Stock Market History Milestones and Evolution - Take Advantage of History Repeating Itself
Read about evolution of stock markets through the stock market history, which can be helpful for newbie's to understand how stock markets actually work.
Start of Stock Market Trading
Like with many aged things, experts have different believes about the roots of stock markets as we know them today. The earliest time stock markets are mentioned is in 11th century in Kairo/Egypt, where Jewish and Muslims merchants had their own methods of trading stocks as alternative payment methods. But most of studies marked 12th century in France/Europe as the real start of stock market evolution, where intermediaries were engaged in managing and manipulating agricultural related debts of people in particular areas. Their role can be understood as mediation between people and banks, similar to stock brokers nowadays. Important imprints about the beginning of the stock market history mention Venice/Italy (and latter on Pisa, Florence, etc.) in the 13th century, where bankers were supposed to trade commodity and government securities. Fist joint stock companies in the history were created by Dutch in 16th century, which actually allowed people to invest in companies in exchange for a share of profits. As a result, Amsterdam Stock Exchange was established and first offering of shares was performed in 1602. Several other stocks and bonds were added to Amsterdam SE later on and they were delivering remarkable service as far as stock market trading is concerned.
Stock Market Trading Expansion
As the time went by, the idea of stock exchange trading has expanded to other countries. Stock trading begin in 1688 in London, while the real expansion started by the end of 18th century on Wall Street/New York, when 24 merchants started to meet on a daily basis with the purpose of exchanging/ trading different stocks and securities. Stocks were traded as private sector was funding part of their business by selling ownership to public. However, first instruments actually traded on New York Stock Exchange (NYSE) were bonds, which were issued by U.S. government as a way to finance the war which was running in those times. Those daily meetings turned out to have significant impact on stock market history and even stock markets in the present age.
19th century was marked as real growth of stock market in America. Many new companies started the business and they were often selling stocks to public via stock exchange to fund their growth. Many people have become investors this way and New York Stock Exchange was becoming more and more important. Millions of dollars were traded on the exchange by the end of 1900. It is interesting, that before 1921 trading was placed outside, while in this year they decide to move the trading indoors and it stayed there ever since. When brokers were trading outside, they were normally shouting so laud, that hand signals had to be developed to allow facilitate trading.
During the industrial revolution the secondary trading on the stock market has evolved next to the primary stock issuing. Investors realized in that time, that they can sell their stock to speculators, who also wanted piece of the action. The biggest companies in U.S. were listed on the NYSE, but people wanted to invest also in stocks of smaller companies. For this purpose American Stock Exchange (AMEX) was established.
Year 1929 was one of the toughest years in the stock market history. The "Black Tuesday" as one can recall, was the day when ticker tape stopped working for over two hours because of unusual high volume which contributed in over 100 billion dollars of lost assets by investors (known as "The Great Depression"). Living was difficult for Americans in those days, it was hard to get the job, banks went bankrupt and people lost a lot of money.
Because of huge expansion of stock market trading, more and more participants, and unstable market environment were the reasons why the Securities and Exchange Commission (SEC) was formed in 1934, with the goal to put the regulation in place that would protect investors.
Latest Stock Market History
Stock market trading has grown to unprecedented levels in recent decades. Daily trading volume is measured in billion of shares. There are number of product available for trading, like stocks, bonds, funds, options and more. Latest evolution of stock market trading is tightly related with technology improvements. While even just few years ago people had to call the broker to place a trade for them, they can trade online today. NASDAQ was formed in 1971 as the first electronic stock market in the world. With evolution of internet there is mass of information available to investors, they have fundamentals available to them, they can perform advanced technical analysis if they want, real time quotes are easy to get, you name it. One would say, it has never been so easy to trade as it is nowadays, however, the biggest secret remains: "Which stock should you buy, at what time and when to exit the trade to realize the profit?"
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Written by: Goran Dolenc