In glancing through the stock prices listed in the newspaper one might wonder how stocks are priced and what affects price movement. After all, there is a wide variety of prices and some well-known companies are traded for relatively low prices while obscure listings may sell at high prices.
To a certain extent stock prices are determined by investor confidence but that confidence in turn is based on real or perceived performance. Companies report their financial status on a quarterly basis when they disclose cash flow, sales and earnings. These hard numbers are the foundation of a company's worth, but investor speculation can undermine or override actual financial data.
Rumours abound on the stock market, and if there is news that a company is about to make a strategic move buyers may flock to buy that stock. As with any other market, the principal of supply and demand applies. If there is a sudden upsurge in investor interest, the price of a stock will rise accordingly. Conversely, fear among investors can cause a stock price to plummet. In the long run, however, company performance and worth are the biggest factors in determining stock prices.
Stock prices are available from many sources. Newspapers carry market summaries of the day's movements and online sources can provide current prices around the clock. Stock brokers can also provide quotes – either online or by telephone in the case of full-service brokers.
A stock quote table in a newspaper or Internet web site is full of useful information that can help the investor make decisions about buying or selling stocks. Being able to read a stock table is a necessary skill for anyone interested in the stock market.
A typical table looks something like this:
Latest Change 52 Weeks
Symbol Price Net % Time High Low Volume High Low
BCE 31.150 -0.480 -1.52 16:57 31.750 31.110 3,643,000 33.000 27.150
BGM 17.060 -0.280 -1.61 15:54 17.300 17.040 207,400 26.850 17.110
IBM 79.820 -0.290 -0.36 16:01 80.680 79.560 4,999,200 99.100 71.850
MSFT 24.670 -0.310 -1.24 16:00 25.050 24.670 73,696,700 27.940 23.820
The first column tells you the name of the company by its ticker symbol – a 3 or 4 character abbreviation. BCE is Bell Canada Enterprises and MSFT is Microsoft. Ticker symbols can be looked up on the Internet.
The latest price is the price at the time of publication of the table. In newspapers this would generally be the day's closing price, but Internet tables may be updated every few minutes. Publicly viewable stock prices on the Internet usually have a lag of 15 or 20 minutes.
Change is the difference between the previous day's closing price and the current quote. Time shows the time of the last transaction. High, Low, and Volume all refer to the current (or last) trading day. High is the highest price the stock sold for, Low is the lowest price, and Volume is the number of shares that have been traded. Finally the 52 week High and Low shows you the highest and lowest prices in the previous year.
There may be additional columns for information about Bid Price (the price a buyer is willing to pay), Ask Price (the price a seller is willing to sell), Price/Earnings ratio (P/E – the stock price divided by the earnings per share), Market Cap (outstanding shares multiplied by current market price), and Dividends Per Share (the current annual dividend the company pays).
Bull Bear Markets
Bull and Bear are the terms to describe the general conditions of the stock market. These do not refer ...
The goal of fundamental analysis is to determine...
Fundamental Analysis 2
Earnings per ShareThe overall earnings of a com...
Most stock trades are done through a broker an...
All of these factors – low price, lack of standards, and lack of stability – make penny sto...
Pink Sheets Stocks
Penny stocks are securities that are less than $5 in value. Although they can be traded on ...
These perks are not free – full service brokers charge the highest commission rates in the industry. ...
There are many different stock indexes, the most com...
The 'Stock Exchange' is the correct term for the physical location for trading stocks. Each country may have many di...
A contract to buy is called a 'call option'. The...
Why would a company do this?...
Stocks Trading Signals
Investors who treat trading as a full-time job have the time to watch the market movements for signals. Often...
Stocks Vs Bonds
Bonds always carry the risk that the principal amount may not be paid back. Companies with hig...
Stocks Vs Mutual Funds
What is the advantage of a diversified portfolio? It offers protection against ra...
Stock Trading Strategies
HedgingHedging is a way of protecting an investment...
The basis for technical analysis is the belief that stock prices move in predictable patterns. All the factors that infl...
Technical Analysis 2
Types Of Trading
The stock market also provides opportunities for short-term inve...