How to Become an Investment Ninja (Part 1)
Now that you know that the stock market is not as difficult to understand as you may have thought and that you really don’t need that much money to get started… what do you do?
Before you start beating yourself over the head for not realizing this sooner – and giving your financial adviser carte blanche to do whatever he wanted with your money – let’s talk about how you can start learning how to invest.
With Pitly, along with the bite-sized lessons, you can also play around with $250,000 of cold, hard, (fake) U.S. greenbacks. Now, you can do just about anything with that (again, fake) money. You can buy a bunch of shares of companies you know like Apple, Facebook, Google. Or you can be a little more sophisticated and look at the fundamentals of those companies before you buy them.
Starting with companies you know is not a bad strategy. You kind of have a sense of what they sell and how they make money. That’s a much better strategy than looking at a biopharmaceutical company if you’ve never worked in that field or don’t know how the FDA (Federal Drug Administration) drug approval system works – without which, no drug enters the U.S. market.
When that strategy starts to turn sour, is when you don’t really do much else other than having Googled something in the past hour or owning an iPhone.
Research and discipline are critical to a successful investment strategy.
My goal for this article is for you to be able to comb through all of the information that appears once you search for a company on the Pitly App.
It turned out to be too long a post for one sitting. I've split it into three articles so it's easier to digest.
In Part 1, we will cover the stock quote. In Part 2 will go over the Balance Sheet and Income Statements and finally in Part 3 we will review Ratios.
Let's get started!
For this exercise, let's look at the Tesla (NASDAQ:TSLA) stock quote. The quote below is as of closing bell August 8, 2017
First thing you see after the company name is the Ticker Symbol (TSLA) and the Current Price ($365.22). Since this was after the closing bell (4:00pm Eastern Time), this is the day's closing price.
Following that, is a stock chart. In this case you are looking at the chart for one month (1M). This also shows the highest and lowest closing prices for that period. You can see how the company is doing over time by simply clicking on 1D (one day), 1W (one week), 6M (six months), or 1Y (one year).
Then comes the company description, which I suggest you read. You never know... you might realize something about the company you hadn't really thought about before.
Next are links to the Ratios, Income Statement, and Balance Sheet. We will get to those later. Stay tuned!
And finally, the moment you've all been waiting for... nope, not the end... The stock quote!
The quote is all the information you see in the gray box. The left side is info from the day's trading while the right side is more general data about the stock.
On the left side you will find the previous day's closing price (P. CLOSE), the current day's opening price (OPEN), the highest price someone paid that day (HIGH), the lowest price someone paid that day (LOW), and the day's volume (VOL). All of these are pretty self explanatory except for maybe Volume. Volume is the total number of shares that changed hands on any give day.
On the right side you'll find the company's market capitalization (MKT CAP), which is the total number of shares outstanding times the price per share. 52W HIGH is the highest price the stock has traded at in the past 52 weeks. The 52W LOW is just the opposite. The AVG VOL is the average volume for the last month. Average volume can really be for any period of time; however, it is typically shown as a monthly average. It is calculated as how many shares have changed hands in any given period divided by the number of days in that period.
That's it! Now you can read the stock quote!
Before you pull the trigger and buy, stay tuned for the next two post where we will go over a few more things you should look at. These are the Ratios, Income Statement and the Balance Sheet.
You're well on your way to becoming a smart investor. Keep it up!