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Finance, a la shmoop. What is a historical trading range? All right you know how [The question written on a blackboard]

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some Wall Street words are arcane, uh no arcane.. they say one thing but they mean [Pong being played]

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something entirely different? Yeah well this is not one of those times.

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Historical trading range, darn well you could say that AT&T has had a historical [AT&T tower]

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trading range at a given price largely because well here's its stock chart for

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the last umpteen years and you can see that it hasn't really moved sort of [AT&T showing a fairly consistent price over time]

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lived between 30 and 40 bucks a share more or less forever it seems all the

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investment gains to AT&T shareholders came through the company paying massive [Definition of dividend written on a 100 dollar bill]

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dividends but historical ranges aren't just about stock prices alone like

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here's the historical trading range of the price to earnings ratio of the S&P

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500 so this chart shows the range of p/e multiples from 1880 to today ish and [Arrows showing the date range on the graph]

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note that the lion's share of multiples lived in this band from about ten times [Lion's head appears]

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to about 20 times and this was the range of multiples in yes there were outliers

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like down here in the dumps after the economic hangover post-world War two [Man welding in a workshop]

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repair work and then up here as well where earnings were actually very low

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like one-time low so the price to earnings ratio was very high right like [Arrow pointing to the highest peak on the graph]

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all the companies missed their numbers horribly went negative and stuff

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all right like the company used to trade for 20 bucks a share and earned a dollar

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well it might have had in that short period only a dime of earnings when

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everything went bad and the world was ending but the stock went down 40 percent to [Picture of a city on fire]

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12 bucks and on a dime of earnings while that 12 bucks seemed like a huge

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multiple at 120 times but Wall Street knew the world wasn't ending and things

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did come back and well here we are doing this video, so the short lived things get

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tossed out and when you look at ranges you look at their history not just one [Bag labelled 2008 recession is chucked out the door of a house]

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moment in time but decades in the past and you think about the ranges and what [Highlighted area on the graph going further back in time]

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it implies in the future if anything and when in doubt yes you just sing Oh home

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on the range, where the price to earnings ratio [Girl sat next to a fire with a guitar singing]

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plays, or something like that historical trading range that's what it

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is go check it out...

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