Saturday, January 30, 2010

Way to pick good stocks

Now, back on track..

Do you know how to read and fully understand the stock market charts, graphs and percentages and other random things in your local newspaper? These charts and graphs can be valuable resources for investors, but if you have no idea what you are doing or looking for, then they’re pretty much just a bunch of letters and numbers. That is why it's important to learn to read them, and FULLY understand them.
Well for starters, the first two columns are the 52 week high and low price. If the numbers you see are close together like 20 and 22 than you know that you have a stable company. But, if there is a large difference like 20 and 50, than that is when you know there is some instability and you might want to dig a little deeper before buying more stocks. The third column you see is yesterday's closing price. If the company is trading at close to the highs, you know that the value is going up which means you are doing good whereas if it is near the low, think twice about investing in it as it is probably on the decline meaning it isn’t doing too well and you should just stop investing in it.
Next up is the three or four letter code demarking the company. Each code available is unique to everyone who reads and uses the stock market so you will be able to follow the all the companies on the stock ticker.
The fifth and sixth columns show all the dividends that you can spend. Number five is the dividend amount while number six is the dividend yield.
The price to earnings ratio comes in at number seven. P-E is the stock's price divided by the company's per share earnings for the latest four quarters.
The numbers of shares sold yesterday in thousands creates the next row.
The high/low for the previous day makes up column 9. You can see how much one day movement there is.
The last column you see is the market's close and net change which will tell you how the stock has ended the day before.
And that is how you can read and understand the stock market.

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