Evolution of the Stock Market

A vital part of being successful in the stock market is understanding its history and its evolution. The stock exchanges have taken around 500 years to into what we have today and they continue to evolve as the years go by. The idea of the stock exchanges date all the way back to 14th century Renaissance bankers. During this age the Venetians created a system of sophisticated systems of securities exchange, allowing traders to buy and sell government and business debt obligations. This type of idea was then picked up in 1531 by Belgium and that is when we saw the first stock exchange open in Antwerp. In this exchange people were able to trade a variety of promissory notes, bonds ect… This was not the same as today where we trade stocks, these were actual solid monetary notes.
We all know about the Ventures of people like Columbus and companies like the East Indian Trading Company. These Ventures were paid for by investors and this was the beginning of actual trading of stock. Many investors did not want to simply invest in one venture because of amount of risk involved. Just like today when we try to keep a diverse portfolio, investors of the day wanted to spread their investment across many different voyages allowing them a sure return on at least some of them. That is where the idea of buying shares (aka Stocks) came into play, each investor could put up a portion of the cost so no one person would have to put up the entire cast allowing them to invest in multiple ventures. Now instead of buying one ship and hoping it made the voyage they would have a share in many ventures so even if one ship didn’t make it there other shares would make up for the loss.
Once this method caught on people that wanted to invest in multiple ventures needed a set place to invest in each venture they chose. It would be extremely impractical for them to go from one company to the next putting up money or the voyage it would take too much time and effort. This is when the earliest exchanges started to open in England. Many of these transaction in the early days started to take place in coffee shops. The ever famous London Stock Exchange takes its origins from these early 17th century coffee houses.
During the early years of the exchanges regulation was nearly zero the governments realized this was a problem after many companies would not let share holder know of catastrophic losses they had incurred until it was too late. That would leave investors holding onto shares of companies that were worthless when they could have had the opportunity to bail if they had know these losses were piling up. Take for example South Sea Bubble of 1720 when investors suddenly saw the South Sea Company come crashing down after reaching amazing heights. This was the last straw and cause government to really start setting some regulations on these exchanges.
The popularity of stock exchanges began to grow all across the world as the result of increases in wealth created by industrialization. This caused the creation of the New York Stock Exchange which is currently the biggest stock exchange in the world and has become the center of the world financial system. Then with the creation of the internet we have seen every day people able to trade within these exchanges. This caused a dramatic rise in the stock markets value along with increased liquidity. This has also led to us having multiple exchanges within the US, even OTC pink sheets which is privately owned has been created to allow us to trade in shares of stocks that do not meet the regulatory rules set by the government.
Now today we have the option of trading stocks on a Foreign Exchange or even right here at home all while sitting at the computer. This has been a huge step for the country and its people allowing smaller companies the ability to be publicly traded, giving them the capital they need to continue and hopefully grow their business. We can now trade anything from commodities such as corn to companies that deal in cannabis. With a little hard work you could own your own business and get it trading on the OTC. The OTC market is for smaller companies and companies that can’t keep up with the regulations imposed by the government. These stocks can be a little more risky than the stock on the NASDAQ, DOW, or S&P but they provide people the opportunity to invest in up and coming companies at very low prices. Say you only have a few thousand dollars to invest which leaves you only able to buy say 10 shares of a company like Apple but on the OTC you could end up with thousands of shares of and up and coming company that in a few weeks allow you to make 50% gains instead of maybe a 10% increase from Apple in a year time. Sure Macintosh is going to be the safer bet in the long run but with only a few thousand dollars it’s hardly worth the trouble to invest. Now if you were a millionaire who could invest hundreds of thousand Apple it could be a great choice for and an amazing way for you to keep your money safe while raking in great profits.
In this day and age we even have companies like www.stockmarketquote.us www.stockmarketquote.us which provide newsletters announcing what stocks are going to be performing well. These companies create programs that allow them to narrow down the field of stocks and through the use of algorithms can figure out which stocks or most likely to head up the charts or crash. The use of these algorithms have become very popular in recent days and have increased investors success unfortunately these methods or not always accurate 100% of the time. These algorithms are put into use in everyday indicators such as the MACD which I am sure you have heard of. Many of these algorithms are very simple and you see them every day on sites such as Google finance or Yahoo finance. Yet some algorithms which you find on high end trading platform from companies like Etrade or the site mentioned above have are a compilation of many of these more basic algorithms which leads to a program which can literally pick out which stock you should buy. The stock market has evolved greatly over the years and right now there are plenty of options for a trader that can give them outstanding opportunities to make profits. We have new tools as well as stricter regulations to keep companies from cheating; this is the era of the trader and if you should seriously think of investing now before the future doesn’t look so bright.