Understanding Stock Quotes

Open: The US stock markets are officially ‘open’ for trade from 9:30 AM to 4:00 PM EST Monday through Friday on most days. Open is the price of the stock at 9:30 AM on an open trading day. In between the close and open are ‘after hours’ (4:00 - 6:30 PM EST) and ‘pre-market’ (8:00 - 9:30 AM EST) trading. Trading that goes on during these times often will impact the open price.

Prior Day’s Close: The price of a stock at the close (4:00 PM EST) of the previous trading day. Note that the prior day’s closing price may not necessarily equal the next day’s open price, as there is after hours and pre-market trading in between the two.

High: The highest price that the stock has traded for during the most recent trading day.

Low: The lowest price that the stock has traded for during the most recent trading day.

Volume: The number of shares of that stock that have traded hands during the most recent trading day. This is an important metric that measures how easily (liquidity) a stock is traded. If volume is high, it is easy to trade shares. If volume is very low for a stock, it may be much harder to buy and sell a specific amount of shares at exactly the price you would like.

Avg. Volume: This is a measure of volume over an extended time period - usually one year. This metric is used to compare to volume in a given day. If volume is relatively high versus the average volume, it may indicate noteworthy news regarding the company that would result in a higher level of trading.

Market Cap (Capitalization): A dollar amount that equals the share price multiplied by the number of outstanding shares. Relatively, stocks are considered large cap if they have a market cap of $10-200 billion, mid if their market cap is between $2-10 billion, and small if the cap is between $500 million and $2 billion.

52 Week High: The highest price that the stock has traded for over the last 52 weeks (1 year).

52 Week Low: The lowest price that the stock has traded for over the last 52 weeks (1 year).

P/E: P/E (Price-to-earnings ratio) is a mathematical computation that takes a stock’s current stock price and divides it by its previous annual earnings per share. A stock that sells for $40 dollars per share that earned $4 per share over the previous year would have a P/E of 10. P/E’s can be an indicator of value relative to other similar stocks when taking growth rates into consideration.

F P/E: Forward P/E’s calculate a stock’s current price divided by expected earnings for the following year. For instance, a stock that sells for $50 per share that was expected to earn $5 per share would have a F P/E of 10.

Beta: Beta is a measure of a stock’s trading volatility level in comparison to the entire market. A beta of 1 means that the stock tends to trade with the market. A beta of less than 1 means that the stock’s price tends to be less volatile than the market. A beta of greater than 1 means that the stock’s price will be more volatile than the market. If a stock has a beta of 1.4, in theory it is 40% more volatile than the rest of the market.

EPS (Earnings Per Share): A company’s profit, or earnings, divided by the number of outstanding shares. For instance, if a company earned $60 million in a year and had 6 million outstanding shares, the company’s earnings per share (EPS) would be $10.

Dividend: A cash reward given by companies to shareholders of stock, typically on a quarterly basis as determined by the company. Dividends are most often given by very profitable or mature companies as an incentive for owning and holding shares. The ‘dividend’ metric in a stock quote is the actual cash reward per share given to shareholders in the most recent quarter.

Yield: Yield is a percentage that reflects the return received from dividends paid on stocks over the most recent quarter (multiplied out over a year) relative to its current price. For instance, a stock that is priced at $80 that most recently paid a quarterly dividend $2 of of  would have a yield of 10% ($2 x 4 quarters/$80 = 0.10 = 10%).

Shares: The total number of outstanding shares that the company has issued for public trading.

Institutionally Own: The percentage of outstanding shares of the stock that are owned by financial institutions (mutual funds, pension funds, etc.).

For more common investing terminology, check out the Mint’s financial term glossary.
For more of GE Miller’s writing, visit personal finance blog 20somethingfinance.com.

Investing 101: Common Stock Quote Metrics Defined | Mint.com Blog | Personal Finance News & Advice

I found this fascinating quote today from Fred Wilson.  I tumbled about Second Market here:

Entrepreneurs won’t start companies and investors won’t invest in them if there is no path to liquidity on the company stock. A secondary market for private company stock can fill the gap that the lack of an I.P.O. market has created.A VC, Apr 2009

You should read the whole article.

SEC Charges Mark Cuban With Insider Trading

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The Securities and Exchange Commission filed insider-trading charges against Mark Cuban, the outspoken owner of the Dallas Mavericks basketball team, over his sale of shares in Internet company Mamma.com after he learned it was raising money through a private financing.

-WSJ.com

• Uh Oh…Mark Cuban Being Charged With Insider Trading [Mark Cuban]
• Dallas Mavericks owner Mark Cuban charged with insider trading
• Mark Cuban charged with insider trading over sale of internet company stock
• Mavs owner Cuban accused of insider trading

New Economic Reality Changes Financial Language

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New economic realities brings its own dictionary. Your Money Mogul listed new meanings of old financial terms. Forget the losses you made and enjoy yourself.

CEO — Chief Embezzlement Officer.

CFO — Corporate Fraud Officer.

BULL MARKET — A random market movement causing an investor to mistake himself for a financial genius.

BEAR MARKET — A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.

VALUE INVESTING — The art of buying low and selling lower.

P/E RATIO — The percentage of investors wetting their pants as the market keeps crashing. BROKER — What my broker has made me.

STANDARD & POOR — Your life in a nutshell.

STOCK ANALYST — Idiot who just downgraded your stock.

STOCK SPLIT — When your ex-wife and her lawyer split your assets equally between themselves.

FINANCIAL PLANNER — A guy whose phone has been disconnected.

MARKET CORRECTION — The day after you buy stocks.

CASH FLOW — The movement your money makes as it disappears down the toilet.

YAHOO — What you yell after selling it to some poor sucker for $240 per share.

WINDOWS — What you jump out of when you’re the sucker who bought Yahoo @ $240 per share.

INSTITUTIONAL INVESTOR — Past year investor who’s now locked up in a nuthouse.

PROFIT — An archaic word no longer in use.

-Fair Loan Rate!

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Capitulation

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A military term. Capitulation refers to surrendering or giving up. In the stock market, capitulation is associated with “giving up” any previous gains in stock price as investors sell equities in an effort to get out of the market and into less risky investments. True capitulation involves extremely high volume and sharp declines. It usually is indicated by panic selling. After capitulation selling, it is thought that there are great bargains to be had. The belief is that everyone who wants to get out of a stock, for any reason (including forced selling due to margin calls), has sold. The price should then, theoretically, reverse or bounce off the lows. In other words, some investors believe that true capitulation is the sign of a bottom. - Investopedia

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