Many people are familiar with the stock market. However, most individuals remain unfamiliar with terms such as “stocks”, “buy and sell stocks”, “stock market charts, and “bulls and bears.” Even the term “stock market” itself is confusing for those who are not familiar with it. have financial expertise.
There will be times when they will scratch their heads in confusion every time they hear their neighbors complain about the low stock price in the market or if a colleague suddenly gets a windfall from his stock market investment. What most people need to know that trading in the stock market can cause businesses to explode or go bankrupt if these companies play the “stock market game” right.
Simply put, shares are a representation of the company’s assets and profits. If the company makes a profit on shares, this value is divided annually among the shareholders in the form of dividends For example, if a company makes $100,000 in profit from this union, and has 20 shareholders stock gangs holding 1 share each, sha shareholders will receive a dividend of $5,000.
Stock Market Determined
The stock market – also known as a “stock exchange” – is a financial institution where licensed brokers trade company shares and other securities – including privately traded securities – that are approved for trading by an exchange. Exchanges can occur physically or virtually. Brokers buy and sell shares based on the needs and needs of the community and/or the company it represents.
The two types of capital markets are…
• Initial Stock Market = to trade Initial Public Offerings (IPOs) and other new issues by sellers and buyers
• Secondary Stock Market = for trading of existing shares in the market by buyers and sellers
Common Stock Market Terms
The stock market “lingo” need not be confused or daunted. To understand trends in the stock market, you need to learn certain commonly used terms and be able to assess stock market charts. By taking the initiative to learn the basics of the stock market, you will become a well-rounded investor capable of making sound stock decisions.
Let’s take a look at some terms you might come across in the stock market…
Share price = This is the value at which shares are bought and sold. Factors that directly affect stock prices are the position and performance of the stock issuing company. Another term related to stock prices is market cap – or simply market cap – which is the share price multiplied by the number of shares.
Other factors that affect stock prices include current performance and future expansion and growth. Let’s put it in simpler terms. If a company performs poorly in the stock market, their share price will drop in value. On the other hand, if these companies perform well, you will see the stock price soar in value.
Reading Stock Market Charts = These charts and quotes provide an up-to-date status of the stock’s performance. These stock changes can be reflected as “days” or “in days” depending on the trade on that day.
52 Week High and Low = This consists of stock data over a 52 week period. On the reporting date, you will be able to see the stocks with the lowest and highest prices during this 52-week period.
Share Type = Preferred stock will have a special symbol written after the company name. If the symbol is not displayed, then the stock is common stock.
Ticker symbol = Every company that trades on the stock market is assigned a specific abbreviation or letter. This ticker symbol is used so that all companies can be listed on the ticker tape. All major stock exchanges in the US – such as the New York Stock Exchange, NASDAQ, Dow Jones and the American Stock Exchange – limit ticker symbols from 1 to 4 letters (similar to heraldic symbols on UK exchanges).
Each new company must register its own symbol, which must be different from the symbols already used by other companies. Some examples of ticker symbols include AAPL for Apple Computer Inc. and INTC for Intel. You may notice that some symbols will have a dot followed by an additional 1 or 2 letters. One good example is BRK.B. This means that the stock is offered by the Berkshire Hathway Company and is a lower priced “Class B” stock.
Dividend Per Share and Dividend Yield = On a stock market chart, a company is said to issue dividends if both columns with this heading are filled in. You calculate the Dividend Yield by dividing the annual dividend per share by the price per share. This dividend yield means that shareholders have a return on their dividend.
Price/Earnings Ratio or P/E Ratio = This value is calculated by dividing the last share price by the average earnings per share for the last 4 quarters.
Trading Volume = Total buying and selling transactions that occurred on that day.
Closing = The last quoted price of the stock on the closing day of the stock market
Net Change = Difference in share price since the last change occurred. Net Change allows you to see which direction the stock price is heading – with a plus symbol for a positive direction while a minus symbol for a negative direction.
Bulls and bears = The terms “bulls” and “bears” are economic indicators for the stock market. You have a bull market when stock values go up. This is an indicator of good health in the economy. In a bull market, investors can stand to gain huge profits from selling stocks. On the other hand, a bear market shows a downtrend in the economy so investors need to sell their shares before the price drops much lower.
During a bear market, many investors and businesses tend to suffer heavy losses if they don’t buy good stocks right away and sell them before they fall quickly. The general rule to follow in the stock market is to buy when the price is low and sell when the price is high (before the price drops.)