Magical Numbers and Mysterious Letters

Growing up, I’d watch dozens of letters and colors on the “stock channel” whiz across the TV screen like a bunch of news headlines. These “headlines” turned out to be prices of businesses across the world. In my pre-teen brain I was thinking; What are these numbers? Why are there weird three and four letter “words” next to them? I hope we are having Pizza Hut for dinner tonight. Watching them update in real time was cool, but it took years to learn the impact stocks play in our everyday lives.

Stocks, Shares, and Other Fun Terms

For starters, the three to four letter “words” mentioned above are called ticker symbols. These are abbreviations for a company. Apple Inc. is abbreviated to AAPL while Tesla is abbreviated to TSLA. Every company has a unique ticker which identifies them in the marketplace.

Stock is a general term for “equity” or ownership in a business. A share is a nickname for an ownership “unit”. Think of a stock as a large cheese pizza cut into slices, and each slice is a share of that stock. When you buy a share, you are buying ownership of a company. As you buy more shares, your % ownership of the business increases. Shares/slices can be purchased during market hours, which, on the east coast, is 9:30am-4pm Mon-Fri.

Shares have a value attached to them. In Figure 2 below, we can see PYPL (PayPal) trades at $59.69 per share. If you want to own one share of PYPL you would need to pay that amount. This price changes all day long depending on supply and demand. Typically, if investors are buying shares, the price goes up. If they are selling, the price goes down. Today, there are more sellers than buyers for PYPL, so the price is down.

The positive or negative number next to the stock price is today’s price change (In Figure 2 this is -0.85). This is the difference from today’s current price and what it closed at on the previous business day. Based on Figure 2, we can see PayPal is down 85 cents from where it closed at yesterday (or Friday since today is Monday). If you owned 10 shares of PayPal stock, you would be down $8.50 in value today (.85 × 10 shares).

How Do I Buy and Sell Stocks?

Stocks are bought and sold on places called “exchanges”. One example of an exchange is The New York Stock Exchange (NYSE). In order to access these exchanges, you need to have a brokerage account. Some popular brokerages are Robinhood, Fidelity, ETrade and Charles Schwab. Opening an account only takes about 15 minutes.

Once your account is open, you’ll be able to search certain companies, do research, add funds, and buy shares aka ownership into businesses. At first, seeing all the numbers and information is overwhelming, but with time and patience you’ll get the hang of it.

Note that you can only buy/sell publicly trades companies. If you search for a company like Chick Fil A, you won’t be able to buy any of their stock since they aren’t public. If you search a brand/company and don’t see it, there’s a good chance it’s private or is owned by a larger corporation.

Personally, I use Fidelity as my brokerage and find their platform simple and easy to use. To open an account on their platform you can follow this link: Let's open your brokerage account – Fidelity Investments

Know Someone Who Would Love This?

The link below will take you to the magical land of learning also known as the landing page. If you were forwarded this email, you can receive this daily newsletter tomorrow by clicking that blue button below and sharing your email address.