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History of Stock Market: Everything to Know How it All Started          

History of Stock Market: Everything to Know How it All Started

History of Stock Market: Everything to Know How it All Started

The stock market has a rich and longstanding history dating back centuries with its roots lie in Antwerp and London in the 1500s. Modern stock trading as we know it began with Amsterdam Stock Exchange being founded in 1668. Elements associated with modern stock markets such as an initial public offering were first implemented via this exchange – including offering Dutch East India Company shares.

Stock markets first appeared in other European cities during the late 1700s, followed by their introduction into newly formed United States in 1792 on Wall Street in New York City; early trading activity largely consisted of government bonds and bank stocks before 1817 when The New York Stock Exchange officially launched with trading stocks of insurance, banking and coal companies located along East Coast corridor.

Through the 19th century, stock trading saw tremendous expansion across Western nations thanks to industrial revolution and railroads. New communication technologies like the telegraph made long distance stock transactions possible and helped create an official national stock market. Over time, numerous private stock exchanges merged together into more regulated public exchanges; for example London Stock Exchange and Paris Bourse were founded during this era.

Western expansion and railroad growth led to the establishment of numerous stock exchanges throughout the US, including in San Francisco, Chicago and Kansas City; however, New York Stock Exchange remains dominant. Charles Dow created the Dow Jones Industrial Average index to measure industrial stocks traded on NYSE; today the Dow is still widely considered an indicator of performance on Wall Street.

Following the stock market crash of 1929 that initiated the Great Depression, stricter controls were implemented to limit excessive speculation and fraud; eventually leading to the formation of the Securities and Exchange Commission (SEC) in 1934. Since then, stock markets worldwide have experienced remarkable growth, propelled by widespread public participation, technological innovations like electronic trading platforms, global expansion and increased regulation – ultimately becoming inextricably linked with national and global economies alike.

What is stock market?

A stock market, or equity market, is an exchange where shares of publicly held companies are issued and traded among investors. Companies use stock markets to raise capital from investors who purchase stocks of these businesses on this exchange; individuals and financial institutions alike can also invest in businesses in order to share in any possible profits they might bring forth.

stock market
Stock Market

Stock market investments enable businesses to raise substantial funds from investors through an initial public offering (IPO), selling shares of stock through an IPO can provide access to funds from multiple investors that can be used to expand the business or invest in potential growth of companies by purchasing stock shares – owning part of them will allow you to share in its profits and success while potentially risking losing money if share prices decline significantly.

Stock markets make investing easy by providing an easily regulated, centralized marketplace in which to buy and sell investments. Individuals and institutions alike are free to exchange shares freely between themselves; strict rules and oversight ensure fairness and transparency, with share prices reflecting investors’ perception of future value of companies they invest in; the stock market represents millions of investors’ combined knowledge, expectations, and outlook of each investment; its share prices represent their market’s perception of its worth and outlook.

Stock markets serve as an indicator of economic health, closely tied to corporate profits. When corporate profits increase, stock market performance typically goes up; failing companies usually pull the stock market down. The stock market offers investors access to common stocks, preferred stocks, mutual funds, exchange-traded funds (ETFs), futures contracts, bonds options and other derivatives as possible investments for various risk tolerances and objectives. It provides investors with an avenue for generating income or building wealth over time – investing can produce substantial returns over the long run thanks to share price appreciation and dividend payments, yet risks associated with investing can be significant as well as potentially rewarding.

Modern stock markets are highly technological and global. Electronic trading platforms, high-speed internet connections and computer algorithms now dominate the stock market; investors can buy and sell stocks on any stock exchange around the globe. Stock markets serve an important function within capitalist systems; they facilitate investments into innovative companies that help spur economic growth and prosperity – so their presence is integral to modern economies thriving on free market capitalism.

Who invented stock market?

There is no single person who is attributed for the invention of the stock market. However, the first stock markets emerged in 15th century Europe, in Antwerp and London. The modern stock market originated in Amsterdam in 1602 with the establishment of the Dutch East India Company.  The Amsterdam Stock Exchange introduced formal trading of company shares and bonds, and many of the elements of modern stock exchanges. 

