Understanding Investment Data

When you first start investing, one of the most important things you do is research everything. Your potential holdings, your current portfolio, the overlying market – any and every piece of data is fair game. In doing so, you’ll likely be bombarded with truckloads of unfamiliar terms and concepts. Learning to decipher and understand all of this investment data is key to becoming a well-learned, successful investor.

When you’re trawling the internet for your next acquisition, you’ll also likely examine the stock charts of relevant securities to accompany the numbers. In fact, many of these charts will include a breakdown of the stock using a vast variety of investment data to give you a comprehensive view at a glance. This means that interpreting these charts isn’t difficult – but you have to know where to get started. 

The overabundance of unfamiliar terms and numbers can be intimidating and exasperating at first. There’s nothing more frustrating for a learning investor than finding a great “tell-all” article…written in a language you can’t understand.

Once you get the hang of it, however, investment data like the terminology, charts, and economic concepts make it easy to select, analyze, and build your portfolio. Learning the mechanics and gaining exposure are key to understand what it all means – and Qai is here to help.

The first thing to do when you’re researching investment data is gain an understanding of the basics. Learning the jargon (and a few mathematical formulas) is an excellent place to start. Whereas the medical field employs words such as cardiovascular and dosage, finance has the likes of market capitalization and P/E ratio.

Let’s break down a few of the most important terms you’ll need to know as a successful investor. Whether these words show up in your stock charts or your latest research about Apple’s domination in the market, you’re guaranteed to run into each sooner rather than later.

P/E Ratio

The P/E ratio is commonly used in the investing world as a metric of a company’s current worth. Typically, investors use this ratio to compare a company against itself, although you can also compare apples to apples (or Apple to Microsoft).

To find a company’s P/E ratio, you simply divide the company’s current share price by its earnings per share (EPS).

Generally, a high P/E ratio indicates solid growth potential (or an overvalued stock). It’s also possible for a company to falsely manipulate their P/E ratio to inflate their performance in the market – so investors should take heed not to take an extraordinarily high P/E ratio at face value.

There are two main variations of the P/E ratio that investors find useful:

  • Forward P/E Ratios use predictions of future earnings to calculate a company’s potential for growth
  • Trailing P/E Ratios use past data to analyze a company’s past performance


Earnings per share, or EPS, is another calculation of a company’s profitability when it comes to investment data. The higher a company’s EPS, the better the company is doing – at least on paper. To find EPS, you simply divide the company’s profits by the number of shares in the hands of investors (also known as shares outstanding).

Another way to look at EPS is a measure of how much profit the company rakes in per share of stock. While this number doesn’t guarantee future profits, it can paint a picture of where the company currently stands.

It’s important to note that a company can also manipulate its EPS, though not always for unscrupulous reasons. For instance, a company may adjust its EPS to account for the fact that they diluted their stock or ceased funding for a project. 

Opening and Closing Prices

Opening and closing prices can come in handy for both day traders and long-term investors, depending on the time frame you view. This investment data metric is helpful in hinting toward increased market interest or a reflection of the news cycle on the stock in question.

These terms are exactly what they sound like – opening prices are the first price of the trading day, while closing prices are the last. However, if a stock trades after-hours, the closing price on one day and opening price on the next may not be the same.

Simple Moving Average vs Exponential Moving Average

A simple moving average, or SMA, is an arithmetic calculation of closing prices within a set period. This number can be useful in projecting future price movements of the security in question. SMAs are frequently used as a technical indicator in determining whether an asset will continue or counter bear or bull trends.

An exponential moving average, or EMA, is another arithmetic calculation that highlights the significance of recent data. Because of this, the EMA is also called the exponentially weighted moving average. This technical indicator is used by investors to determine whether they should buy or sell securities.


A stock’s volume is investment data that simply refers to how many shares changed hands in a given time frame. By taking the volume over the course of a day, or the average over the course of some weeks, an investor can see how market interest fluctuates over time.

Volume is a direct measure of market activity and liquidity; typically, more liquid stocks move more often. However, high market interest is not inherently positive or negative, so it’s important to examine the underlying reason a normally sedentary stock begins to post record-breaking volumes.

