The scrolling ticker on TV financial shows stream stock prices at a dizzying rate.
Disney is at $185 a share!
Apple is $128!
And, wow, Caterpillar has jumped over $240!
This helps you know if you want to buy or sell.
you’re free to also learn whether investor interest in the stock is increasing, stable or declining.
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Knowing this information will position you better for investing success on the stock exchange.
Think of that as Investing 101, and then this as Investing 202.
There are some situations when your trade might not be executed close to the last price.
If you dont, you could get a price you werent expecting.
The Bid and the Ask
If you plan to sell, look at the bid.
Thats the best price another investor is willing to buy the stock if you place a market order.
Did you know?
The same is true of buying a stock on the market.
Most of the time, the spread is only a penny or two for the most popular stocks.
If its Monday, that would be Friday.
The opening price is where the stock traded at the beginning of the current trading day.
Apple bore a lot of fruit for its investors, didnt it?
Its the difference between the highest and lowest price for the stock in the past year.
Instead of a range, you could see the 52-week high and the 52-week low.
Dont get too hung up on whether a company is at the top or bottom of its range.
It can go higher and, unless its at zero, it can go lower.
The number alone doesnt tell us much until you compare it to the volume on a chart.
If volume spikes suddenly, then you should check recent news on the company.
Its also important when trading thinly traded stocks.
Before you buy or sell shares of a small company, check the volume.
Some posted bids or ask prices are only good for 100 shares.
A beta of one is normal risk.
A beta of less than one implies the stock wont go up or down as much as the market.
Utility stocks have predictable profits, so they tend to have low betas.
A beta of more than one means the stock has fluctuated more than the rest of the market.
Teslas stock (OTC:TSLA) had a beta as high as 2.
The dividend listed in the quote is usually the dividends paid over the past 12 months.
The following information will help you understand more about the lingo of the stock quote.
Understanding Yield
The yield is your expected return as a percentage instead of a dollar figure.
The more the company pays its profits out in cash, the less it has available to expand.
Thats why growth companies dont pay high dividends and mature companies with fewer growth opportunities do.
The Value of Earnings Per Share
Companies report their after-tax profits as earnings.
The more profit your share makes, the more valuable your share in the company becomes to potential buyers.
Its the price per share divided by the last 12 months of the companys earnings.
The higher the price-earnings ratio, the more optimistic the market is about the shares.
Value investors seek out stocks with low price-earnings ratios but excellent prospects.
Those may be a bargain, but not if the company is in trouble.
So you could surmise that the market is more optimistic about Apple than Samsung.
Caterpillar and John Deere, which both manufacture heavy agricultural equipment, were closer, 38.74 and 34.59 respectively.
This tells you the market is rosy about both.
Learning how to read stock quotes is an essential step toward becoming a confident stock investor.
He is an adjunct professor of finance at Wayne State University in Michigan.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
