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A Brief History of the Stock Market | SoFi

The stock market can feel like a vast, nebulous force that is difficult to comprehend. However, these markets had humble beginnings in Western Europe in the 17th century. From then to now, here’s what you need to know about the history of the stock market.

the idea of ​​a stock market

A stock exchange or stock market is a physical or digital place where investors can buy and sell shares, or shares, in publicly traded companies. the price of each share depends on supply and demand.

Reading: Who invented the stock market

the more people want to buy shares, the higher the price. less demand, and the price of a stock falls. stock markets now exist in most countries, but the first appeared in Amsterdam in the 17th century.

stock market timeline

Here is a timeline of major events in stock market history:

late 1400s: Antwerp, or present-day Belgium, becomes the center of international trade. Merchants buy goods in anticipation that prices will rise for a net profit. some bond trading also occurs. • 1611: the first modern stock exchange is created in amsterdam. the dutch east india company is the first publicly listed company and for many years the only publicly traded company. • late 1700s: a small group of merchants made the buttonwood tree deal. The men meet daily to buy and sell stocks and bonds, a practice that eventually comes to form the New York Stock Exchange. • 1790: the philadelphia stock exchange is formed, helping to stimulate the development of us financial sectors. uu. and the expansion of the country to the west. • 1896: the dow jones industrial average is created. initially it has 12 components that were mainly industrial companies. • 1923: the first version of the s&p 500 index is created by henry barnum’s poor company, poor publishing. begins by tracking 90 stocks in 1926. • 1929: the us. The stock market crashes after the “Roaring 20’s” decade, when speculators placed leveraged bets on the stock market, inflating prices. • 1941: standard & poor’s is founded when the poor’s post is merged with the standard stats. • 1971: Trade begins in another US dollar. stock exchange, the national association of securities dealers automated quotes, also known as nasdaq. • 1987: Corporate purchases and portfolio insurance helped market prices rise through October. 19, which is known as “Black Monday”. • 2008: The stock market crashes following the boom and bust of the housing market, along with the proliferation of mortgage-backed securities in the financial sector.

where were the actions first created?

The idea of ​​exchanging goods dates back to the earliest civilizations. the first companies would combine their funds to take ships across the sea to other countries. these transactions were implemented by trading groups or individuals for thousands of years.

Throughout the Middle Ages, merchants would gather in the middle of a city to trade and trade goods from countries around the world. Since these merchants were from different countries, it was necessary to establish a currency exchange, so that commercial transactions were fair.

antwerp, or belgium today, became the center of international trade in the late 15th century. it is believed that some merchants would buy products at a specific price in anticipation that the price would rise in order to make a profit.

For people who needed to borrow funds, wealthy merchants lent money at high rates. these dealers would then sell the bonds backed by these loans and pay interest to the other people who bought them.

who invented the stock market?

The first modern stock trading was created in Amsterdam when the Dutch East India company was the first publicly traded company. To raise capital, the company decided to sell shares and pay dividends on the shares to investors. Then, in 1611, the Amsterdam Stock Exchange was created. For many years, the only trading activity on the exchange was trading in the shares of the Dutch East India company.

At this point, other countries started creating similar companies, and buying shares was all the rage among investors. The enthusiasm blinded most investors and they bought any company that became available without researching the organization. this resulted in financial instability, and finally, in 1720, investors freaked out and tried to sell all their shares in a hurry. however, no one was buying, so the market crashed.

shortly after followed another financial scandal in england: the bubble of the south seas. But even though the idea of ​​a market crash worried investors, they got used to the idea of ​​trading stocks.

when will u.s. beginning of the stock market?

although the first stock market began in amsterdam in 1611, the united states didn’t get into the trading game until the late 1700s. that’s when a small group of merchants made the buttonhole deal. This group of men met daily to buy and sell stocks and bonds, which became the origin of what we now know as the New York Stock Exchange (NYSE).

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Although the first stock market began in Amsterdam in 1611, the United States did not enter the stock market until the late 1700s.

Although Buttonwood Merchants are considered the inventors of the largest stock exchange in the United States, the Philadelphia Stock Exchange was America’s first stock exchange. Founded in 1790, the Philadelphia Stock Exchange had a profound impact on the city’s place in the global economy, including helping fuel the development of America’s financial sectors and their westward expansion.

In 1971, trading began on another US stock exchange, the National Association of Securities Dealers, Automated Quotes or also known as Nasdaq. In 1992, it joined forces with the London-based International Stock Exchange. this link became the first intercontinental stock market.

Unlike the NYSE, a physical stock exchange, the Nasdaq allowed investors to buy and sell stocks over a network of computers, rather than trading in person. In addition to the NYSE and NASDAQ, investors were able to buy and sell shares on the American Stock Exchange or other regional stock exchanges such as those in Boston, Philadelphia, and San Francisco.

how was the usa? stock market created?

