What are Historical Stock Prices and Why are They Important?

May 7th 2016

Historical stock prices are precisely that -- the cost of a company's stock at a specific point in history. A company that has been publicly traded for many years, such as Sears or Apple, has a lengthy history of stock prices, which reflect economic and company changes over time. In the case of newer companies on the market, historical stock prices can show you what they were worth in their first year of trading as compared to how they are priced now.

Why Study Historical Stock Prices?

The answer is simple -- to better judge the value of an investment. Take, for example, the current king of the Internet, Google. A simple search with Historical Stock Data or Yahoo! Finance shows that on its first day of public trading, Google's stock opened at $100 and closed at $102.37. Further research shows that over the next 11 years, Google's stock grew in value nearly every single month, currently standing at more than 10 times its original worth. As a potential investor, these are important facts that you need to know in order to protect your money. At virtually any point in Google's trading history, you could have made a safe, and incredibly lucrative, investment. The numbers clearly prove that to be true.

Without proper research, investing in stocks is nothing more than a game of blackjack: You never know for sure whether it will pay off, and in most cases, it won't. If you think it's time to start playing the market, you need to make sure you're putting your money on the safest options possible. It can be tempting to play the penny stocks or to pick a company to invest in based on its ethics and tagline; but if you want to be a serious investor, you need to do your homework--thoroughly and correctly.

How to Study Historical Stock Prices

The first step to making a good investment is to check the market every day, as well as the news. Pay attention to which companies are doing consistently well and which companies may be in danger financially. When you have chosen a few different stocks, it's time to take a look at their historical stock prices.

Not every company on the stock market has a history as long as Coca-Cola or even Google; but recent information is still incredibly valuable to potential investors. Over the course of any stock's history, what you want to see is consistency--and you want that trend to be in a positive direction. Has the company only been publicly traded for a year or just a few months? You still need to check its historical prices and make sure these have been moving in an overwhelmingly upward direction. With young stock, it is important that you pay particular attention to the news about what and how the company is doing so that you can judge for yourself whether it is making good business decisions. 

Deep and concise research of the historical stock prices for companies you are interested in investing in is really the most important step in the investment process. It is easy to find the information, which means you have no excuse to invest blindly! Furthermore, the better educated you are in historical stock prices, the more you will eventually understand about the entire stock market investment process as a whole. Stay informed and make your money work for you. Investing wisely is investing the right way.

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