Basic Stock Reading 101 Understanding Stock Market Charts Stock Market Terminology

In order to increase your changes of a positive return of investment (ROI) on your Stock Market portfolio you need to comprehend the basic reading of stocks. Start by arming yourself with a fundamental understanding of investment and financial terminology with a good finance and investment terms dictionary.

 The purpose of this article is to provide you with the primer of the basic reading of stock terms and stock table.  We will look at a recent large cap stock called General Electric (GE) as our example stock.  The information about (GE) is based on the stocks closing price as of December 13, 2010.  The information is from the advance research chart found on the web site of Fidelity investment.

 The date is December 13, 2010 the Last trade exchange for (GE) is the NYSE;  the last stock trade was $17.62;  the day low price was $17.55;  the day high price was 17.90; the Bid price was $17.58;  the ask price was $17.60;  the 52 week high stock price $19.90 the 52 week Low stock price was $13.75/ market capitalization for (GE) is $188.80b, the Volume for GE is 67,875,234 shares traded, the Shares outstanding are 10,691,220,000.

 (GE) most recent P/E 15.28;  PEG ratio1.24;  Annualized dividend yield 3.16%, Dividend amount 0.14; Ex-Dividend date 12/22/2010;  Dividend pay date  1/25/2011

 Ask Price;  The ask price is price of a stock that is owned by stock holder who is willing to sell his stock shares.

 BID Price; The amount of a stock price that a buyer of that stock is willing to pay.

Day Order;  Means that your stock purchase order will remain open until that days market close.

 (EPS)  Earnings per share purpose is a indicator of how profitable a company is.  Common Stock (EPS) is called a residual security  The formula to determine (EPS) is (Net income divided by Average outstanding shares.  All legitimate debt obligations must be paid first by the company then the remaining balances is considered earnings.  There are two basic types of reporting periods for (EPS) Trailing (EPS) is considered the preceding past 4 quarters.  The rolling (EPS) is considered the following past two quarters plus the next two up coming quarters.

 Ex-Dividend date;  The ex dividend date is the last date to purchase the stock (GE) in order to be eligible  to receive the dividend on the next dividend pay date in this case 1/25/2011. The SEC Security and Exchange Commission has a 3 day settlement period before you can qualify for use of the proceeds of your stock or to receive the next stock dividend.  In this case you would have to purchase (GE) prior to  December 17,2010 to receive the dividend on1/25/2011

 (GTC)  Good to cancel order  That your stock purchase order remains open until that stock reach the stock price that you set.

 Limit Order.  A limit order gives the buyer some control over the purchase price of his stock. A limit purchase order will execute only if that price of the stock reaches the price that the buyer has set.

 Market order;   Is the quickest way for you to purchase your stocks.  The stock order is filled at what ever price the stock is at the time you place the order. You have no control over the purchase price of your stock.

 (PE)  What is the (PE) Price to Earnings ratio?  The PE compares the share price to the earnings per share of the stock.  The purpose behind the (PE) ratio is  to review the companies growth.  The formula for (PE) is  Market value per share divided by the earnings per share (EPS).  It is a good strategy to know what the industry (PE) ratio average is so that you can compare your companies (PE) ratio to it’s peers.

 (PEG)  is the Price to earnings growth yield margin.  The current  price/earnings multiple of a stock dividend yield is divided by the sum of the expected growth rates for the next five years, plus it’s dividend yield.  The proponents of this stock metric believe that ratio of under 1.0%  means that the stock is a good bargain to purchase.

 The preceding investment stock terms will give you the reader a introductory understanding of the basics of reading stocks.  As a character in William Shakespeare play once said famously, ” I hope that is as clear as a Summers day”