New York Stock Exchange
Until about 1920, most stock trading took place outside. New York Stock Exchange traders met on Wall Street and traded in an open "street market." In 1921, the traders moved indoors. NYSE was established as a highly regarded exchange because it brokered only the exchange of large, established companies. In 2007, NYSE merged with Euronext, creating a global exchange group.
American Stock Exchange
The American Stock Exchange started as the New York Curb Exchange. In the 1950s, AMEX grew quickly by attracting young, entrepreneurial companies, doubling the value of listed shares from $12 billion to $23 billion by 1960. In 2008, AMEX joined NYSE Euronext.
Nasdaq
The Nasdaq exchange started in 1971. At the time, it was the first electronic exchange in the world and eventually became known for smaller companies and especially technologically driven firms. In 1998, Nasdaq joined with AMEX, though they continued to operate as separate exchanges.
Great Depression
The worst crisis in the history of the stock market was the Great Crash of Oct. 28-29,1929, that essentially started the Great Depression. This was caused mostly by the overuse of margin accounts in which everyday investors bought shares at a 10-to-1 ratio. The resulting losses, including bank failures, created massive unemployment and lowered productive capacities for more than a decade.
Gains and Losses
The stock market has gone through many ups and downs, as represented by the chart provided, but the overall trend is positive, reflecting greater productivity and growth in the overall economy.
Globalization
Globalization, or increasing interconnectedness of markets, has had a tremendous influence, especially in the past 20 to 30 years. As technology advances, the world becomes smaller in the sense that goods and services can be exchanged over great distances quickly and with fewer costs. This allows investors more opportunities to diversify internationally. For example, it is common for the Japanese to buy U.S. Treasury bonds and for U.S. investors to purchase shares in Asian companies.
Financial Crisis
The 2008 financial crisis precipitated from a bursting of the real estate market in the U.S., causing a global economic downturn. Many stock exchanges worldwide showed historically significant declines. The S&P 500 index in the U.S. lost more than half of its value between December 2007 and March 2009.
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