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Stocks – Some Real World Data

Stocks - Some Real World Data
5.4
So welcome to some data. As I said I could stay here forever, but I want to quickly show you some kind of statistics. Go to Yahoo!, finance.yahoo.com. You can go to your own home sites. I'll stay with the US one, so that we're on the same page for everyone. Because I can't go to yours, I don't know where you are. May the force be with you but I don't know where you are. So the first thing that jumps out at you is the fact that stocks are talked about all the time and the chain as the graph is up there. So right now I'm seeing a S&P 500 Dow NASDAQ. What is that S&P 500?
41.7
S&P 500 is a combination of 500 stocks valuated. Meaning that you're gonna combine things, you could rate them equally. But it S&P weights them according to their equity value. So Microsoft, Google will get more weight, right? Makes sense. Then there's Dow. And Dow is a bunch of 30 stocks. And I'll show you some data in module six more so. And it's around 17,565. I look at it every day, simply because it shows up. But it's an indicator of what the largest 30 stocks as a portfolio are doing. And so, depending on where you invest it, you look at various indices. And portfolios are good to look at.
87.4
Because portfolios are what you [COUGH] invest in if you're risk averse, and I haven't seen anybody who's not. NASDAQ is an exchange on which many famous companies are traded, and it's value right now is 5,098.51, it's changing as we talk. So it's fascinating. So you see collections of stocks on the very first page. But then there is a tab on the left which says My Portfolio. You can create your own and you can track it.
117.7
Quotes you can do. I'll just press market data and see where it takes me. And it takes you again to market performance. But then it lists some companies, Bank of America is there, stock price is there, and so on, so forth. So I will go to AAPL, just to see what's going on. And AAPL is one of the biggest companies, one of the most known to be innovative companies. So it is trading right now at $118 per share, okay? And you may obviously you'll be looking at it at a different time, and it'll be different. But that's not the point. The point is, what kind of data is given here. So the data I'll stay on is big picture.
164.4
So this previous closed, that has been the market closed yesterday. Then the open, meaning when the market opened, what the price was. The previous closed was 118. Now it's about 117.5. Then the bid and ask are prices at which you either buy or sell, from whom? The broker who's willing to make the market. So the broker is saying I can sell you at x and I'll buy from you at y and so on so forth. First year target estimate, 148. This is some kind of an estimate. The next number is very cool but we haven't talked about it. Remember I told you high risk high return? What modern finance theory has come up with the concept of beta.
209.1
And beta is that component of risk that remains once you are diversified. So think of Apple. If you're only holding Apple by itself, which you'll never do because you're risk averse, then the measure of risk is the variance. How much it's bouncing around, and you can see on the graph, roughly get a sense. But if you put in a portfolio, the measure of risk changes completely. Because it's always in the context of a larger portfolio. And turns out that its risk is about as much as the market, because the market's risk is one. This is beautiful measure, beta. It's got a Nobel Prize, effectively. So it's about .9937 right now. Now this number, by the way, is estimated.
253.8
So, unlike the other numbers, it could vary depend on how you estimate it. And typically you use a fair amount of data, you do it pretty rigorously. On Yahoo Finance it's probably two years worth of data is used and that's not sufficient but at least the reports give you a sense of risk. Days range is given in prices, 52 week range. Volume, is number of shares traded. Actually that number's extremely interesting to me. Is because I don't worry when the stock price falls. I get very worried when the volume falls to zero, which has happened. And there has been extreme price movement, right? So black Monday or a crash. Why is that bothersome?
295.7
Because if trading is not happening that means people don't have faith in the market and that in some sense is more bothersome. Prices keep going up and down. This market cap, what does that mean? Market cap means price times number of shares. So, it's a very simple. And right now it's a big, big number. $658 billion. [LAUGH] Lot of money. Okay, PE ratio is price over earnings. Now, we know both, we have talked about earnings per share, we know price. However, the number reported here is affected by accounting ways of measuring earnings, which as I said, not the ways that we have talked about. To understand more of that, you'll have to do accounting, do more finance classes.
339.7
And then you have dividend, how much dividend is being paid? So this is interesting too. We just talked about dividends. And the dividend is $2.08 per share. And a dividend yield is how many dividend divided by price? You see what I'm saying? So it's trying to get a sense of what the yield is, dividend yield. And thus, such data is reported all the time and available everywhere. I will do one more thing and then we'll stop. You can press key Statistics, which is on the left panel. And I think I pressed it and it's going to come up in a second. What that report is even more information about a company.
384.3
The balance sheet, all kinds of financial ratios, all kinds of mode information about volume, about price movements over the past year and so on. But most importantly, which is different, is it give you both information about the business. What are revenues? What are profits? They're listed. But they also give you information about the balance sheet. And balance sheet has basically as you, saw both the equity and the debt. The one reality about debt is that it doesn't trade as often as equity. So the debt numbers you see on Yahoo Finance are trying to measure the book value of debt, which is equal to market value only the day of the issue.
426.4
And after that market value changes, with interest rates, with probability of default, whatever, but the book value doesn't change, right? So that's a little bit problematic. On the other hand, market value, very easy to figure out, right? It is price times number of shares. And it is listed right up there. Right now, 657.83, it's changing, billion dollars. I hope you enjoyed this section. Stocks are one of my favorite things ever created. They reflect the beauty of finance, the beauty of life, and the beauty of trust in the future. Growth is good if it creates value on a net basis. And it's important to study growth very carefully, because it can be good or bad.
475.2
May the force be with you and we will end this module. And you can please start doing assignments if you haven't already. Of course its up to you when you do them. And they allow you to take as much time as you want the assignments do. But doing them almost is a necessity to learn. Any amount of number crunching or problem solving I do, will never teach you what you need to learn, unless you do them yourselves. See you next time.
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