| Introduction: Welcome! Have you ever looked at the stock pages in the newspaper and wondered how to read them? Well truthfully, they're not at all that hard to read. In fact, it's quite easy! Just read on and you will understand it soon enough. Section 1: Stock Market Okay, the first thing you have to know about stocks is: the stock market. The stock market is the place where stocks are bought and sold. Some examples of a stock market which may seem familiar to some of us are the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX), the National Association of Securities Dealers Automated Quotation (NASDAQ), and the DOW (Dow Jones & Company, Inc). Section 2: What are Stocks? So, what are stocks? Stocks are pieces of a company. When you own stock from a specific company, you literally own a piece of everything they own. This includes equipment, land, buildings, etc.. Lets say you own 100 stocks of a company who has sold about 1,000 stocks. You now consequently own about 10% of the company. Also, as a stockholder, you have the right to participate in all voting in that specific company -- each stock equals 1 vote -- and be informed of how well or bad the company is doing. Interesting stuff, right? Section 3: Reading the Stocks in the Stock Page Now it's time to learn how to read the actual stocks listed in your local newspaper or even on the internet. 52-Week Yld Vol Net Hi Lo Stock Div % PE 100s Hi Lo Close Chg 15.36 7.28 Sample SPL .56 3.8 22 215 12.34 7.75 12.67 -11.92 Above is an example of what a stock listing should look pretty similar to. We'll go over what each abbreviation means and what those numbers are. 52-Weeks Hi & Lo The 52-week 'hi' and 'lo' lists the highest and the lowest price paid for that stock during the previous 52 weeks. Stock Name & Symbol The stock name, generally the company name, is the name on the 3rd column. The trading symbol is on the column right next to it or the 4th column. A great use of the trading symbol is when you go to the Yahoo! homepage, on the right-hand side of the page towards the middle, you can type in the trading symbol of the company that you wish to invest in and it'll bring you to their 'stock page'. Dividends The Div column or the 5th column from the left is the share of a company's profits that they pay their stockholders. If you have more stocks, your dividend check will be larger. If the dividend column is blank, the company isn't paying their stockholders any dividends. Yield The column after the 'Div' column or the 6th column, is the Yield column. The yield is the percentage of profit earned on a stock investment through its dividend payments if any is awarded. The yield for Sample is 3.8. You calculate the yield by dividing the dividend they provide by the price of the stock -- 14.76 -- and multiplying it by 100. PE (Price-Earnings) Ratio The next column or the 7th column tells you the price-earnings ratio. It compares the stock's price per share with the company's EPS or earnings per share. The PE ratio is a measurement that investors use to determine whether a stock is priced fairly. You calculate the PE by dividing the stock's price per share by the company's EPS. Volume The 8th column is the Volume. The volume tells the investor how many shares were traded that day. The number that is given is in the hundreds. For example, the volume of Sample is 215 but when you multiply it by 100, the actual shares sold that day would be $21,500. High The 9th column gives the highest price paid for the stock during the day. For Sample, the highest price paid during the day was $12.34. Low The 10th column gives you the lowest price paid for the stock during the day. For Sample, the lowest price paid during the day was $7.75. Close The 11th column gives you the last price paid for the stock that day. For Sample, the closing price was $12.34. Net Change. The last column gives you the net change. The net change is the difference between the previous day's closing price and the current closing price. Section 4: More About Stocks There is a common misconception that you must be a certain age, say 18 or older, to be able to own, purchase, or sell stocks. Ironically, this statement is 100% false. There is no age limitation placed on selling or purchasing stocks. You are eligible to purchase and sell stocks at any age. Section 5: Investing Tips 1) Buy low, sell high! The #1 thing investing professionals would tell you is to buy low and sell high. Most of the time it's recommended that you buy stocks that are no more than $20 to $50 or at least that's my opinion. Selling high may mean that you sell something that just went up about $10-$30+ in price. 2) Never fall for fake e-mails! These e-mails claim to have a great investing deal. What I mean is, they claim to be about to have a sudden rise in stock price and to act fast or else you'll miss out. First of all, that is just some sort of fraud. Many times these companies are about to go bankrupt and their stock prices are about to fall straight down to the floor. Second of all, I believe it's illegal to tell someone when stocks are about to go good or bad. 3) Do your research! Do your research! Don't just pick one company because the name is pretty or because you think they have the lowest current price available. If you go ahead and do your research and look into stock prices and maybe even company history and sales and at the products they provide, you may be very grateful down the road. 4) You wont always win! Keep in mind that you may not always win. Sometimes you may anticipate a company to increase in stock prices but become heart-broken when stock prices come crashing down right in your face. 5) Don't put invest your money into a single stock! In my opinion, you should NEVER invest all of your money into one single stock. Reason being is: what if you invested all of your $10,000 into one stock and then in the following months the price falls and doesn't rise until months later and even then is still below the price you paid for them. You just lost some of those $10,000! Now, what if you evenly distributed your $10,000 among 5 stocks and 3 out of the 5 raise by twice as much in price and the other 2 just fall by no more than a few dollars. You just made a profit! The other two stocks don't really matter because the other three are now worth more than twice as much as they were. |
| How to Read the Stock Pages Monday 30, 2006 / Lunes 26.2006 Written By: Peter D. |
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