Now that you've learned about stock symbols and how to find them, let's look at how to determine which stocks you want to buy based on your analysis of financial information.
There are endless ways to analyze stock market information; countless valuation theories and trading systems have been created to attempt systematic profit generation from the stock market. Alas, there is no crystal ball, no hard-and-fast rule you can follow to guarantee success 100% of the time. However, the goal of every investor should be to make logical investment decisions they can be comfortable with.
A key component in any investor's decision-making process should be a keen analysis of available financial information - from the business and markets sections of newspapers to websites to financial news providers. Most online brokerages offer detailed quotes and research material to their clients, and the Investopedia Simulator is no exception.
Let's work through a basic analysis of a detailed stock quote for well-known technology company Apple Computer Inc (Nasdaq: AAPL).
To analyze the current condition of Apple shares, type in 'AAPL' in the "Quotes" field, which is located on the top part of the page, and then click on "Get Quote".
You should now see AAPL's stock quote page:
On the main quote page, you can see what the overall sentiment that Investopedia users have regarding the stock and the 6 month chart of stock's performance.
Let's briefly touch on key pieces of information available in the heading section of the page.
Charts show a graphical summary of the stock's past performance and trade volumes over different time spans.
Option Chain shows all the option contracts that a specific stock possesses (more about options will be explained in a later section)
News contains all the applicable links to all the news stories and commentary that involve or mention the company that you are looking at.
Historical is where users can look up a stock's past trading volume, opening, high, low and closing price information.
Executives will direct users to a page on Forbes that will disclose who the company's major executives are, their age and the cash compensation they are receiving.
Earnings will direct users to a section of Forbes that reveals information regarding the company's valuation and earnings information.
Ratios disclose important financial metrics (such as the company's profit margin, current ratio and return of assets, among others).
Income Statement, Balance Sheet and Cash Flow will allow users to access each component of the company's financial statements, respectively.
Now that you have a handle on the resources that you have available to research a company, you're probably asking yourself, "Great, now how does this information tell me what stock will be the next winner?" Unfortunately, a quick look at a few numbers will never tell you the entire story, but what it can do is provide a great starting point. We can't possibly fit every common analysis technique into this short lesson, but we encourage you to read through our educational content.
A few of our favorites are:
Stock Basics Tutorial - an excellent rundown of equity finance principles.
Investing 101 - an overview of the importance and nature of financial planning.
Five Investing Pitfalls To Avoid - a must read for new investors!
Guide to Stock-Picking Strategies - a first-rate tutorial that looks at some of the most common (and successful) methods for selecting stocks.
Now that you've gotten your feet wet with financial data, it's time to put your stock analysis skills to use.
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