Are you starting to grow interested in the stock market, and have recently invested in it? It became quite popular, ever since the investment fever was initiated by the bitcoin and crypto market. And the stock market analysis and trade platforms have entered our mobile devices, making it way easier to access information and track changes by the hour.
If you haven’t made your investment yet, but would like to do so, you’re probably reading a lot, gathering precious info to arm yourself with knowledge. The internet has proven to be an excellent source, and many websites such as amakella.com offer tons of articles, books, and other useful material on the topic of economy and investments. So, everything works to your advantage.
Some questions related to the stock market can remain unclear, after all the reading, and it’s important to clarify them at the start. For example, a basic understanding that it’s a unique and independent institution, defined as an organized space (in a physical and business sense), in which a trade is being performed under strict rules and regulations. One can trade anything from shares, currencies, and so on. In one word, one trades the capital. It can also be explained as a market of the capital, where standardized goods are being traded, under prior determining conditions.
There are three types of known stock market forms:
- Financial – effective, where financial instruments are being traded (money, capital)
- Goods – product, offering aid in the turnover of large quantities of goods, without their presence (wheat and other agricultural products). The goods are delivered to the buyer upon contract, and the buying price is being transferred after the stock market meeting.
- Mixed – including the trade of both.
There are also many interesting things related to it, that you won’t read in all the economy books. That’s why we’ve carefully selected 5, you probably didn’t know of.
In the beginning, it was just a market, literally
In the Middle Ages, there were well-known places where trade meetings were held, Toulouse, Venice, Bologna, Genoa, Marseilles, where trade transactions were carried out at a specific time and place. This means that trade transactions that have emerged as a necessity, lead to the emergence of stock exchanges in order to make trade easier and safer, and more organized.
Buyers and sellers met on the stock exchange, negotiated the price and determined the conditions and method of payment. With the further development of trade, meetings between traders became more frequent and more regular, where it was not possible for anyone to come, but for those who met certain conditions. At that time, standards and criteria are determined, both for the participants and for the goods that are traded.
It is believed that it was named in Bruges in the court of a banking family of Van der Burse, on whose coat of arms there were three bags of money.
In the 15th century, the world had its first organized market with regular meetings. In 1847, Antwerp, to which he transferred wealth from Bruges, received the first stock market, and then it appeared in Lyon, Toulouse, and Amsterdam.
Price balloons are completely natural
The economic crisis is nothing something our generation thinks of as an abstract expression, since we had an opportunity to experience one back in 2008, and another is probably at our doorstep. In books, we read about 1929, but since the eighties, we had three. However, besides these modern-day ones, there those who go back even to the seventeenth century, such as the famous “tulip mania”. Regardless of how these crises were provoked, one thing they have in common is the so-called “price balloon”, formed as a direct consequence of a long irrationality between investors. A natural cycle had to return the market into balance, sooner or later.
New York stock exchange is more than 200 years old
Most people are aware that it’s quite old, but not enough know that is there for more than two centuries. As was the case with the ones we mentioned from Europe, it was formed in the open. Under a tree, to be exact. More than two centuries ago a group of stockbrokers met under a tree to sign an agreement, thus starting what will be known as the most famous stock exchange.
According to the size of the market capitalization of the companies listed, it is the largest in the world. The number of members in the stock market hasn’t changed since the fifties.
Since then, the price of the seat inside has been growing constantly, reaching 4000 million dollars at one point. Quite a shocking amount. But, no worries, afterward it dropped to 3.5 million.
The root is the ancient times
If you ever wondered where it all began, you probably didn’t think it could go such a long way back. Financial markets are usually considered to be a modern-day thing. However, there is some evidence that shows some sort of stocks has been traded in the Roman Empire. At the time, Cicero spoke about how stocks have a very high price, aiming at the instruments that were traded, and whose value was directly connected to the success of a certain organization (similar to today’s company).
A stock index is a basket full of stocks, according to which it’s easy to follow the price movements of the entire group
The world’s most famous index is the S&P 500. Their basket contains the 500 largest companies in the USA. From the twenties, until today, this index brought its investors an average yearly income of 11,4 percent. To translate this into a normal people language, it means that if you chose to invest, let’s say, $ 50 in the mentioned index, your income would be a fantastic $ 180.000 by now. That is if your grandfather was smart back then.
There are many more interesting facts about this market, historical and analytical. We’ve mentioned a couple to tickle your imagination and make things interesting.