Isaac Winehouse

The History of Stock Market Trading Presented by Isaac Winehouse

The American Stock Market is a very important component of the world economy and dates back over 200 years. Hundreds of years ago, the colonial government made the resolution to finance the war by offering government notes and bonds. Linked to the notes and bonds was a promise that a profit would be paid out to all buyers at a later date. The idea also lent way to a trend where private banks began issuing stocks and companies were selling shares of their company raise money to finance their business. This rising market was a new thrilling method of investing money and a way for the wealthy to grow their net worth. In 1792, there was a meeting of twenty four influential merchants. At the meeting, the merchants made an agreement to have a daily meeting on Wall Street to sell stocks and bonds; this group and their daily activities led to the creation of the New Y ork Stock Exchange (NYSE).

When the United states experienced rapid growth in the mid 1800s, companies wanted to expand to support the increasing population but needed funds for expansion and development. At that time, companies also realized that potential investors would be interested in attaining stock in exchange for partial ownership in the company. By the 1900smillions of dollars of stocks and bonds were traded on Wall Street and by 1921, the stock activity was moved from outside to indoors.

The Industrial Revolution prompted change in the stock market. A new form of investing was created where existing stock holders realized they could profit by re-selling their stock to others who also saw potential value in the company. This new trading system gave birth to the secondary market, which is often referred to as the speculator’s market; with the introduction of the secondary market, the stock market became extremely volatile.

The quick growth of the market prompted the government o initiate more regulation in order to protect investors. After the Great Crash in 1934, Congress passed the monumental Securities and Exchange Act. Under this act, the Securities and Exchange Commission (SEC) was fashioned. The SEC regulates the trading activities within the American stock market. The commission also oversees the requirements for a company to issue stock and sell shares to the public. One of their goals is to make certain that the company provides accurate information to potential investors.

Historically, stock market investments was a hobby for the wealthy. After seeing the profits made by those who participated in trading, average Americans began to notice the value of investing in the market. Over 200 years after its creation, the world stock market is believed at over $30 trillion and the total world derivative markets have been estimated to be over $700 trillion. Because the market is so volatile, there are identifiable trend. The terms bear market and bull market describes downward and upward market trends. These terms can be used to describe the entire market or just specific securities. In a secular bear market, the trend is to move downward. Secondary trends, on the other hand, are short-term changes in the direction of the price within a primary trend. This trend tends to last a few weeks to a month. Primary trends are broader and tend to affect stock prices for a year or more.

Isaac Winehouse has a passion for the NYSE…do you?