Simplifying stock symbols

Cheat Sheet:

  • A stock symbol is a shorthand way to refer to a specific stock.
  • Ticker symbol and stock ticker symbol are other names for it.

Each stock has a unique symbol called a stock symbol that investors use to place trades accurately.  You can think of them as unique nicknames for stocks.  They’re 1 to 5 characters long (usually letters, but in some international markets they can also be numbers or a combination).  A more general term is ticker symbol, which refers to stocks, ETFs, mutual funds, and other securities.  

When a company goes public (IPOs), it chooses an available ticker symbol for its stock. Ticker symbols are usually similar to the company’s name. IBM’s symbol is IBM. Apple’s is AAPL.

You used to be able to tell which exchange the stock trades on by the number of letters in the symbol.  Usually a one, two or three letter symbol meant the stock traded on the NYSE, whereas a four-letter symbol meant Nasdaq. That changed in 2007, when the SEC eliminated those restrictions. 

Why is it so important to have ticker symbols?  It’s because the same company can have different kinds of stock, and the symbol is an efficient way to identify which kind you’re talking about.  

Take GOOG (called Alphabet Class C stock) and GOOGL (Alphabet Class A stock), for example.  Both are Alphabet stock, but only the latter gives you the right to vote (and costs more per share).  So if that’s the one you want to buy, it’s a lot easier to enter GOOGL instead of “Alphabet Class A.”  Another great example is BRK.A and BRK.B.  Both are Berkshire Hathaway stock, but B costs a lot less (you get a smaller slice of the company with fewer rights).

So just remember, a stock symbol is like the stock market’s version of a vanity license plate.

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