The London Stock Exchange was founded in 1773 as an informal meeting of stockbrokers in coffeehouses. Over the following decades, it grew into a highly organized stock exchange and one of the most international in scope. The New York Stock Exchange was established in 1792, originally trading mainly government bonds. It was formally organized in 1817 and has since become the world’s largest stock exchange by market capitalization.

In 1896, Charles Dow created the Dow Jones Industrial Average as an index of industrial stocks traded on the NYSE. The DJIA is still the most well-known stock market index today. The early 20th century saw increased regulation of U.S. stock exchanges. The Glass-Steagall Act of 1933 established the FDIC. The Securities Act of 1933 required companies to register new securities and disclose financials. The Securities Exchange Act of 1934 created the SEC to regulate exchanges. The Investment Company Act of 1940 regulated investment companies like mutual funds.

Since the mid-20th century, stock markets have globalized, transitioned to electronic trading, and listed thousands more companies and a wider range of investments. Stock market capitalization has grown exponentially, and public participation has surged with lower trading costs and new options like ETFs and 401(k)s. Stock markets now offer a diverse range of tradable instruments, allowing investors to customize risk.  

Where did the stock market start?

Amsterdam saw its first stock market appear in the early 1600s. But the modern stock exchanges only emerged later during this era in London and New York. In 1602, the Dutch East India Company founded the Amsterdam Stock Exchange, making history by issuing bonds to general public investors.

The London Stock Exchange was established in 1773. Early trading took place at Jonathan’s Coffee House where brokers and merchants would meet to purchase and sell shares. The New York Stock Exchange or NYSE was established on Wall Street in New York City in 1792, initially trading just a handful of government bonds under a buttonwood tree under an oak tree on Wall Street, before rapidly growing over subsequent decades.

Stock exchanges introduced regulations and structures for purchasing, selling, and trading shares of public companies. They provided businesses with capital as well as enabled many small investors to participate in their wealth by becoming owners or investors in such larger corporations.

When did the stock market start?

The modern stock market originated in the late 1700s and early 1800s. Although rudimentary markets for trading stocks and bonds emerged in Amsterdam in the 1600s, the first major stock exchanges were established in London and New York. The London Stock Exchange was formed in 1773, facilitating the buying and selling of shares. The New York Stock Exchange was founded in 1792, starting with just a few government bonds traded under a buttonwood tree. 

How does the stock market start?

The stock market began with the issuance of shares by public companies. Once companies started selling ownership stakes to investors, an organized system was required to buy, sell, and trade these financial instruments. Amsterdam, London and New York became home to some of the first stock exchanges that established standardized rules, schedules and locations to bring together buyers and sellers.

Initial trading occurred primarily face-to-face on a trading floor where stockbrokers and traders would shout orders out and make deals, however as time passed exchanges adopted more organized electronic trading systems that made trading faster and more efficient. Eventually, with global telecommunications networks enabling faster electronic trading, most trading now occurs over the phone or computer via virtual stock exchanges. Yet while mechanisms may have evolved significantly over time, their core purpose of providing an organized marketplace where people could purchase shares in listed companies has remained the same: providing and enabling them to share in corporate profits while investors gain from participating in their growth while providing investors with access to profits as an investment platform that is accessible by all and allows investors allowing access to profits generated by listed company profits by both investors as well as companies by way of corporate profits shared between companies and their investors as shareholders while companies gained from investors investing via public markets as an exchange regulated marketplace.

These markets allow investors to invest via capital flow while giving companies access to investors by sharing in corporate profits generated through corporate growth has remained the same: providing an exchange where the public can buy/sell shares listed companies through both buying/selling shares on exchanges that provide investors with the ability to profit shares traded within listed companies that allows both parties involved enabling capital flow via exchange markets while giving companies as well as an opportunity for participation within corporate profits/growth share ownership shares being offered for sale/ trade through exchange markets with listed exchanges, in turn providing access to this forum provide capital markets.

Provide the businesses gaining exposure via investors while receiving funds flow back by companies’ shares of growth or performance as shareholders to access to public markets via stock market investors access listed company shares bought/sold by trading which offers them and shareholders access to shares at trade via markets/etc for listed exchange market also shares listed companies share both ways by exchange markets while providing companies to share in return providing investors access shares which gives shareholders to share ownership opportunities when capital flows (or sales/gain/growth

What is the importance of the Stock Market?

