How to Read Stock Quotes and Tickers
As investors, we can become inundated with information about the financial markets. We are bombarded by financial news and stock quotes nearly constantly and while some might suggest to pay no mind to the daily financial ups and downs, it is only natural to want to keep up to date with your investments. Not everyone has time to read through the financial news section of the paper or spend hours watching the financial news on television. However, most people do have time to glance at stock quotes in the newspaper or catch quotes on the ticker on the television. The key is to be able to easily recognize what this information offers and how to interpret it. In this article we will run through an example of both a quote from a financial newspaper as well as a stock ticker on the television. If you are looking for information on how to read an online stock quote, please also see our article entitled How to Research Stocks.
Contents
Newspaper Stock Quote
Below is an example of what a typical stock market quote may look like in the financial section of a newspaper. Your newspaper may be slightly different; however, in general, the information is very similar.
52 Week High and 52 Week Low
We can break this down column-by-column, starting on the far left. The 52 week high and the 52 week low are simply the highest and lowest prices for which the stock traded within the last 52 weeks. This is a rolling annual comparison, not a calendar year.
Company Name and Symbol
The next two columns are the identifying information on the company. The column entitled “Stock” may also be called “Company” or something similar. It is an abbreviated version of the company’s name. The following column is typically called “Sym”, “Symbol”, “Tick”, or “Ticker”. This is the stock’s symbol, under which the company trades on an exchange such as the London Stock Exchange.
Dividend Yields
The dividend and yield are related to each other in that the dividend is the amount paid per year in pounds, while the yield is that amount in relation to the price of the stock. To find the yield, we take the dividend amount divided by the price of the equity. If a stock has no information under dividend and yield, then that company does not issue a dividend.
Price to Earnings Ratio (P/E)
The P/E column can be very useful to quickly gather information when researching stocks. P/E stands for price to earnings ratio and is used by many investors to determine the value in a particular stock, among other things. A stock’s price to earnings ratio can be compared against other companies in its own industry. Stocks with a lower price to earnings ratio might be considered undervalued when the average P/E in its industry is higher. For instance, if the average P/E ratio in the widgets industry was 20.9 and ABC Widget’s P/E was 15.4, then ABC Widget might be a good stock to research to evaluate whether or not it is undervalued.
Volume in Hundreds (VOL 00’s)
“Vol 00’s” is short for volume in hundreds. This is how many shares of this particular stock were traded on the previous trading day. Simply add 00 at the end of each number for the actual amount.
High, Low, Close and Change
The “High”, “Low”, “Close” and “Change” are all in reference to the previous day’s traded. Since newspapers are printed after the market close, they reflect the last price that the stock traded for during the prior day. This is the close price. The change is the amount in pounds that the shares traded for in relation to the previous day’s close price. For instance, if ABC ended today at ₤57.20 and the change is +0.25, then the close on the day before was ₤56.95. The high and low in this case is the intraday high price and low price of the stock. A wider gap in the high and low often indicates a volatile stock while a narrow gap might indicate a less volatile or more stable stock price.
Reading Televised Stock Tickers
Another resource for stock quotes throughout the day is the financial news channels on the television. These quotes are often called tickers and they stream usually across the bottom of the screen during the newscast. The ticker might look something similar to the sample below:
To some this may look like gibberish at first. However, these tickers are made to be simple and to give basic information in very quick fashion. Each channel that offers scrolling tickers will be slightly different, however the information is generally offered in a similar fashion. You will not obtain much research information from a stock ticker, but you will be able to easily gauge the market and see how some important stocks are doing on the day.
The part in white is the stock’s symbol. The symbols may be a combination of letters and numbers, including as little as one letter. The next part of the ticker is the number of shares sold. The ticker is actually a read out of actual shares traded, so the numbers are not quotes, they are actual trades. If you trade shares of the stock after seeing the prices on the ticker, your shares might (and probably will) trade for a different price. The number of shares is measured in hundreds if it is not followed by a symbol. In our example, two means two-hundred shares. When there is a symbol included, that determines the number of shares sold. Our example shows 20k for XYZ, this means that 20,000 shares of XYZ sold. Many times this information is omitted from the ticker altogether, as it is not very relevant to the average investor.
The rest of the ticker is related to the price at which the shares sold. In the example above, ABC stock sold at ₤43.50. The up arrow show that the stock is selling higher than the price at the previous close, and the number following the arrow is how much the stock is up or down compared to the last close of the market. We can see above that someone bought 20,000 shares of XYZ stock at ₤52.10, which was down 25p from the previous day’s closing price.
It is important that long term investors do not become too involved with the daily ebb and flow of the stock market. For some, the temptation to make emotional decisions is too much, and they end up making the cardinal mistake of selling stocks when the markets are down, simply out of fear. The golden rule of investing is to buy low and sell high. This means that contrary to what you may feel, dips in the market are actually a great opportunity to add shares to your portfolio. Of course, it is important to only purchase more shares when you have researched the company and believe that the price has dropped not because of any fundamental change within the company, but as a result of a pullback of some sort in the overall market. When the latter is the case, there are great opportunities to add valuable positions to your portfolio while shares are being traded at a discount. With the ability to quickly scan stock quotes, and have an understanding of the information they provide, it will be much simpler to recognize these opportunities and take full advantage whenever possible.