Reading the Business
Section
The first thing you need to realize is that you are reading yesterday's
closing prices. If you are reading Monday's newspaper (or Saturday’s
or Sunday's newspaper) the listings are for Friday's closing prices. This,
of course, is obvious but needs to be stressed because a lot can happen
to a stock's price by the time your read about it in the newspaper. If you are reading
the newspaper at lunch time, keep in mind that what you are reading is practically
2 days old.
Finding your stock can sometimes be difficult. Most newspapers
list the most popular stocks, while others like the Wall Street Journal
are more complete. Assuming the stock you are following is in the
paper you are reading, the first thing you need to do is look at the top
of the page to find the proper exchange for your stock. It most likely
is listed on the NYSE, NASDAQ, or the AME.
The stocks are usually listed alphabetically by the company name's abbreviation.
It's Ticker symbol is often easier to spot if you know it.
Here are some column headings for stocks and what they stand for:
Div - This shows the stocks annual dividend pay out. Some
stocks (such as growth stocks) invest their income back into the company
rather than paying it out as dividends to the shareholders. This
is why for a lot of stocks this column will be empty.
Yld % - The yield percentage is simply the dividend divided by
the closing price. (Rather than bringing your calculator every time you
look at the paper they do this for you).
P/E ratio - This is the current price divided by the earnings
for the year. If your stock has a P/E of 20, that means that with
its current earnings, it will take twenty years for the company to earn
what you are paying for it (at the current price).
52 week Hi / Low - This shows the stock price over the previous
years time. It does not include the price you are looking at.
Volume or Sales - This is the number of round lots traded for
that stock on that day. This is not the total number of shares outstanding
(get that from their annual report). Add 00 to the number for the
total quantity that was traded.
Hi / Low and Close for the day - The closing price is what you
came to see. The hi and low is an indication of that stocks volatility
for the day.
Net Change - This is the difference in closing price you are
looking and the previous day's closing price.
Bold, Underlined, Footnotes, etc. - If the close has changed
more than 5%, or the volume traded that day was higher than normal
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