When our country was founded, businesses just bought and sold things using a medium of exchange. When, how and why did the stock market evolve? I may sound ignorant, but I think that a lot of people have the same question. I also think that most publicly traded companies care more about their stock price than anything else. The company that I work for posts it on their web site every day, (like it's going to motivate employees to work hareder to make it go up). Who decides increase or decrease the stock price? Is this just an arbitrary decision, or is it scientific?
2006-08-02 15:09:51 · 4 answers · asked by Clifton M 1 in Business & Finance ➔ Investing
The New York stock market started under a shady tree, where wealthy bankers or their agents met to buy and sell interests in the stock, or to sell people on a contractual partnership in a percentage of the stock.
Mr. Market determines the value of a stock. Mr. Market is not a real person, but the crowd of traders that traffic in the stock market are collectively referred to as Mr. Market. Stock market price is determined in the market price, by the prices people are willing to exchange equities for cash.
NYSE is different from NASD. NYSE has market specialists, that stand around in their own pit, trying to match buyers and sellers. No phones are allowed on the trading floor, so buyers and sellers must rely on hand signals from their associates on the sidelines.
If someone thinks a stock is going to increase in value they place an order for that stock. If someone wishes to sell, the market maker sells the stock through open outcry. It is a really neat, really fast paced series of auctions going on throughout the day.
The stock price is based on the settlement price people agree to trade the equity on.
Is is scientific? Not exactly, BUT, some brokers and investors use a great deal of mathematics and complex models to determine what they would buy or sell an equity for. This is used based on expectations of future prices, determined by future earnings and market conditions.
2006-08-02 15:29:17 · answer #1 · answered by Anonymous · 7⤊ 1⤋
The web site from answer #1 is accurate regarding the tree and wall street, but is a bunch of crap regarding conspiracy of traders - gets worse as you read it further down. There have been problems with Mutual Fund corruption and single company mis-handlings like Enron, but The SEC does a farely decent job of monitoring U.S. trading. Much better than overseas companies.
answer 2 is better although occasionally off topic
Any company can decide to share interest in their company with others by selling shares of the company to individuals. Krispy Kreme went IPO (Initial Public Offering) a few years back, Burger King a few months ago and so on and so on. The companies are owned by those that choose to own it. It's based on economic freedom - you for instance - if you choose could buy shares of any publicly traded company as can anyone else at the current price. If the company does well in the future, then so do you.
No conspiracy - it's called business - capitalism and economic freedom.
2006-08-02 16:31:07 · answer #2 · answered by jjttkbford 4 · 0⤊ 0⤋
No conspiracy?
I hate conspiracies and conspirists!
Why group them all together and call them that?
Give them individuality and freedom to express what they think before you slap labels on them!
Getting back to the question...it all started under a buttonwood tree somewhere near what today is Wall Street.
2006-08-02 16:59:05 · answer #3 · answered by Anonymous · 0⤊ 0⤋
this sums it up
http://www.hermes-press.com/wshist1.htm
by the way, this is where the terms 'bull market' and 'bear market' originated as well...if the tree was full of 'bullitins' it was known as a bull market.
when the tree was 'bare' it was known as a bear market.
2006-08-02 15:19:56 · answer #4 · answered by -* 4 · 0⤊ 0⤋