Now to the markets…
Nov 20, 2016
If you would prefer to listen to me read this blog post, please click on the play button.
How many times have you listened to the news either on TV or radio and after they have updated you on the latest disaster (I’m not being facetious, we are having disaster after disaster at the moment; I am sending virtual hugs to all affected), they then tell you the sports results and then they “UPDATE THE MARKETS”.
Who zones out at this point? To be honest they lost me when they mentioned the word ‘sport’ but after blanking the business news for more years than I could count, as I started to get interested in personal finance I began to understand a lot more of what they were saying. But I still don’t get it all and from what I’m hearing, you don’t either.
Now, if you are going to become an investor you kind of need to know what on earth they are talking about, at least a little bit. Today I just want to give you a couple of key websites to check out so you can find out how and where to read “the markets” online and also how to understand the business news when you hear it on the radio.
Radio NZ’s Nona Pelletier gives a wrap up on major things that have happened on the New Zealand and International markets during the day. Some points will be interesting, some irrelevant and some are talking directly to you if you have a stake/share in that company.
In the business news last week all talk was about trump (he still does not deserve a capital T), this week, among many other things, is the prediction that the cost of freighting goods up and down the country is sure to increase due to the massive disruption on our main state highway due to the earthquakes around Kaikoura. This will have an impact on the goods we buy and on the share price of any company listed on our NZX that has anything to do with moving freight itself, or requires a lot of the goods they produce being freighted. They may talk about company takeover offers of note and talk to CEO’s about any future plans they have; basically anything topical. At various times of the year different companies will announce their profits/losses and dividend payout so they cover those too.
I really like listening to Nona as she is a SHE and also has a very upbeat way of delivering a string of numbers and percentages. I had more or less written my blog but had a few questions. I went through my address book of people who would know the answers to these and came up blankety blank. So I reached out to Nona and ended up speaking for almost an hour. This is what I am loving about my blog, it is putting me into contact with some amazing people who offer to help me just by having a chat. Brilliant.
If you have bought shares or if you are interested in a company and want to know more about it go to www.nzx.com so you can stay up to date with what they are doing. You can find out a lot about a company and its recent performance as this is where they share their financial information. I had mentioned to Nona that when I am staying with family I look in the newspaper at the page of tiny writing showing all the share prices and wanted to understand the columns and explain these to you today. She helpfully pointed out that the far better place to go is online for up to date info! Good point. Whereas I had researched each heading that I read in the newspaper and was about to explain it in detail to you, when you look online no explanations are necessary, it is straightforward. Also, the header on the website is giving a constant update of how our top markets are performing at any given time which is handy.
In the search bar on the top right of www.nzx.com either enter the company name or the ticker code if you know it. Every company has its unique ticker code and once you have bought a share you will remember those relevant to you. Once you locate it you can drill down into the information available, which is pretty comprehensive. I check in here about once a month to see how my Meridian shares are performing (ticker code MEL).
Another excellent site to check out is www.anzsecurities.co.nz
If you enter MEL (Meridian) in the “Quick Quote” box it will instantly take you to the page showing how the company is doing on that day. Check out any company you like here.
Also another great site I use to make sense of all of this is www.investopedia.com
A great tool for explaining terms used etc if you need help with that.
Using the graphs and numbers you see and reading the percentages you will begin to get an understanding of what it all means - I promise! It is just a matter of going there relatively frequently and learning a new language of sorts. For me it is definitely not something I look at each day, just once or twice a month as I’m updating my spreadsheet.
Now, when you hear a market update on the radio it goes something like this:
“The NZX Top 50 Index is up 0.8%, up 54 points to 6,825”
Nona did her best to explain this to me.
The total value of the 50 companies in that index has risen 0.8% that day so far. The percentage is more useful to understand than the points. 54 points is just a representative number and is another gauge to go by. They try to give three numbers to give people context, to just say “the market is up 54 points” would be useless in itself. Others might focus on the 6,825 and that is their reference point for whether it has been a good or bad day. The most important thing I took out of our conversation was if the market goes up or down 2% that is a big day. Anything above 1% is significant.
Moving on with the news she might reel off a whole list of New Zealand companies that trade on our main market, the NZX50. She lists the name, how many cents they lost or gained and the closing share price:
Eg: Auckland Airport - down 2 cents - current share price is $6.30
Then she will talk about the rest of the world, because while we snooze, they trade. Our tiny country is hugely impacted by what is going on around the world, particularly in the Asian region. With trump being elected it was a volatile day. The markets get spooked by uncertainty and it rises and falls as new information comes to light.
The other markets she will talk about are commonly:
ASX200 - Australian stock exchange
NASDAQ - New York
FTSE 100 - London
NIKKEI 225 - Japan
HANG SENG - Hong Kong
DAX - German stock index (Frankfurt stock exchange)
Each economy and country has many markets (including us), and we in New Zealand hear about our most common trading partners. They tend to mention a few key companies in each country. For example they might talk about an Australian company such as ANZ and give the same information as she would in New Zealand
Eg: ANZ up 7 cents to $27.83
THEN she talks about the New Zealand dollar and what you can currently buy with it overseas. It is constantly changing throughout the day. This is super important information for you if you are off on holiday, but perhaps more important for those businesses who are importing and exporting products from and to other countries. So, if you are off on a spending spree and you hand over $1 NZ dollar you will get back:
0.9399 Australian dollars
0.7097 American dollars
77.39 Japanese Yen
0.57 British Pound
0.66 Euro
Finally she will mention interest rates, government bond trading, crude oil price and my personal favourite, the gold price. Bond trading was too confusing for me to cover here and I’m unlikely to buy oil so I won’t go into detail here (unless I get a request from you to).
Phew, that is quite enough information for today and hopefully that helps those of you who are looking at the NZX, reading the paper or listening to the radio this week! It is actually quite a hard topic to condense down into a few pages and I suspect that is the very reason the majority of us shy away from trading. I just started with buying one thing and keeping an eye on that and my knowledge has built, so back yourselves and give it a go.
Keep these key websites in your toolbox to refer to:
A shout out to Nona Pelletier, Senior Business Reporter for Radio New Zealand for taking the time to talk to me! A trained journalist but her extensive knowledge of business is self taught. There is hope for you and I yet.
Happy Saving!
Ruth
Take a listen to Nona: www.radionz.co.nz
