The American Stock Market

William Berg
 


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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.

Read more about the American stock market as well as other International stock markets

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