There are three main reasons why stock markets are important. The first reason is that it allows companies to raise capital. Companies issue shares of stock to raise money from investors to fund their business operations, expansion plans, R&D, etc. This is a key way for companies to raise money to grow their businesses. Stock markets also allow investors to earn returns. Investors buy shares of stock in companies and earn returns through capital gains (if the stock price increases) and dividends.

This is a key way for many investors to generate wealth and income over the long run. The stock markets also help direct money and investments into innovative and growing companies. This improves the overall allocation of resources in the economy. Investors can put money into promising companies that then use it productively.

What is the first stock exchage?

The first official stock exchange was the Amsterdam Stock Exchange, established in 1602 by the Dutch East India Company. It was the first company to issue stocks and bonds to the public.

When are the largest stock market crashes?

Below is table depicting the largest stock market crashes in history and its magnitude, 

DateEventMarket Index% Decline
1637Tulip ManiaTulip bulbs99%
1720South Sea BubbleSouth Sea Company stock96%
1907Panic of 1907New York Stock Exchange49%
1929Wall Street CrashDow Jones Industrial Average25%
1937Recession of 1937Dow Jones Industrial Average32%
1970Penn Central Transportation Company CollapsePenn Central stock70%
1973-19741970s Bear MarketDow Jones Industrial Average47%
1980-1982Early 1980s RecessionDow Jones Industrial Average28%
1987Black MondayDow Jones Industrial Average22.60%
1989Japanese Asset Price Bubble CollapseNikkei 225 stock index75%
1990Gulf War and Recession of the Early 1990sS&P 50033%
1997Asian Financial CrisisHang Seng Index51%
1998Russian Financial CrisisRussian stock market86%
2000-2002Dot-com Bubble BurstNasdaq Composite Index78%
20019/11 Attacks and Market CrashDow Jones Industrial Average14%
2007US Housing Bubble and Subprime Mortgage CrisisS&P 50057%
2008Global Financial CrisisDow Jones Industrial Average37%
2020COVID-19 Pandemic Market CrashS&P 50034%

What are the largest stock exchanges today?

Below is a list of the largest stock exchanges in the world, ranked by market capitalization.

RankExchangeLocationMarket capitalization (USD)
1New York Stock ExchangeNew York City, USA$25.1 trillion
2NasdaqNew York City, USA$16.2 trillion
3Shanghai Stock ExchangeShanghai, China$6.7 trillion
4EuronextAmsterdam, Brussels, Dublin, Lisbon, Milan, Oslo, and Paris$6.0 trillion
5Japan Exchange GroupTokyo, Japan$5.3 trillion
6Shenzhen Stock ExchangeShenzhen, China$4.7 trillion
7Hong Kong Stock ExchangeHong Kong$4.5 trillion
8National Stock Exchange of IndiaMumbai, India$3.3 trillion
9London Stock ExchangeLondon, UK$3.2 trillion

When did the new york stock market start?

The New York Stock Exchange (NYSE) was officially founded on May 17, 1792, when 24 stockbrokers signed the Buttonwood Agreement under a buttonwood tree on Wall Street in New York City. The Buttonwood Agreement set rules and regulations for trading securities, marking the beginning of organized stock trading in the United States. Over time, the NYSE became the largest and most influential stock exchange in the world.

Arjun Remesh

Head of Content

Arjun is a seasoned stock market content expert with over 7 years of experience in stock market, technical & fundamental analysis. Since 2020, he has been a key contributor to Strike platform. Arjun is an active stock market investor with his in-depth stock market analysis knowledge. Arjun is also an certified stock market researcher from Indiacharts, mentored by Rohit Srivastava.

Shivam Gaba

Reviewer of Content

Shivam is a stock market content expert with CFTe certification. He is been trading from last 8 years in indian stock market. He has a vast knowledge in technical analysis, financial market education, product management, risk assessment, derivatives trading & market Research. He won Zerodha 60-Day Challenge thrice in a row. He is being mentored by Rohit Srivastava, Indiacharts.

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