How to Understand the Stock Market Tables & Charts

Stock market charts provide valuable information.

The stock market can be a good place to invest, especially if you take a long-term view. While the stock market suffers from periods of breathtaking volatility and severe drops, it also provides excellent opportunities for growth and double-digit returns over time. Those investing in the stock market for the first time, as well as those seeking to enhance their returns, should first take some time to learn about stock market charts and tables.

Things You'll Need

• Financial newspapers
• Annual reports

Instructions

1. Purchase a few financial publications, like the Wall Street Journal, Investors Business Daily and Barron's. These publications all contain extensive stock tables investors can use to review stocks and assess their relative investment benefits.

2. Choose a few stocks to focus on and research in more depth. You can choose the company you work for, the manufacturer of a product you love or even your favorite fast food restaurant. The key is to choose stocks in which you have a personal interest---this will make the research more interesting and encourage you to stick with it.

3. Find the ticker symbols of the stocks you want to research. You can look up the ticker symbols at websites like CNN Money and Yahoo! Finance. Locate those stocks in the stock tables of your favorite financial newspaper and circle them.

4. Locate the annual earnings column in the stock table, then find the current stock price. Divide the current stock price by the annual earnings. The result is known as the price/earnings ratio. Review the price/earnings ratio of several stocks to see how they compare with one another, and with other stocks in their industry. For instance, comparing the price/earnings ratio of two separate restaurant chains or two different oil companies will provide more relevant information than comparing the P/E ratio of a small restaurant chain to that of a multinational oil company.

5. Find the 52-week high and low for each stock you research. The 52-week high and low points provide valuable information about the volatility you can expect going forward, as well as the volatility the stock has experienced in the past. For instance, a stock that has a high of $100 and a low of $10 is likely to be much more risky than one with a high of $15 and a low of $12. It is important to consider the potential for risk and reward when investing in any type of stock.

6. Request an annual report from the companies you are focusing on. Turn to the earnings table and review the current and prior year earnings. The earnings growth of a company is a very important indicator of its stock price, with companies that are able to show strong year over year earnings growth generally more valuable than those whose earnings are flat or declining.

References

• Investopedia: Price Earnings Ratio