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Finance: What is the Historical Trading Range? 18 Views
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Description:
What is the Historical Trading Range? The historical trading range is just the collection of prices a security has been trading at since its IPO in the case of stocks or since it was listed on an exchange, in broader terms.
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Transcript
- 00:00
Finance, a la shmoop. What is a historical trading range? All right you know how [The question written on a blackboard]
- 00:07
some Wall Street words are arcane, uh no arcane.. they say one thing but they mean [Pong being played]
- 00:14
something entirely different? Yeah well this is not one of those times.
- 00:18
Historical trading range, darn well you could say that AT&T has had a historical [AT&T tower]
- 00:23
trading range at a given price largely because well here's its stock chart for
Full Transcript
- 00:27
the last umpteen years and you can see that it hasn't really moved sort of [AT&T showing a fairly consistent price over time]
- 00:31
lived between 30 and 40 bucks a share more or less forever it seems all the
- 00:35
investment gains to AT&T shareholders came through the company paying massive [Definition of dividend written on a 100 dollar bill]
- 00:39
dividends but historical ranges aren't just about stock prices alone like
- 00:44
here's the historical trading range of the price to earnings ratio of the S&P
- 00:49
500 so this chart shows the range of p/e multiples from 1880 to today ish and [Arrows showing the date range on the graph]
- 00:55
note that the lion's share of multiples lived in this band from about ten times [Lion's head appears]
- 00:59
to about 20 times and this was the range of multiples in yes there were outliers
- 01:04
like down here in the dumps after the economic hangover post-world War two [Man welding in a workshop]
- 01:08
repair work and then up here as well where earnings were actually very low
- 01:12
like one-time low so the price to earnings ratio was very high right like [Arrow pointing to the highest peak on the graph]
- 01:17
all the companies missed their numbers horribly went negative and stuff
- 01:20
all right like the company used to trade for 20 bucks a share and earned a dollar
- 01:24
well it might have had in that short period only a dime of earnings when
- 01:27
everything went bad and the world was ending but the stock went down 40 percent to [Picture of a city on fire]
- 01:31
12 bucks and on a dime of earnings while that 12 bucks seemed like a huge
- 01:35
multiple at 120 times but Wall Street knew the world wasn't ending and things
- 01:39
did come back and well here we are doing this video, so the short lived things get
- 01:42
tossed out and when you look at ranges you look at their history not just one [Bag labelled 2008 recession is chucked out the door of a house]
- 01:46
moment in time but decades in the past and you think about the ranges and what [Highlighted area on the graph going further back in time]
- 01:51
it implies in the future if anything and when in doubt yes you just sing Oh home
- 01:57
on the range, where the price to earnings ratio [Girl sat next to a fire with a guitar singing]
- 02:01
plays, or something like that historical trading range that's what it
- 02:05
is go check it out...
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