Using Google Finance to Follow Stocks

One positive that has come out of this current recession is the growing interest that people have in the stock market. For better or worse, the fluctuations of the market and abnormal volatility over the last few years have attracted a lot of attention from people either looking to get in on the action or just trying to protect their investments. However, not everyone knows how to do either of these things properly.

Stock market investing, if done shrewdly, is a very rewarding experience. Not only can you make money from it, it also serves as a good social conversation starter. Knowledge and perspective about investing displays a level of sophistication beyond basic financial management. People will always be interested in knowing better things to do with their money.

Fortunately for you, the internet provides a wealth of easy-to-use tools for casual and serious investors alike. The best part is that a lot of them are absolutely free.

So maybe you aren’t ready to pull the trigger just yet and open an online investing account. What you can do is use popular portfolio trackers like Google Finance or Yahoo! Finance to watch stocks you’re interested in, but aren’t ready to put your money on at the moment.

The following is an in-depth look at Google Finance. If you’re interested (leave your comments below), we’ll cover Yahoo! Finance separately.

Basic Stock Information

You can find this information basically anywhere on the internet. Any site that provides a stock ticker will let you look up a quick snapshot of the company. It will usually include the following information:

• Current stock price: This is the price each share of a specific stock is worth at the moment. It is IMPORTANT that you distinguish between the real-time price and the delayed quote price. Some stocks that don’t trade on the major stock exchanges like NASDAQ or New York Stock Exchange will have a 15 to 20 minute delay on their quote.

• Range: The two prices here show the range in which the stock has been trading in for the day. It has the lowest and highest price that shares have traded. You can use this to gauge whether the share is pushing up, dipping down or settling in between.

• 52-week: This category shows you the range in which shares of the stock have traded in for the past 52 weeks. It is the same principle as the day range, but has more implication on where the stock is heading long-term.

• Market cap: The total dollar value of all outstanding shares a company has on the market. Market capitalization gives you an idea of how big a company is. When you hear terms like “Blue Chip Stock” or small-to mid-cap companies, they’re usually categorized by the size of market caps.

• Shares: The total number of outstanding shares a company has on the market. Multiply the stock price by outstanding shares, and you get the market cap.

• Volume: How many shares of the stock that have been traded. A stock with higher trading volume will experience less drastic price swings because it dilutes the impact of each trade. Stocks with low volume are more vulnerable to price manipulation by big traders.

• Dividend: If the company pays a dividend to its shareholders, this will tell you the payout per share and yield percentage.

• P/E: The price-to-earnings ratio is how most investors gauge the value of a stock. When you hear people say valuations are low or stocks are cheap/expensive, they aren’t talking about the price, they’re talking about the P/E ratio. To calculate, you take the price per share of the stock, and divide it by the earnings per share. You can use this to compare with other stocks in the same industry, but it isn’t advisable to use it to compare stocks in different ones because sometimes they don’t correlate.

• EPS: The earnings-per-share of a stock tells you how much each share has earned based on the company’s performance. It lets you measure the profitability of the company.

• Stock chart: There is also a graph that shows the stock’s price performance over a period of time. It is usually shown on just the day’s action, but you can expand and collapse to your desired time horizon. What’s interesting is it also plots points where news was released, so you can see if it had any effect on whether the stock price went up or down.

Going beyond just basic information on stocks, there are also other valuable resources you can use. There is a news feed for each stock on any press releases, news or analysis on the company.

You can also find out who the top executives are, other stocks in the same sector, key stats as well as filings to the Securities and Exchange Commission, income statements and the company’s balance sheet. All are valuable in determining the health and direction of a company and its stock.

Other Investing Tools

In addition, you can use Google Finance to sort through the stocks you want to follow and even maintain a portfolio of them to measure their performance over time. There are a number of ways to do this.

Stock Screener

If you know what you’re looking for, or even if you’re still trying to figure it out, this is a good tool to use. It essentially lets you filter out stocks that don’t meet your criteria.

For example, if you’re just looking for stocks that pay dividends, you can use the screener to only show you the stocks that do. You can also filter for higher or lower yields, depending on what you want, or sort through multiple criteria.

For instance, you want stocks to find only tech stocks that have a large market cap–set the sector and market cap criteria to fit your needs. You can do this for a number of categories, like stocks under $10 or stocks with a specific price change.

Portfolio

This tool allows you to follow the stocks you’re interested in the most. So instead of looking at each one individually every day, you can just open your portfolio and it is all there for you.

• Performance tracker: In addition to the basic information, you can also monitor the performance of your chosen stocks from a specific date to the current date, and it can calculate how much money you would have made or lost if you had invested in it. To do that, you would have to put in the appropriate information first, such as amount invested and so forth.

• Transaction log: You can allows keep a record of all your “transactions,” whether they’re real or simulated. This included when you bought or sold shares, which is more like when you started and stopped following a stock.

• Portfolio related news feed: This feature funnels all the news relating to stocks in your portfolio into one section for you to read.

• Import/export data: If you want your portfolio information on an Excel spreadsheet or other type of database, you have the ability to export all that information. You can also import information you want to input as well.

Getting Started with Google Finance

If this all still sounds complicated, don’t worry. It actually gets easier to understand as you go. There are countless people out there that taught themselves how to invest in stocks just by going out there and tinkering with free tools like this. Those people are known as “self-directed investors.”

Now, to be clear, knowing about your stocks doesn’t mean you know how to invest in your stocks. Knowledge is one thing, application of it is another. Tools like Google Finance and Yahoo! Finance are excellent in helping people educate and inform themselves about the market, but they aren’t replacements for actual financial advisers or professionals.

If you feel more comfortable having someone else manage your investments, seek professional advice. It would be nice, however, to at least know more about what they’re about.

So, do you invest in the stock market yourself? What investment tools do you use that have helped you?