A great example of this is the 2020 pandemic crash, during which many companies posted extraordinarily high volumes. While market interest was certainly skyrocketing, it was primarily due – at least initially – to panicky investors looking to dump their shares, which then flooded the market overnight.


Yield is the income return on an investment from dividends or interest payments. Income-oriented investors typically choose securities that return higher yields to boost their annual intake. You’ll often see yield expressed as an annual percentage regardless of how often payments are made throughout the year.


A dividend is the money paid to investors who own shares of a particular stock. This money comes from the company’s earnings, although not every profitable company pays dividends. The power to hand out this type of return rests in the hands of the Board of Directors, who vote to set how often and how much investors are paid. Dividends may be paid in cash or shares of additional stock.

Market Capitalization

Market capitalization, or market cap, is calculated by multiplying a company’s outstanding shares (the number of shares circulating among investors) by the current price of a single share. In simpler terms, a company’s market cap is how much money a single investor would pay to purchase every share of a company’s stock.

In investing, a company can be classified as:

  • Small cap – worth between $300 million and $2 billion
  • Mid cap – worth between $2 billion and $10 billion
  • Large cap – worth over $10 billion

A large cap company may not necessarily perform better. But they are typically well-established and have a lot farther to fall in case of emergency.

Compound Interest

Compound interest is how your money earns money. Simply put: when you invest money in the market, that money earns interest. When that interest is added into your principle (compounded), you can then earn interest on your interest. Depending on the specific investment, your interest may be compounded one or more times throughout the year.

Terms to Know: Broader Economic Analysis

Once you know the basics of investing in securities, it’s important to analyze broader economic data and trends. You may not be unable to determine the extent of the impact these metrics have on your portfolio. But knowing they’re there can help you combat volatility in your portfolio.


Simply put, inflation is a sustained increase in consumer prices over time. For instance, if your gallon of milk cost $2 in 2000 and $4 in 2020, that’s inflation at work. You may have also heard of inflation as the eroding force on a nation’s currency over time. It’s the force responsible for the dollar having less purchasing power now than 20 years ago.

While the causes and effects of inflation are complex, they irrefutably impact the market. Investors who keep a close eye on PPI and CPI are measuring inflation. An increase in the cost of production or consumer goods is a potential sign inflation is on the rise.

When it comes to securities, inflation can either be used or use you. For instance, many types of bonds lose their value over time due to the effects of inflation. However, some Treasuries are designed to account for inflation upon payout. If you’re worried about the effects of inflation on your portfolio, it may be wise to look into inflation-resistant securities.

Consumer Price Index

The Consumer Price Index, or CPI, measures the weighted average of prices within set market baskets. For instance, you can take the CPI of food, clothing, or transportation sectors, to name a few. It’s also possible to measure CPI more broadly.

For instance, the CPI-U measures the weighted average of urban consumers, while the CPI-W accounts for consumers within specific worker sets.

CPI is useful in tracking, predicting, and gauging inflation and deflation within the economy. As a result, CPI is also closely tied to the cost of living within a country’s borders. When it comes to investing, CPI is most useful for estimating returns on an investment over a period of time.

Producer Price Index

The Producer Price Index, or PPI, measures the average selling prices of domestic products. It differs from the CPI in that it calculates costs from the producer (industry) standpoint, rather than the side of the consumer.

Typically, the PPI is used as an objective tool for adjusting prices in long-term purchasing contracts. Investors use PPI as one of many components to make financial decisions when trading stocks or betting on a particular company’s performance.

Gross Domestic Product

Gross domestic product, or GDP, is an important indicator of an economy’s health. GDP represents the sum of what a single economy produces over a set period of time. GDP is linked, to a degree, to inflation, unemployment, and market recessions.

When GDP falls outside of certain predictors – or when a deadly virus spreads around the world and GDP crashes unexpectedly – investors can expect to see some volatility in the market.

Bull vs Bear Markets

Bull and bear markets are blanket descriptors of current market conditions that can be useful in market analysis.

A bull market is a market on the rise, so named because bulls use their horns to push up hard and fast. Typically speaking, although not always, bull markets go hand-in-hand with a strong economy with good employment rates and a solid GDP. During a bull market, securities and indices are growing, or at least stable, in value.

