Origin of the stock market
One may often wonder when did investment actually commence and when was the stock market formed. The origination of the stock market dates back to two centuries. The stock market was originated in Europe about four centuries ago, prior to the industrial revolution. Many settled merchants were willing to invest in businesses having huge future potential, but a single merchant had limited capital for this purpose. So merchants came together to invest their funds in the stock market, which provided the company with more people contributing to the capital. A unit represented the contribution of each merchant, and it was here that the concept of shares came into existence. This paved the way for joint stock businesses and thereby originated the stock market. Trading in the stock market was marked by an informal note. But with more and more companies entering the stock market, a n urgent need for a place to carry on things in an organized way was felt. In the beginning, traders met over a cup of coffee and transacted in shares. With time, the physical stock market replaced the coffee house. So in 1773, the foundation of the stock market was laid, which made the importance of book runners, investment bankers, lead managers, fund managers, and brokers, all the more important. Dealing in shares began in the 1920’s in Kenya when it was just a small colony of Britain. But there were no rules to be followed, and a formal marketplace for proper administration was non-existent. An agreement was enough for trading. People actually transacted in the stock market to earn additional money as a side income. Mostly the accountants, lawyers, etc. took part in it. In the early days, trading began in parks and coffee houses in the 1700’s. Philadelphia was the place where the first exchange was formed in 1800, and the next came in 1817 in New York, which had many regulations for transactions. People gained a lot of money from the stock market in the beginning of the 20th century. People had not seen any downtrend in the market so it was taken as a foolproof way of earning a huge income. But a huge crack in the stock market was witnessed in the year 1929 and people lost as high as 60-70% of their capital investment, and resultantly, the Great Depression followed next. Since that point of time, ups and downs have been a regular feature of the stock market. A major downtrend is enough to wipe away the lifetime savings of an uneducated investor. The markets crashed again in 1987, and then the government stepped in to save the investors from going bankrupt. However, apart from bringing in the concept of circuit filter, little has been done in this regard, and volatility remains a big feature of the market today.
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