Handling Data Adjusted for Stock Splits

A stock split is an action taken by a company in which it splits their outstanding shares into a larger number of shares. A 2-for-1 split would result in the company having twice the number of shares, investors having twice as many shares, and each share being worth half as much. Therefore, each investor has the same percentage of equity in the company, but the individual shares would cost half as much to purchase.

Unfortunately, if the price of the stock suddenly drops by 50%, this can look pretty bad in a chart. It can also make calculations and predictions react as if a big sell-off has taken place. Therefore, most historical data is "split-adjusted".

With split-adjusted data, all of the prices that occur before a stock split are adjusted to match the prices after the stock split. If a stock splits 2-for-1, the price of a stock is cut in half. Therefore, all of the prices before this stock split also need to be cut in half to maintain continuity in the pricing.

Most historical data has already been split-adjusted. However, problems can occur when a stock split occurs and new split-adjusted is combined with older data that has not been split-adjusted. TradingSolutions automatically detects for when this occurs and uses the Stock Split Adjustment Wizard to help you resolve the problem.

Importing New Data after a Stock Split

When you import data into an existing data series in your portfolio, TradingSolutions automatically compares the prices in the new data to the prices in the old data. If the price changes by more than 25% on the first day of the new data, TradingSolutions warns you that a stock split may have occurred and offers to run the Stock Split Adjustment Wizard to resolve the problem.

Ä    Note: It is important to note that the date in this message is typically not the date of the actual stock split. The date that is checked and displayed is the first date of the new data. Again, this is because new data has typically already been split-adjusted. Therefore, any problems would occur at the start of the new data being imported, not on the date of the actual stock split.

The Stock Split Adjustment Wizard allows you to specify the size of the split and the date to begin adjusting the data. It also confirms the fields that should be adjusted. In most cases, none of these values will need to be modified. Once you have completed going through the wizard, all of the values on and before the specified date will be adjusted by the amount indicated.

Manually Adjusting Data after a Stock Split

There may be times that you want to run the Stock Split Adjustment Wizard manually to adjust data outside of the import process. This may occur if you decide not to run the wizard during import or if you occasionally enter data directly from the newspaper. You may also want to run the wizard to undo a previous stock split adjustment.

To run the Stock Split Adjustment Wizard, select Split Adjust Data… from the context menu for a data series from the Portfolio View. You can also select Split Adjust from this Date… from the context menu for any date in the Spreadsheet View. Note that unlike the automated split-adjustment that occurs during import, you will need to supply the size of the stock split and the date to start the adjustment from.

If you are using the wizard to undo a previous stock split adjustment, simply use the opposite amount for the same date. For example, if you want to undo an adjustment for a 2-for-1 split on 8/30/1966, adjust for a 1-for-2 split on that same date.