Using Historical Stock Values

If it were as simple as looking at historical stock values, everyone would make money on Wall Street, and there would be no need for investors. Unfortunately, there are dozens of other factors that play into how stocks do: current management, new trends, world events, and market reaction. But historical stock value is invaluable as one tool out of many for gauging your stock's future performance. Nowhere is this more evident than in a blue chip stock. These stocks, like GE, Colgate-Palmolive, and Johnson & Johnson, have performed well in the marketplace for many years. But not only has their historical performance been excellent, they also are known to have the most talented management and the most visionary business plans, as well as fiduciary stability and the highest rated credit. Historical stock performance for other companies may be less predictive. For instance, in the 1990s, hundreds of Internet stocks started performing very well indeed, along with technology stocks. And with a booming economy, there was money for not just large investors but for the average investor to throw at the dot-coms. Well, everyone knows where that went. Even with five or ten years of great performance in the marketplace, many of them went down the toilet really fast when the bubble burst. To intelligently gauge historical stock performance against future stock performance, use your brain. Is it a product that is unique? Will it add value to people's lives, and is it likely to make more money for companies than it will cost them? Does it have a great marketing plan? Does it have industry buzz? And do the executives in place have a great track record, preferably at other companies in a similar industry? If all these answers are yes, and it has a historical stock value that looks good, you may have a winner. But how do you find historical stock value? Many companies post this information on their own web sites under investor information, or publish it in their annual reports. You can also find historical stock value on free websites or in such reference sources as Hoovers databases (available online or in your local library). The key thing to remember is not to use historical stock value in a vacuum. Take it into consideration along with other important factors like management and industry potential. Only by considering history along with other information can you make an educated decision about your future stock values.

Discuss It!

Most Popular Articles

More