On the other hand, a market is a “bear market” if stocks have fallen 20% or more in a set period of time. These are so named for the way bears use their paws to slam down on their prey. While buying during a bear market can lead to greater returns as the market regains its value, it’s also riskier because stocks are more volatile with no guarantee of returns anytime soon. If a bear market lasts too long, companies may lay off employees or take other risk-averse measures to protect their sustainability.

What Do Stock Charts Mean?

Once you have an understanding of these basics, the next step is to learn how to read a stock chart. For the experienced investor, a quick glance can give insight into the company’s recent activity and financial performance beyond the chart itself, as many sites also post data on the side to build a more comprehensive picture.

Let’s break down an example using Apple stock on Marketwatch.com.

Example 1: 1-day Charts

When you look at the chart below, you’ll notice that the x-axis reflects the time of day, while the y-axis marks the price points at which the stock traded. You’ll also see a squiggly blue line that shows how the stock’s price rose and fell throughout the day. Marketwatch also shows you when after-hours trades began.

In the case of Apple’s stock, you can see that the price increased about $15 on the day in question (6 August 2020). This comes out to about a 3.5% change.

While looking at the chart will show you this data, you can also see the final percent change on the left-hand side of the chart, along with the opening and closing prices. Beneath the chart, you can also view the volume change over the day and the average of the last 65 days, as well as price ranges over the day and the last 52 weeks.

Example 2: YTD Charts

The first example chart only covers a few hours. However, a one-day chart doesn’t give much information unless the stock has a major shift throughout the day – and even then, massive swings aren’t likely to last for long.

That’s when changing the time period on a chart comes in handy.

Marketwatch allows you to view various increments from one-day to all-time. This allows you to get a more comprehensive view of the stocks in question.

This next example shows what it looks like when we change the chart to view Apple’s stock YTD (year to date). You can see how Apple’s stock was plugging along at the beginning of the year – and then plummeted almost $200 when the pandemic market crashed. Since then, Apple has far and wide outperformed itself and the market, increasing over $100 more than its starting price point for the year in a few short months.

Switching between dates allows you a more comprehensive look at how the stock actually moves. One-day indicators can be deceptive. And they can cause good traders to make bad decisions.

Example 3: 3-year Charts

The longer time frame you choose, the better your view of the company. For instance, Apple’s 3-year data shows that the stock has a history of jumping up and slumping back down once more.

You’d have to dig deeper to find out the exact cause of the fluctuations. What the data can tell you is that Apple’s stock will likely perform – eventually. While there’s no such thing as a guarantee in the market, viewing longer patterns like this can ease investor concerns.

Example 4: Key Data

If you scroll down a little further on Marketwatch’s page, you’ll also see many of the investment data metrics we covered above. They’re laid out nice and neat. This auxiliary data shows information found in the charts. Like the opening price, price ranges, and the average volume.

This investment data chart also offers new information. Like an impressive market cap and shares outstanding, the EPS and P/E ratio, and the yield and current dividend. Learning what numbers are average or excellent for Apple – and the industry – will take time and exposure. But having the numbers broken down by the stock’s chart proves invaluable for many investors.

Keep in Mind, Though…

When you analyze a stock chart, even with the extra data, you’re still not getting the whole picture. Price fluctuations do not a story make – and in the world of finance, the story is often what’s important.

To that end, it’s important to remember a few key points about stock charts and investment data:

  • Stock charts show price point fluctuations and other mathematical analysis. Researching why stocks move as they do is up to you.
  • It’s normal for a stock to swing – sometimes even dramatically – in the short-term. Stocks are volatile because they follow human decisions and emotions. Therefore, examining positions in-depth before trading is key for long-term investors.
  • What looks like massive movements on the chart may only be fluctuations of a few cents. This is depending on how much the security is worth. Always look to the y-axis to see how far a stock really dropped.
  • If you’re a day trader, looking at one-day fluctuations may make a lot of sense. If you’re a long-term investor, however, making decisions on one-day movements will only misguide your trading strategy. Plus, it’ll cost more in the long run. Always adjust your investment data charts to analyze a relevant time period, rather than an insignificant time frame for your needs.  

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