It’s where fortunes are won and lost, where anyone has a chance to strike it rich or lose everything: The stock market fuels dreams of building great wealth, but can turn suddenly, crushing those hopes and decimating nest eggs.
From the opening bell at 9:30 A.M. Eastern Standard Time to the market’s close at 4:00 P.M. , the U.S. stock markets never stop moving. The action, though, is nearly silent, a stark contrast to the “Wild West” excitement that characterized the markets as recently as ten years ago. Today, the quiet hum of computer screens has replaced the cacophony of shouting traders and the flurry of paper littering the floor.
The U.S. Stock Market is Born
When the United States was in its infancy, the founding fathers worked tirelessly to create a nation like no other. In a brilliant move, President George Washington installed Alexander Hamilton as the first Secretary of the Treasury in 1789. Under his watch, the U.S. stock market was born. Hamilton founded the country’s first stock exchange in Philadelphia in 1790, followed shortly after by the New York Stock Exchange in 1792, where the Bank of New York was the first corporate stock traded.
Alexander Hamilton (1755–1804), as seen on the face of the $10 bill. George Washington installed Alexander Hamilton as the first Secretary of the Treasury in 1789. Under his watch, the U.S. stock market was born.
A Real Wall
Wall Street came by its name honestly: In 1685, it was positioned behind a twelve-foot stockade wall designed to protect the local Dutch settlers from the dangers of Native American and British attacks.
The markets that now make up what is commonly known as the U.S. stock market are the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ). Other cities like Boston, Chicago, Philadelphia, Denver, San Francisco, and Los Angeles have exchanges, as do many major international cities like London and Tokyo.
Though the United States still lays claim to the largest stock market in the world, emerging markets around the globe are rapidly adding to the number of publicly traded companies. All around the world, more than 600,000 companies are publicly traded, with billions of shares changing hands every day. By understanding how the different stock markets work and compete for your investment dollars, you’ll be better equipped to succeed in the investing world.
Competition, both domestic and global, continues to make stock transactions more transparent and more accessible to all investors.
Back in the 1990s, it became clear that individual investors were becoming serious players in the world of Wall Street. With the advent of online investing and an aggressive play for smaller investors by the two leading stock markets in the United States, the NYSE and the NASDAQ, buying and selling investments has gotten easier and much less expensive.
Greed... is Good
Hollywood loves to stoke stock market drama, often portraying investment bankers and stockbrokers as cutthroat manipulators. One of the most quoted is Gordon Gekko from the movie Wall Street , famous for his core belief: “Greed, for lack of a better term, is good. Greed is right. Greed works.”
When people talk about Wall Street or “The Market,” they’re generally referring to the secondary trading market, where the vast majority of investors buy and sell stock. But the primary market is where it all begins. The main difference between these two markets are the players involved: In the primary market, large investors are buying shares of stock directly from the issuing company; in the secondary market, investors buy and sell shares from each other.