The Ticker Tape

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No image better represents the United States stock markets than the ticker tape. The little one-inch-wide strip of paper is as synonymous with following the performance of stocks and their markets as it is with heroes' welcomes and parades. Ironically, you would be hard pressed to find an actual ticker tape machine outside of a museum or, for that matter, to find a parade that still uses the discarded strips . Computers have replaced ticker tape machines, and returning heroes are now showered in celebration with shredded paper and phone books.

Plain English

Originally, the ticker tape referred to an actual machine. Today the term is used to describe an electronic ribbon that carries information on stock trades currently occurring in the market.

Today's ticker tape usage is a far cry from the machine's heyday, when between a quarter and a third of a mile of tape ran through the ticker on a daily basis, with the machine providing an endless stream of audible ticks as it reported on the activity in the United States stock markets. Considering the sheer volume of information that would have to pass through a ticker tape today to report on the markets, it is glaringly obvious why its usefulness is long past and why the ticker tape machine has become but a fond memory.

The information contained on the ticker tape, however, is still available in many places. Electronic ticker tapes run in such varied locations as the bottom of your television screen and oversize billboards in Times Square (on the corner of the Morgan Stanley building). There's even a McDonald's on Wall Street that runs an electronic ticker tape during the day, since the customers obviously have a vested interest.

The information on these ticker tapes isn't nearly as comprehensive as the information on the stock tables, and it runs past pretty quickly, so little opportunity exists to gather what information it has.

The Top Row

The information on the ticker tape is displayed in two rows. The top row contains information identifying the stock whose performance is being listed ”the symbol of the stock, for example. Since insufficient room exists to list the full names of the stocks, investors must already know the stock symbol. Stock symbols here can run from one to four letters as appropriate for the corresponding market.

Of the 26 letters in the English alphabet, 22 are used individually to note stocks. The letters I, O, Q, and W are not used, because I and O look too much like the numerals 1 and 0. In addition, Q is reserved for companies that have filed bankruptcy. W isn't used because it is too easily confused with the lowercase letter w which, when it follows a stock symbol, denotes a warrant . Still, having a whole letter to yourself is pretty prestigious, so it goes without saying that the stocks assigned to those 22 letters are major companies. AT&T, for example, gets the letter T, and Sears gets the letter S; both are major old and respected companies.

The order of the listings is alphabetical by the actual name of the company, not by its stock symbol, so the symbols on the tape appear to be listed without rhyme or reason, unless you know the correct name of the company as well as its stock symbol.

TIP

Know the names and/or symbols of a couple of stocks that precede your own so you won't miss your listing when it passes .

Following the stock symbol, you may discover the symbol "Pr." This indicates that the following information pertains to the stock's preferred classes. In the event that the company has issued more than one class of preferred stock, the appropriate class would be designated by following the Pr symbol with the letters A, B, C, and so forth.

You learned earlier that stocks are often traded on more than one market. As a result, when the location of the trade is relevant, the symbol may be followed by an ampersand (&) and another letter. The letter signifies the corresponding market where the trade took place, and its use indicates that the market itself is a relevant piece of information and needs to be considered when determining the performance of the stock. In our sample, we can see that a relevant ICN pharmaceuticals trade took place on the NASDAQ because of the ampersand and the notation of the letter N.

The Second Row

Once you have found the appropriate listing, look in the second row to discover the trading activity of the stock. When a price alone follows the stock symbol, it indicates that the trade being reported took place in the amount of 100 shares. Again, this is a throwback to the assumption that all shares trade in round lots, which we have established is not always true.

In addition, the listed price is not always accurate; it assumes that you as an investor already know the range within which the stock was trading. In the sample, note that British Petroleum is listed as trading 100 shares at the price of 6?. This is not accurate, because British Petroleum was actually trading at 46?. The ticker tape assumes that you as an investor in British Petroleum already knew its stock had been trading in the $40 to $50 range.

The ticker tape is not totally sadistic, however. In cases where the stock is trading in multiples of 100, this fact is indicated by preceding the number of 100-share multiples with a capital S. In the sample, for example, we can determine that the B class of American Express preferred stock just traded 2,500 shares at $40.50 per share. This rule holds true for up to 10,000 shares. Should any number greater than 10,000 precede the capital S, the number should not be multiplied by 100. This designation can be used to represent a block trade, or it might also be used to signify a share that is not trading in round lots of 100.

Time Delay

Finally, be aware that the information on the ticker tapes is always released to investment houses and brokers first. Only after a 15-minute delay is the information released to the general public at large. In addition, the introduction of the computerized quote machine now used by most brokers enables them to access greater amounts of information in real time, or virtually up to the second the trade is made. Although these innovations will further make the ticker tape obsolete, its future existence is nevertheless almost certainly guaranteed , not by what it is capable of providing but out of respect for the heights to which its past performance has brought the United States markets.

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