The Handy Investing Answer Book. Paul A Tucci

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СКАЧАТЬ per second. The great significance of the invention of the ticker machine is that it enabled the dissemination of prices across a large audience. Stock prices could be known by buyers near real time, allowing the markets to become more efficient and competitive.

      What is a “ticker symbol”?

      A ticker symbol is a unique series of characters, as many as five characters long, that identifies the name of the investment actively traded on an exchange. For example, Google is known as GOOG on the National Association of Securities Dealers Automated Quotations (NASDAQ) exchange, and Ford is known as F on the New York Stock Exchange (NYSE).

      Why were these machines called Stock Ticker Machines?

      The machines were called ticker machines because of the distinctive ticking noise the machines made while printing the ticker symbol and brief information about the stock price, on thin paper called ticker tape.

      Specifically, what do ticker symbols indicate?

      When you see ticker symbols moving across a screen, they usually tell us several things. The abbreviated letters, of one to five characters in length, indicate on what exchange the stock is listed. Symbols that are from one to three characters represent companies listed on the New York Stock Exchange, while symbols that are four or five characters represent companies listed on the NASDAQ Exchange. What you often see after the stock symbol is a recent price, change in price, and, in some instances, the volume of shares traded. You still see ticker symbols today, and the above information floating across a television screen or monitor as you watch financial programming or peruse financial websites.

      What are “dividends”?

      Dividends are the distributions of profits or earnings of a company to shareholders of record. It is generally defined as a distribution of some of the company’s profit to a specific class of shareholders as determined by that company’s board of directors, and is usually issued on a per share basis. If you have more shares, you are paid more of the company’s earnings during the period set forth by the board of directors.

      What is a “blue chip stock”?

      A blue chip stock is a publicly traded company that is usually very large, may be distributing profits in the form of dividends for many years, is a leader in the sector in which it competes, has notable stability and growth, and has the ability to adapt to changing market conditions successfully.

      Where did the term “blue chip stock” originate?

      It is thought by many to be derived from gambling, specifically the card game “poker,” where in betting, the use of the blue-colored chips represents the most expensive chip at the table.

      When did The Wall Street Journal begin to publish a Dow Jones Industrial Average?

      The Wall Street Journal began publishing an average of the prices of stocks listed on the New York Stock Exchange in 1896.

      What is the Dow Jones Industrial Average (the “Dow” or “DJIA”)?

      The DJIA is a price-weighted average of thirty blue chip stocks traded on the New York Stock Exchange. It is often seen as a barometer of the health of the stock markets.

      How important is the DJIA to the investment community?

      The DJIA is widely regarded as the most important index to follow in the world. It broadly indicates stock prices and investor confidence.

Who picks which stocks are components of the Dow?

      The editors of The Wall Street Journal decide which companies should be included in the Dow. They search for a balance of companies reflective of the U.S. economy as a whole.

      Who created the DJIA?

      Charles Dow created the Dow, picking 11 stocks, then increasing this number to 12 stocks before publishing the average in 1896 that made up the Dow.

      How else do I use the Dow in order to analyze my portfolio?

      You may use the Dow in order to compare the performance of your stocks, bonds, and mutual funds, and ask yourself whether you are outperforming or underperforming the Dow. It helps to see this comparison over different periods of time in order to assess the success of your investment choices.

      What is the oldest company in the Dow?

      Of all the companies that composed the original Dow, only one—General Electric—remains today. General Electric has been a component of the Dow since 1907.

      What are some of the newest entries in the Dow?

      Cisco Systems and Travelers were added to the Dow in 2009. Nike, Visa, and Goldman Sachs were added to the Dow in 2013.

      How many times has the list of Dow companies changed since its inception?

      The Dow components have changed 99 times, including increasing the number of components from 12 to 20 in 1916 and increasing them again from 20 to 30 in 1928.

      Why are companies removed from the list of companies on the Dow?

      Individual companies that compose the DJIA are removed because of economic and managerial trouble. Others no longer offer a good representation of index components reflective of the American economy at large, and must be replaced by healthier, more representative companies. Still other companies tracked by the Dow are removed because their stock price is very low, and not as relevant as other firms in the average.

      This is the General Electric Building in Rockefeller Center in New York City. GE is the only original DOW company, first listed in 1907, still in existence.

      What are some of the largest percentage moves of the Dow?

      On March 15, 1933, the DJIA gained 15.34%. On October 19, 1987, the DJIA declined by 22.61%.

      Why are some stocks with low prices specifically removed from the Dow?

      Since the companies tracked by the Dow represent an average of the prices of shares in the securities that compose the index, stocks with lower prices tend to pull the average down, making the index less effective as a barometer of the market at large.

      Which companies have been recently removed from the Index?

      General Motors, Citigroup, AIG, Altria Group, Honeywell, Hewlett-Packard, Kraft Foods, Bank of America, and Alcoa.

      How much did the Dow fall at the onset of the Great Depression?

      On October 29, 1929, at the onset of the Great Depression, the Dow Jones Industrial Average plunged more than 11%, to 230.07 points. The average had hit a peak of 381.17 the month before, but would not reach this number again until 1954.

      What are some other notable dates in NYSE history?

      In 1987, the DJIA plummeted more than 22% in one day, yet the next day, the volume of shares traded (600 million) created a new volume high record. By 1997, daily trading volume of shares exchanging hands reached one billion. In 2001, in the wake of the World Trade Center attack, the NYSE was closed for four sessions, the longest period of time the exchange was closed since 1933. Yet when the exchange reopened on September СКАЧАТЬ