Company names and stock symbols are commonly confused. To make a long story short, a stock symbol (which can sometimes be called a “ticker symbol”) is simply a short abbreviation that investors use to uniquely identify all of the shares that are publically traded within a particular stock market. There are many different formats for stock symbols, and they may consist of numbers, letters, or even a combination.
The reason that stock symbols are occasionally known as “ticker symbols” is because the symbols were originally printed on the tape that ran from a ticker tape machine.
History of U.S. Stock Symbols
Standard & Poor (S&P) had the desire to add uniformity to the investment process, so the stock exchange implemented stock ticker symbols that were more modern and boasted only letters. Before that time, one company may have had dozens of different ticker symbols floating around depending on the stock exchange in question. Needless to say, that way of doing things became mighty inefficient in a hurry. The S&P changed all that, and then years down the line, the securities industry as a whole standardized the method to make it official – it had finally become the industry standard. However, to this day, for preferred stocks, stock symbols have yet to be standardized.
Examples of Stock Symbols in the United States
Let’s take a look at the standardized stock symbols for some of the biggest companies in the United States to get a better feel for the way companies are tagged in the marketplace. Some of the larger company stock symbols are as follows:
AAPL – Apple Inc.
BAC – Bank of America
C – Citigroup Inc.
GOOG – Google
HNZ – H.J. Heinz Company
HPQ – Hewlett-Packard
INTC – Intel
KO – Coca-Cola Company
MSFT – Microsoft
TGT – Target Corporation
WMT – Wal-Mart
WAG – Walgreens
For the beginning investor, understanding these symbols makes it easier to get into trading without feeling like you’re in a completely foreign world. You will be able to read stock tickers more easily and gain a better grasp on the process more quickly.
The SEC Changes the Rules
In the past, all an investor would need to do was look at a symbol in conjunction with its appended codes in order to figure out where a company’s stock was trading. But a move by the SEC in 2007 changed all that.
The SEC approved a rule that changed how companies that moved between the New York Stock Exchange and the Nasdaq were known. The rule allowed them to keep their three-letter symbols even though they moved between exchanges. At the beginning, the law excluded companies that only had one- or two-letter stock symbols, then after 2008, companies slowly began keeping their shorter symbols intact when making the switch. This trend started with CA, Inc., which traded using the symbol CA.
Knowing stock symbols is a great way to get your feet wet in the world of stocks. It will help you get accustomed to the companies that are trading and read the tickers more prudently.
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