Question 1

How do you compare the performance of two stocks?

Accepted Answer

By putting both on the same chart on the same percentage scale over the same period. Comparing absolute prices is useless, because a 900 dollar stock and a 40 dollar stock are not comparable in dollars; what is comparable is how much each moved in percentage terms from the same starting point.

Question 2

Why does a stock price change when the market is closed?

Accepted Answer

Because premarket and after-hours sessions exist, where trading happens outside regular hours. That is where quarterly results and overnight news get priced in. Volume in those windows is very low, so large moves frequently correct once the regular session opens.

Question 3

What are US stock market hours?

Accepted Answer

The regular session runs from 9:30 to 16:00 US Eastern time, Monday to Friday, excluding market holidays. On top of that there is the premarket, starting several hours earlier, and after-hours trading, which continues past the close.

Question 4

Which index should a stock be compared against?

Accepted Answer

The index it belongs to by size and sector. For a large American company the usual benchmark is the S&P 500; for a technology company, also the Nasdaq 100; and for a small company, the Russell 2000, which behaves quite differently from the other two.