks like SPY gained 57.67%.

Sample Google Finance stock chart of SPY

Now let's take a look at the chart below from StockCharts.com.
This site handily includes a charting option called PerfChart in its "Create a Chart" drop-down menu. PerfCharts include adjustments for dividends. Now the picture of SPY's performance looks quite a bit different. Instead of roughly breaking even from 2000 to 2007, we can see this ETF actually managed a 15% gain during that time. Across the full span of this chart, SPY has nearly doubled (a 98.69%) when viewing it's total return; a nearly 41% difference in performance between the two charts.

Sample StockCharts.com PerfChart of SPY with dividends reinvested

There are a number of reasons investors may want to chart only price, particularly those who prefer not to reinvest dividends. But you have to know exactly what you're looking at before making an educated decision. For my investment style, PerfCharts are extremely useful.

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