Talking volume

QWhat does it mean that Target’s “volume” is 3.56 million?

— P.T., Allentown, Pennsylvania

AThat figure reflects the number of shares of Target’s stock that traded hands, averaged over some period such as a day or a month. When you asked, 3.56 million was the average number of shares traded per day over the past 30 days.

Volume can vary widely between companies, in part because they have different numbers of shares outstanding. Target recently had about 500 million shares, while Walmart, with a corresponding volume figure of 6.1 million, had about 2.8 billion shares.

Online data sources such as Finance.yahoo. com often list recent volume and average volume. If a stock’s recent volume is much higher than its average, then something is probably happening to attract attention to the stock, such as good or bad news for the company.

QWhat are the marks of the most promising stocks, and are they best found in a booming market?

— T.C., Anaheim,

AYou’re more likely to find stock bargains when the market is down and the economy is challenged. Many stocks can be overpriced in booming economies.

But pay less attention to the overall economy and more to each company you’re evaluating. For best results in your investing, you should understand the company well and have great confidence in its competitive strength and its future. Read its annual and quarterly reports, reviewing factors such as debt load, cash level, profit margins, free cash flow and growth rates of revenue and earnings.

Superinvestor Warren Buffett has explained that he looks for “(1) businesses we can understand, (2) with favorable long-term prospects, (3) operated by honest and competent people, and (4) priced very attractively.” That’s great advice.