The US stock market
A stock is a legally binding symbol of ownership in a company.
When you purchase a stock, you actually become the owner of a
part of a company - a share holder. Since one company can
release a lot of stocks, the ownership is typically spread over
hundreds or thousands or owners. Selling shares in a company is
a way for that company to bring cash to the company. If you
start up a new small company, you typically own 100 % of the
shares yourself. When you need to invest a lot of money in
necessary equipment, you can allow people to purchase parts of
your company. This will provide the company with enough cash to
buy equipment.
To gain any real influence over a company, you must own a lot of
the stocks or work together with a lot of the smaller owners.
Today, people often buy stocks not in order to gain control over
a company, but as an investment. They hope for the value of the
stock to increase over time. A company can also decide to give a
part of its annual earnings to the stock owners. This way, you
can make money from your stock without selling it.
To put it simple, a stock market is a place where stocks are
traded, just like a fruit market is a place where fruit is
traded. The New York Stock Exchange, the American Stock Exchange
and Nasdaq are three important stock markets in the United
States. Unlike the fruit market, it would be impractical for you
to stroll down to the New York Stock Exchange and purchase a bag
of stocks from a vendor. Stocks are instead typically bought and
sold via a stock broker or through Direct Investment Plans and
Dividend Reinvestment Plans. If you purchase stocks via a Direct
Investment Plans or a Dividend Reinvestment Plans, you will not
actually buy stocks at the stock market; you will purchase them
directly from companies.
Wall Street is very important place in the history of the
American stock market. During the 17th century, Dutch settlers
in New York built a high fence to defend themselves from
attacks. The wall only lasted until 1685, but the Englishmen
continued to call the street near the former wall Wall Street.
The history of the American stock market does however begin in
Philadelphia, not in New York. The very first stock exchange in
America was created in Philadelphia, in 1790. The first stock
exchange in New York was created only two years later, but it
didn't do as well as the Philadelphian stock exchange. In 1817,
representatives from the New York stock exchanged travelled to
Philadelphia in order to find the key behind the Philadelphian
success. The result of the trip was the creation of a more
formal and disciplined New York Stock and Exchange Board. One of
the more notable incidents in the history of the American stock
market is naturally the stock market crash of 1929. During the
early years of the 20th, vast amounts of money had been made on
the booming stock exchange markets. This boom came to a rapid
end when the stock market plummeted in 1929 and triggered the
Great Depression in American.