It took centuries for the New York Stock Exchange to become what it is today. In 1817, buttonneedle merchants observed and visited the Philadelphia Merchants’ Exchange to imitate its model of exchange, creating the New York Stock Exchange Board.

Members had a dress code and had to earn a seat on the exchange. they also had to pay a fee, which increased from $25 to $100 in 1837.

After the great fire of 1835 destroyed 700 buildings in lower Manhattan, Wall Street suffered significant property loss. Fortunately, Samuel Morse opened a telegraph demonstration office, which allowed brokerage houses to communicate remotely.

in 1903, the doors of nyse were opened with hundreds of stock certificates kept underground in vaults.

The stock market soared, peaking at 50% in 1928 despite signs of an economic downturn. In 1929, the market fell 11% in an event known as Black Thursday. the crash in the market sends investors into a panic, and it took the entire 1930s to recover from the crash. this period is known as the great depression.

Since then, the market has experienced several crashes, most notably the subprime mortgage crash in 2008.

Although the NYSE was created by a few traders centuries ago, many investors, stock executives, companies and regulators have contributed to its growth and what it is today.

global exchanges

The NYSE is the world’s largest stock exchange. however, there are now exchanges in major cities around the world that trade national and international stocks.

These include the London and Tokyo Stock Exchanges. Some of the largest exchanges in the other world are in China, India, Canada, Germany, France, and South Korea.

history of stock indices

When reading about the stock market, you come across names like the dow jones industrial average and the s&p 500 index. these are two of the most famous stock market benchmarks, or barometers that attempt to capture the performance of the entire market and even the entire economy.

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Founded in 1896 by Charles Dow and Edward Jones, the Dow is a price-weighted average. That means stocks with higher price-per-share levels influence the index more than those with lower prices. The DoW is made up of 30 large US-based stocks. it was designed as an indicator of the economy in general.

The dow’s initial 12 constituents were primarily industrial companies, such as gas, sugar, tobacco, and oil producers, as well as rail operators. since then it has gone through many changes and now includes technology, healthcare, financial and consumer companies. General Electric was one of the original members of Dow. meanwhile, procter & the stake was added in 1932 and remains the benchmark today.

meanwhile, the s&p 500 index was created in 1923 by henry barnum poor’s company, poor’s publisher. began tracking 90 stocks in 1926. standard & poor’s was founded in 1941, when the company merged with standard statistics.

Today, the S&P 500 is a market capitalization-weighted index, which means that companies with higher market value have more influence. Market value or market capitalization is calculated by multiplying the price per share by the number of shares outstanding. More than the dow or other indicators such as the russell 2000 index, the s&p 500 has become synonymous with the stock market among investors.

what are stock market cycles?

Speaking of markets going up or down, stocks and the market can fluctuate on any given day. the United States. Historically, the stock market has gone through larger market cycles in which the market expands and contracts over the course of weeks or even years.

There are typically four stages to a market cycle: accumulation, mark-up, distribution, and the price-cutting phase.

There are generally four stages in a market cycle: accumulation, mark-up, distribution, and the markdown phase. the accumulation phase occurs when a market is down and buyers start buying stocks at reduced prices.

At the beginning of the price increase phase, prices have been stable for a while and more buyers begin to jump on the bandwagon, driving the stock price higher. At the end of this phase, as buyers jump in en masse, the market makes a final spike as it nears the top of a bubble. during the distribution phase, sentiment becomes mixed, and in the markdown phase, prices tend to fall.

These are some of the most famous in the US. uu. stock market cycles:

1. During the Roaring 20s, speculators placed leveraged bets on the stock market, inflating prices. The rise in stock prices was followed by the stock market crash of 1929. It took years for stock prices to recover. 2. corporate purchases and portfolio insurance helped market prices rise through oct. November 19, 1987, which became known as “Black Monday” among stock traders and investors. panic selling, coupled with computerized trading, caused the 23% drop in a single day. 3. Investors flocked to tech stocks during the internet boom of the late 1990s and early 2000s. However, some of these companies were not profitable and did not have promising business models, causing bubble burst until 2002. 4. A rapidly growing housing market, coupled with the proliferation of mortgage-backed securities in the financial sector, helped years of stock market gains from the early 2000s through 2008. , the market collapsed, causing a deep recession. the stock didn’t start to recover until March 2009.

the takeaway

It took centuries to create the modern stock market that exists, and exchanges continue to constantly evolve.

Today, both institutional and retail investors can buy shares of companies that are traded on stock exchanges through a broker. they can also buy shares of exchange-traded funds, which contain bundles of shares rather than shares of a company.

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