May 20: The Stock Market: A Historical Perspective

by David Jenyns on May 20, 2007

Perhaps one of the most commonly known investments, and most successful for that matter, in which people participate on a regular basis is stock trading. Stock trading empowers people to meet the financial standards and objectives so that the maximum amount of profit can be achieved. Therefore, it is imperative to have a working knowledge of the stock market and stocks so that you are able to see how they work together to better enhance your investment future.

When individuals think of the stock market, usually they immediately associate it with Wall Street, which is the place where the world’s largest financial market was invented and, has since prospered. Amazingly enough, the name Wall Street can be traced back to 1653 when it was set up as a defense mechanism against the Native Americans by settlers of Dutch descent. Little did the people know that the 12 foot stock fence was later to become the world’s largest financial establishment for stock trading. The fence lasted until 1685, when it was torn down so that a street could be built in which the British named Wall Street.

Located in Philadelphia, in 1790, a group of 24 merchants were intrigued by the financial transactions that were taking place on Wall Street, so they met to discuss the possibility of establishing a similar entity in their very own city. Because things were not going so well in New York, where Wall Street is presently located, representatives were sent to Philadelphia to observe the happenings. The New York representatives must have learned quite a bit because they returned to Wall Street and reorganized it, thus, opening a “new” Wall Street that functioned even better than before!

As is well known, the stock market experienced prosperity during the 1800’s however, during the 1900’s; it took a turn for the worst. In 1929, the stock market crashed meaning that people, who had invested millions of dollars, lost every single dollar! People were in great despair which resulted in suicides as well as plummeting the nation into the Great Depression, a time of financial despair where all people suffered hunger, homelessness, and hopelessness.

Because of United States becoming involved in World War II, however, the nation’s economy began to repair itself, therefore, ending the Great Depression and allowing the stock market to recover. The stock market began again on its road to prosperity and continued in this direction until 1987, when another crash occurred. The stock market crash of the 1980’s was not as detrimental as the one in 1929; however, people still lost millions of invested dollars. In fact, the day of the 1987 crash was the largest single-loss day in the whole history of the stock market!

The 1987 stock market crash prompted the United States government to prepare the nation in the event that a crash like the Great Depression happened once again. The government worked to pass rules in regulations that would help to protect all investors who put their money as well as their faith into the New York Stock Exchange. It is important for the government to become involved in order to provide the investors some protection because in New York City alone, 2.2 trillion dollars in transactions ensue each and every day!

With such a great amount of dollars in the stock exchange, logically, this is the best investment to pursue in order to establish a sound future for you and your family. As history tells, at the beginning of Wall Street, there was great risk involved with investing money; however, as time went on, people began to get more comfortable with Wall Street as they invested more and more of their hard earned money. As more investments were obtained by Wall Street, the stronger the stock market became, thus, when the 1987 crash occurred, it did not affect the economy as well as the nation as harshly as during the Great Depression.

This should ease your mind about investing your money into stocks through Wall Street. Yes, there is a degree of risk involved, as with any investment, however, it seems most logical to invest your money into an entity that is the largest financial institution in the world! The more educated you become about the stock market and how it operates the more you will learn that the stock market is the way to go with investing.

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