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The key to picking stocks is to deal with an investment advisor, look on the Internet for trading companies that offer free information on specific stocks or be aware of new trends," says Dana Nelson, a senior financial advisor with American Express in Ann Arbor, Michigan. If, however, you are unable to use an investment advisor or just want to "do it yourself," Nelson offers the following steps to reading the stock tables:
- Read the tables from right to left, starting with the net change column.
- The net change column will give you an idea of which stocks are going up or down.
- The next column, called the close column, shows what a stock’s price was at the end of the day.
- The high and low columns show a stock’s average or trading range for the day.
- The volume column shows how many stocks were sold on a given day. If the number is high and the stock price is rising, this is a good stock to purchase. If the volume is high but the net has dropped, people are selling the stock.
- The next column to the left shows the price-to-earnings ratio (P/E). If the number is high, then the stock is expensive. However, a stock with a high P/E is not always considered a good buy because it could be overvalued and will have to make money to justify its high P/E ratio. If a stock with a high P/E ratio doesn’t make enough money, the price will eventually drop. Therefore, it is best to buy stocks with a low P/E because there is potential for monetary growth.
- The last two columns show the symbol and name of the stock (with the 52-week high and low, which shows the price range in which the stock has traded over the previous 52-week period).
- In addition, it is best to read the explanatory notes, which begin before the stock tables, for further assistance.