What is a Stock Market Symbol?
Each publicly traded stock and mutual fund has a symbol it is known by, consisting of anywhere between one and five letters. This is its stock market symbol, or ticker symbol. It serves as a universal identifier as well as a convenient shorthand for noting price movements and transactions. A stock market symbol can be thought of as the equivalent of an element's symbol on the periodic table. In the United States, stock market symbols consist of only letters, with the occasional period before the last letter, such as in the symbol BRK.B, which indicates a class B share of Berkshire Hathaway, Inc.
A stock market symbol will vary slightly based on the exchange that the stock is traded on. For example, most of the stocks traded on the NASDAQ exchange have four or five letters, while most of those on the New York Stock Exchange (NYSE) have three letters. NYSE ticker symbols can also be two letters, or just one.
One-letter stock market symbols are sought after, to some extent, by publicly traded companies, because they provide a unique ease of recognition. AT&T is one of the oldest companies traded on the NYSE, and it is well known by its symbol, the letter T. When AT&T was purchased by SBC, the latter company took on AT&T's name, and also insisted on keeping the one-letter stock market symbol, because it was so well recognized.
In practical terms, a company's stock market symbol is used primarily for writing buy and sell orders, as well as obtaining information on the company and its stock. Often, a great deal of information is communicated by a "behind the dot" letter in the symbols of stocks traded on both the NYSE and the NASDAQ. For example, a symbol that ends in ".E" means that the company has had trouble with its periodic filings with the Securities and Exchange Commission (SEC). A ".Q" suffix denotes a company currently in bankruptcy, and a ".X" ending indicates a mutual fund.
Stock market symbols in the U.S. are only comprised of letters, but many worldwide symbols are alphanumeric. The purpose of this is to facilitate international stock trading. For example, a company traded in a Middle Eastern or East Asian country may desire to have a symbol that can be understood by Western traders. A symbol consisting of numbers will be much more easily understood by a Westerner than characters or non-Latin script.
@Logicfest -- that is great for finding out how a company is doing, but let's hope that investors know the stock symbols of their company's by heart.
One great thing about those Internet sites that keep up with stocks, though, is that it is easy to build custom reports based on what stocks you hold or are interested in following. Very convenient stuff, particularly since the data updates quite quickly. In some cases, updates are even in real time.
Those symbols can be very hard to remember, but that's one of the things the Internet is good for. If you are on a major site that tracks stocks, there is usually a search function that let's the user type in the name of company and it will find the stock symbol.
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