Why We Removed Australia (ASX) From the DCF Discount Comparison
We previously published a DCF discount backtest for Australian stocks reporting 6.08% CAGR. The result was partly an artifact of broken split-adjusted prices in our upstream FMP data (314 ASX symbols affected). We retract the original number and explain why.
We previously published a DCF discount backtest for Australian stocks that reported 6.08% CAGR vs 3.67% for the ASX 200. We've retracted that result. The numbers were partly an artifact of bad price data in our upstream provider, and we can't tell you what the honest figure is.
Contents
- What went wrong
- Why we can't fix it locally
- What this changes for our other strategies
- Does the strategy work in Australia?
- Read the rest of the comparison
This page replaces the original post.
Retraction published May 2026.
What went wrong
Our backtests run on FMP's stock_eod table, which serves split-adjusted historical prices via an adjClose field. For ASX listings, that adjustment is broken on a meaningful number of stocks.
A direct query against the data showed 314 ASX stocks where the maximum and minimum adjClose values over 2000-2025 differ by more than 1,000x. Two clear examples:
- IIQ.AX (INOVIQ Ltd):
adjCloseoscillates between ~25 and ~15,000 across consecutive years. - NCR.AX:
adjCloseranges from 0.0001 to 1,635.10. An 11.7 million-times ratio.
For comparison, even the most volatile penny stocks rarely show ratios above 100x over a quarter-century. Ratios in the thousands or millions don't reflect real returns. They reflect stock splits and consolidations that FMP failed to apply retroactively to its historical price series.
When a backtest computes a return between two such prices, the result is fictional. In our run, this produced individual-year portfolio returns of +740% (2005) and +698% (2008) that are physically impossible for a diversified equity portfolio. Those years dragged the headline 25-year CAGR upward.
Why we can't fix it locally
The error is in the source data, not in our backtest code. The adjClose field in FMP's response for ASX symbols is identical to the raw close even on dates where splits clearly occurred. Their stock-split-calendar endpoint also returns zero events for many of the affected symbols. Until FMP corrects the underlying adjustment, every backtest of ASX stocks built on stock_eod carries the same artifact.
We've filed a bug report with FMP documenting all 314 affected symbols.
What this changes for our other strategies
Every backtest in our strategies series that previously reported an Australian (ASX) result has been removed or pending retraction. For the DCF Discount comparison specifically, the global comparison post now covers 14 exchanges and explicitly excludes Australia.
The same root cause affects Brazil (SAO). That retraction is here.
Does the strategy work in Australia?
We genuinely don't know. The signal (FCF yield above 8.78%) is exchange-agnostic. There's no a-priori reason to expect Australian value stocks to behave fundamentally differently from Canadian or UK value stocks, both of which produced strong results in this comparison. But we won't publish a number we can't trust.
If you want to test this yourself with a different data source, the screen is open and the methodology is documented in the US flagship post. The signal is one line of SQL.
Read the rest of the comparison
The cleaned 14-exchange comparison and the regional posts are here:
- DCF Discount: Global Exchange Comparison (14 exchanges)
- DCF Discount: US Stocks (flagship post with full methodology)
- DCF Discount: Canadian Stocks (TSX)
- DCF Discount: Swedish Stocks (STO)
- DCF Discount: Indian Stocks (NSE)
Original post (now retracted) reported 6.08% CAGR over 2000-2025 vs 3.67% for the ASX 200. We retract that figure. Data quality details: FMP stock_eod has broken split adjustments on 314+ ASX symbols. Bug report filed March 2026. Not investment advice.
