Stock market news is all around us everyday in different forms. It’s on TV, it’s on ticker tapes in front of financial buildings, it’s in the newspaper in the form of stock tables and it’s on the internet. So how do you make sense of the all the financial data coming from these resources? Learning how to read the stock market is an essential requirement for becoming a successful investor.Here are the basics you need to know.
How to Read the Stock Market Tables
Open any newspaper to the financial section and you’ll see a table full of numbers, arrows and letters. This is usually a stock table and it encapsulates the stock market’s performance for that day as well as gives you past data for comparative analysis.
Although every paper’s stock tables might be slightly different, in general, they all contain the same basic info. Here’s how to read the stock market table:
52 week high: This figure gives you the highest price for a particular share in the last 52 weeks. It’s crucial to be able to determine the performance of a stock over time and analyze trends.
52 week low: This figure will give you the lowest price for a share in the last 52 weeks (nearly a year). It’s also crucial for evaluating trends and performance. When combined with the 52-week high figure, it should give you an accurate assessment of the stock’s yearly performance.
Name/Symbol: This column contains both the company name and its stock symbol. A stock symbol is usually a 3-letter symbol used to identify the company in the stock market. You need to know the stock symbol of any companies you invest in so you can track their performance over time and also when you use the internet to find stock quotes. Companies often pick memorable ticker symbols, so for example, Genentech, a biotechnology firm, has the stock symbol DNA.
Dividend: The amount paid on an annual basis by a company as profit to its shareholders.
Volume: The number of shares traded today for a particular stock.
Yield: Yield is a percentage calculated as dividend divided by stock price; the yield of a particular stock may change on a daily basis depending on its stock price for that day.
P/E Ratio: This ratio is simply the price of stock divided by the company’s earnings per share. In general a lower P/E ratio is desirable because it would mean that the company is a good value investment for the current price.
Day Last: This would be today’s stock price, or whenever the stock last traded on a business day.
Net Change: The net change measures the differential in the stock price between its current price and the price the day before, and reports the change as a percentage.
How to Read the Stock Market Ticker Tape
The stock market ticker tape runs on TV channels, as well as outside financial buildings and the Internet. It’s usually a quick glance at how various stocks are performing on the current day. It denotes stocks by their symbol, which can be anywhere from one to four letters. Some companies abbreviate their business name, so Google’s symbol is GOOG, while other companies use their entire name, such as NIKE.
The ticker generally also shows either a green arrow, indicating increase in stock price, or a red arrow indicating a decrease in stock price followed by a percentage figure denoting the amount of change in stock price for the day’s trading.
Both stock tables and stock tickers are helpful for an investor to monitor and track stock performance. Knowing how to read the stock market is crucial for any investor because stock investing is all about making and then monitoring your investment so you can tweak your stock portfolio to optimal market conditions.