After five years of Equity Mates and three years of Get Started Investing we’ve built a back catalogue of more than 700 episodes. Bitesize is our opportunity to share some of our favourite moments, lessons and quotes from both Equity Mates and Get Started Investing.
Today Bryce and Alec revisit some of the jargon we get stuck on and define these common terms.
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Alec: [00:00:06] Welcome to bite sized on Get Started Investing feed. In this series we feature some of our favourite lessons, quotes and moments from the podcast. If you'd like to listen to the full episode, we've included the link in the show notes. So another important one is earnings or earnings per share. Very simply, think of earnings as profit. Think of it as the money the business takes home after it's paid, its employees paid, you know, all its business expenses, paid its debt, paid its tax. What's left is its profit. And then that. If you divide that by the number of shares on issue, you can get your earnings per share. And so the way that's important as an investor is if you paid $10 for a share and the company made $5 in earnings, then, you know, you've done pretty well for yourself because that's a 50% return on your investment. You paid $10 and your share of the company that you own returned $5. Now, unfortunately, sometimes you don't see that. Sometimes the company keeps doing whatever it wants next year. But, you know, your share of the investment returns 50%. So you'd be pretty happy if you got that.
Bryce: [00:01:31] You would be stoked.
Alec: [00:01:33] Yeah.
Bryce: [00:01:34] Another one, Ren, to keep an eye on and to understand is trading volume. And that is a pretty important thing to understand when you're trying to make a decision on a daily basis on whether or not you can buy and sell. So generally speaking, trading volume is the total quantity of shares that have been traded for that particular stock on that day. You can find it on any sort of financial summary for the stock that you're picking. So I've got Tesla up here and I can see that for the last period that it traded, it had 5.83 million shares traded for the day. And so if you can dig a little bit deeper and understand the supply and demand of that, it can give you a good idea if it was a lot of selling action or a lot of buying action coming in. It can give you an idea of how in-demand the stock is. It's a little bit more for the advanced investor. Advanced investor, but something to try and keep an eye on. Something else you'll see in terms of volume on your summary is average volume. Tesla has an average daily volume of 7.2 million shares a day. So it actually was trading below its average volume, which can give you an idea of how in-demand the stock is as well. If you enjoyed that bite size, you'll find a link to the full episode in the show notes.