How to Really
Read the Stock Listings
The emphasis on market price, investors—whether they believe in fundamental or technical indicators—are naturally drawn to the closing price and the degree of movement in the stock's market value. Because of that emphasis, it is easy to forget what is truly important in the stock market: the fundamentals and how each day's changes reflect what is happening with your investments.


The Basic Information
The typical stock listing varies with each financial publication. If you depend on your daily paper rather than one of the specialized investment-oriented papers, you probably get information about a limited selection of stocks—only stocks of regional interest or outdated information. If you subscribe to The Wall Street Journal or Investor's Business Daily, then you have complete listings available every day. If you subscribe to Barron's, you have a comprehensive weekly listing. And if you are on the Internet, you can get real-time quotes any time.
The advantage of using one of the specialized newspapers is that you get the complete listings for the New York Stock Exchange; American Exchange; Nasdaq; and nonstock listings such as mutual funds, bonds, options, futures, and foreign markets. For many investors whose portfolios are diverse, it is always desirable to be able to check everything and not just the latest stock reports. The benefits of being able to monitor the entire market as well as your own portfolio cannot be emphasized too greatly.
rKEY POINT
Monitoring the entire market gives you greater insight than just watching the day-to-day changes in the stocks you own.
Investors in the stock market have an added advantage if using the Internet. You may use this convenient communications medium not only to monitor stock prices, but to place orders, research companies, view current financial statements and news, and access economic and business news. The Internet is an important and powerful investor's tool and should be used for information gathering, at the very least.
To begin with stock listings: What do the daily summaries actually show? Each day's listings show a number of results for each listing company. Figure 9.1 shows a typical listing for Disney.
A good number of investors use a short-hand approach to reading stock tables. They find the company name and look at the far right column to answer the question: Did this stock go up or down today? This is an easy trap, because it is so visual and immediate. The day-to-day results, entirely technical, give you a quick method for scorekeeping that satisfies the urge to know—right away—whether this was a good day or a bad day on the market. The easiest way to judge this is to determine whether your investment capital is worth more or less than it was yesterday.
In the example provided, each share of Disney stock gained 43% cents. That is what a gain of seven-sixteenths means in terms of dollar value. So if you own 100 shares, you earned $43.75 on the day. What does this mean? If you are holding the stock for long-term appreciation, it means very little—not only because it is a momentary and rather minor change, but also because on a day-to-day basis, stocks go up and down in value. Information is relative, and value is relative as well. Of greater concern to the long-term investor is the determination of whether or not this particular company continues to represent an investment worth keeping. The daily stock listings provide some information, but not enough of the right information. This is yet another source of data that you can use as part of a larger program. As a stock market investor, you need to know how to read these listings, and not just the rise or fall on a daily basis.

FIGURE 9.1 Stock Listing
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rKEY POINT
Don't make the mistake of using stock tables only to track daily price movements. There is much more in the stock listing than price change, and you need the range of information to properly monitor your investments.

Figure 9.2 expands the listing by explaining what each entry on the line shows. Each listing contains a lot of information that you can use for tracking and monitoring purposes. One of the pleasures of stock market investing is that you can watch your investment's value change from day to day. This is rewarding and exciting. In comparison, owning an investment like a piece of real estate is less satisfying because there are no daily listings telling you what your property is worth. It may well be that the broad-ranging popularity of the stock market is connected directly to this day-to-day reporting of higher or lower values.

FIGURE 9.2 Stock Listing with Explanations
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136 Mastering Fundamental Analysis


What each segment shown in Figure 9.2 reveals about a stock is explained below:
•   High and low trading range during the last 52 weeks. This is a summary of the price range over the past year. It lets you see, at a glance, the historical trading range of a stock. This shows not only the breadth of the trading range, but also that range in relationship to the stock's current price level.
•   Name of company. The name or abbreviated name, the guideline being space. For example, the name Minnesota Mining and Manufacturing Company is too long to squeeze into the limited space; so in stock listings, this company is abbreviated as MinnMngMfg.
•   Trading symbol. This is the symbol used in placing trades and reporting activity.
•   Annual dividend per share. This is the dollar amount paid per share on an annual basis. If dividends are paid quarterly, the last four quarters are added together for this figure.
•   Dividend yield. This is the portion of return on investment from payment of dividends. It varies every day as long as the market price changes, because it is calculated by dividing the latest reported annual dividend by the stock's closing price. The formula is shown in Figure 9.3. The result in the figure, .6, represents six-tenths of one percent.


FIGURE 9.3 Dividend Yield (rounded to one decimal)
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PE ratio. When you are reviewing and monitoring a stock, remember that everything is relative. This is true of the price-earnings (PE) ratio as with everything else. If you are monitoring a number of stocks, it is instructive to track the changes in PE ratio from day to day, and the differences in PE ratio from one stock to another.
Volume of shares traded. This summarizes the day's trading volume in hundreds of shares. For example, the illustration shows volume of 14756. This means that 1,475,600 shares were traded that day. One indicator of market attitude toward a stock is to compare volume levels with trading range. As a general rale, you will notice that large price movements often are accompanied with exceptionally high volume; whereas little or no volume is reflected in slight movement in price. A company's stock shows great strength if its price trades in a relatively narrow range even with a heavy volume.
High and low price range. This shows the day's trading range, which is useful because a comparison of breadth to closing price tells you whether the stock tended to rise or fall toward the end of the day. It further demonstrates market interest in the stock, especially when viewed in combination with volume levels. Also remember that each one stock has its own typical trading range and volume. Closing price. This is the most popular information for most investors, who want to know whether their stock went up or down today.
Net change. This reports the change in stock price from the previous day's closing price to today's.