Check out the stock data below. This is a snapshot (taken a while ago) of three important publicly-traded companies:
|Ticker||Price||Change||% Change||Day Range||52 Week Range||Market Cap||Div||Yield (%)||P/E Ratio||Volume||Open|
|GOOG||474.68||-0.39||-0.12%||470.56 - 477.65||395.98 - 629.51||151.09B||-||-||21.50||1.44M||477.06|
|BA||67.53||+0.12||0.21%||66.67 - 68.11||38.92 - 76.00||51.26B||0.42||2.49%||40.72||4.24M||67.31|
|GE||14.91||-0.17||-1.13%||14.87 - 15.15||10.50- 19.70||159.19B||0.10||2.68%||15.30||61.26M||15.12|
So, what does all of that mean? Here's the breakdown, from left to right:
Price: The last trade made for one share of this company.
Change: The amount the stock price has changed since it last closed (at the end of yesterday).
Percentage Change: Harken back to 4th grade math - this is percentage that the stock has changed since it last closed (at the end of yesterday).
Day Range: The day range shows the highest and lowest price that the stock had for the day. Ideally, buy low, sell high. The best investors (and we mean Warren Buffett) don't worry as much about a stock's daily price as its long-term prospects.
52 Week High and Low: This identifies the highest and the lowest price that this stock has sold for over the past 52 weeks. This information allows you to place its current price within a one-year context.
Market Capitalization: This is a measure of the total value of the company. Market Cap = Total Shares Outstanding x Current Price.
Div is short for dividend. A dividend is the amount that the company will pay you (typically once per quarter) for each share of stock that you own. Some companies (like Google, in the above example) don't pay dividends.
Yield = dividend / price. This tells you what portion of the price you paid is "guaranteed" to be paid back to you each quarter. Companies can change their dividend at their own whim, so there really are no guarantees. When taxes on dividends are raised, or during tough times, companies often reduce their dividends.
P/E Ratio: The price-to-earnings ratio tells you "how many dollars today are you willing to pay for a dollar of earnings in the future?" In other words, this tells you how excited investors are about the companies growth prospects.
Volume: Nope, not the kind that you see in geometry. This simply tells you the number of shares that have traded that day.
Open: Stocks open and close. Open is how they begin the day. Close is how they end. Today's close = tomorrow's open.
Okay, team. If you think you've got it, then hop on over to our Stock Market Game to see how you would have fared in the stock market over the past fifteen years.
Why It Matters Today
Think of the stock market as that moving-floor escalator thing you stand on in airports. As soon as you load a grand onto it, the money starts moving slowly forward, over time, at a clip of about 5% a year. Looking at the chart, you will see huge gyrations. You will likely experience some amazing boom times as well as some excrutiating lows. But unless you are really stupid or really lucky or both – or become a professional money manager – you’ll likely compound your savings at about that 5% clip, give or take (and likely take because most people give over a lot of profits to the tax man or to stock brokers by trying to beat the market via trading stocks they know little about... but that’s a different story).