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Bounce by Banks Lifts Stocks

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Financial stocks led the market higher Monday afternoon as investors bet that major U.S. banks would emerge relatively unscathed from the Dubai debt crisis.

Investors’ confidence that banks will benefit from continued efforts by governments around the world to prop up the global economy was bolstered by a statement from the troubled state-owned conglomerate Dubai World that it was taking steps to restructure tens of billions of dollars in debt.

The Dow Jones Industrial Average broke into positive territory for good with 45 minutes to go to end with a gain of 34.92 points, up 0.3%, at 10344.84, helped by gains in all its financial components.

Bank of America rose 2.5%, J.P. Morgan Chase was up 2.8%, American Express rose 2.4%, and Travelers Group rose 1.4%. But the average’s retail components fell, with Home Depot off 0.9% and Wal-Mart Stores down 0.2%.

The late gains salvaged what had been a gloomy session through most of the day. Declines in consumer stocks kept major indexes in the red through most of the day due to concerns that the U.S. holiday-shopping season could be lackluster.

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Dec

01

2009

How to Read a Stock Table/Quote

Any financial paper has stock quotes that will look something like the image below:

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Columns 1 & 2: 52-Week High and Low – These are the highest and lowest prices at which a stock has traded over the previous 52 weeks (one year). This typically does not include the previous day’s trading.

Column 3: Company Name & Type of Stock – This column lists the name of the company. If there are no special symbols or letters following the name, it is common stock. Different symbols imply different classes of shares. For example, “pf” means the shares are preferred stock.

Column 4: Ticker Symbol – This is the unique alphabetic name which identifies the stock. If you watch financial TV, you have seen the ticker tape move across the screen, quoting the latest prices alongside this symbol. If you are looking for stock quotes online, you always search for a company by the ticker symbol. If you don’t know what a particular company’s ticker is you can search for it at: http://finance.yahoo.com/l.

Column 5: Dividend Per Share – This indicates the annual dividend payment per share. If this space is blank, the company does not currently pay out dividends.

Column 6: Dividend Yield – The percentage return on the dividend. Calculated as annual dividends per share divided by price per share.

Column 7: Price/Earnings Ratio – This is calculated by dividing the current stock price by earnings per share from the last four quarters. For more detail on how to interpret this, see our P/E Ratio tutorial.

Column 8: Trading Volume – This figure shows the total number of shares traded for the day, listed in hundreds. To get the actual number traded, add “00″ to the end of the number listed.

Column 9 & 10: Day High and Low – This indicates the price range at which the stock has traded at throughout the day. In other words, these are the maximum and the minimum prices that people have paid for the stock.

Column 11: Close – The close is the last trading price recorded when the market closed on the day. If the closing price is up or down more than 5% than the previous day’s close, the entire listing for that stock is bold-faced. Keep in mind, you are not guaranteed to get this price if you buy the stock the next day because the price is constantly changing (even after the exchange is closed for the day). The close is merely an indicator of past performance and except in extreme circumstances serves as a ballpark of what you should expect to pay.

Column 12: Net Change – This is the dollar value change in the stock price from the previous day’s closing price. When you hear about a stock being “up for the day,” it means the net change was positive.

Quotes on the Internet
Nowadays, it’s far more convenient for most to get stock quotes off the Internet. This method is superior because most sites update throughout the day and give you more information, news, charting, research, etc.

To get quotes, simply enter the ticker symbol into the quote box of any major financial site like Yahoo! Finance, CBS Marketwatch, or MSN Moneycentral. The example below shows a quote for Microsoft (MSFT) from Yahoo Finance. Interpreting the data is exactly the same as with the newspaper.

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Oct

29

2009

Introduction to Stocks

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Wouldn’t you love to be a business owner without ever having to show up at work? Imagine if you could sit back, watch your company grow, and collect the dividend checks as the money rolls in! This situation might sound like a pipe dream, but it’s closer to reality than you might think.

As you’ve probably guessed, we’re talking about owning stocks.

This fabulous category of financial instruments is, without a doubt, one of the greatest tools ever invented for building wealth. Stocks are a part, if not the cornerstone, of nearly any investment portfolio When you start on your road to financial freedom, you need to have a solid understanding of stocks and how they trade on the stock market

Over the last few decades, the average person’s interest in the stock market has grown exponentially. What was once a toy of the rich has now turned into the vehicle of choice for growing wealth. This demand coupled with advances in trading technology has opened up the markets so that nowadays nearly anybody can own stocks.

Despite their popularity, however, most people don’t fully understand stocks. Much is learned from conversations around the water cooler with others who also don’t know what they’re talking about. Chances are you’ve already heard people say things like, “Bob’s cousin made a killing in XYZ company, and now he’s got another hot tip…” or “Watch out with stocks–you can lose your shirt in a matter of days!” So much of this misinformation is based on a get-rich-quick mentality, which was especially prevalent during the amazing dotcom market in the late ’90s. People thought that stocks were the magic answer to instant wealth with no risk. The ensuing dotcom crash proved that this is not the case. Stocks can (and do) create massive amounts of wealth, but they aren’t without risks. The only solution to this is education. The key to protecting yourself in the stock market is to understand where you are putting your money.

It is for this reason that we’ve created this tutorial: to provide the foundation you need to make investment decisions yourself. We’ll start by explaining what a stock is and the different types of stock, and then we’ll talk about how they are traded, what causes prices to change, how you buy stock and much more.

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This is Part 1 of a 9 part series for the new investor to get acquainted with Stocks. Sign up to our FREE Newsletter for more in-depth tips and tricks about Stocks, and as an added bonus, you will receive our highly acclaimed Stock Picks FREE of charge.
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Oct

26

2009

Toxic Assets Explained

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“Toxic asset” is a non-technical term for certain financial assets whose value has fallen significantly and for which there is no longer a functioning market, so that they cannot be reasonably sold. The term became common during the financial crisis of 2007–2009, in which they played a major role.

When the market for such assets ceases to function, it is described as “frozen”. Markets for some toxic assets froze in 2007, and the problem grew significantly worse in the second half of 2008. Several factors contributed to the freezing of toxic asset markets. The value of the assets were very sensitive to economic conditions, and increased uncertainty in these conditions made it difficult to estimate the value of the assets. Banks and other major financial-institutions were unwilling to sell the assets at significantly reduced prices, since lower prices would force them to reduce significantly their stated assets, making them appear insolvent.

Oct

23

2009

What Are Penny Stocks?

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In the U.S. financial markets, the term penny stock commonly refers to any stock trading outside one of the major exchanges (NYSE, NASDAQ, or AMEX), and is often considered pejorative. However, the official SEC definition of a penny stock is a low-priced, speculative security of a very small company, regardless of market capitalization or whether it trades on a securitized exchange (like NYSE or NASDAQ) or an “over the counter” listing service, such as the OTCBB or Pink Sheets. The terms penny stock, microcap stock, small caps, and nano caps are sometimes all used interchangeably, however per the SEC definition, penny stock status is determined by share price, not market capitalization or listing service. A penny stock is typically listed for below $5 per share (traditionally one dollar but defined as five by the SEC).

Oct

23

2009

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