Tuesday, June 30, 2009

The History of the Stock Market

With all the press the economy and the stock market are getting these days, it makes us wonder when and how the stock market began. It is believed that the stock certificate that's the oldest in existence was issued in 1606 to a company in the spice business. Though the company fell apart in 1799, heavily in debt, the stock share is worth a great deal more now than its original value, due to the fact that it is a collectible. The business of stocks and securities began in the Old World, (Netherlands, Spain, France and England), but when the English colonists came to America this great plan came along with them.

In America, Alexander Hamilton was the first U. S. Secretary of the Treasury. It was his idea to promote the development of stock exchanges in America. His likeness, in the form of a statue, sits in the American financial district, known as Wall Street in New York City.


In 1817 the New York Stock and Securities Board was formed which is now known as the New York Stock Exchange, followed by the American Stock Exchange in 1842. At the time of George Washington's inauguration as President of the United States, New York was the nation's capital.

Both Wealth and Devastation Resulted

History recalls that the stock market became a very popular vehicle for investing large sums of money by the 20th century. And, enormous amounts of money were made by investors, namely one J. P. Morgan who created U. S. Steel through a gigantic merger.

And, as today, there were times of panic, such as 1907 when millions in securities were sold within a few short months, causing stock prices to plunge.

The era known as "The Roaring Twenties" came to an abrupt end with the market crash of 1929. Within a week, the market tanked, leaving many formerly rich people penniless. Some even committed suicide by jumping from their building windows. This depression, as it was called, lasted until 1941 when World War II began. The most recent crash in 1987 was known as Black Monday, when the point drop on the Dow Jones Average was 508. However, on Monday December 1st, 2008, the market dropped 680 points as the economy, once again, weakened and a recession was acknowledged.

Today's Economic Crisis - more history in the making

Many billions of dollars have been lost in the stock market since the recent downturn in the economy. Those hardest hit have been retirees living on the income from their 401k's and IRAs. Some who were formerly millionaires are finding themselves looking for ways to make ends meet to hold onto whatever retirement savings they still have. Market volatility has, and always will be, one of the risks of putting "all your eggs in one basket." Therefore, in order to make wise investments, it is smart to stay diversified in your holdings.

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