If you’re a stock trader, then you know how the stock market works. However, there are lots of surprising facts about stock markets that you probably didn’t know. Here are seven of the most fascinating ones.
Stock markets originated in the ancient world
While stock markets seem a modern invention, there is evidence of stocks going all the way back to the Roman Republic. At this time, Cicero talked about shares having a very high price, suggesting that there were tradable instruments whose value were linked to the success of a particular organisation.
Modern shares started with the Dutch East India Company
The Dutch East India Company, which is involved in the spice trade, was among the first companies to offer shares. Shareholders didn’t have much influence – the company was controlled by its directors. However, shareholders were richly rewarded. The annual dividends were 16% on average over the first half of the 17th century.
London stockbrokers were banned from the Royal Exchange
Stock trading in England started when King William tried to raise money for England’s wars in 1693, and English stock companies followed suit very quickly. Trading first started on the Royal Exchange, but the first stockbrokers were so rude that they were banned. Because of this, they started to trade in coffeehouses along Exchange Alley, which quickly led to the establishment of the London Stock Exchange.
It’s tough to be listed on the New York Stock Exchange
If a company wants to be listed on the New York Stock Exchange, then they have to issue $100 million worth of shares and must have made more than $10 million in the last three years. On the NASDAQ, the value issued stocks only have to be $70 million. On the London Stock Exchange, the requirements are even easier – the market capitalisation only has to be £700,000.
Shanghai is the second largest stock exchange by trade volume
While you might think that London is a huge stock exchange center, the truth is that Shanghai is number two. The NYSE trades $1,520 billion of shares per month, while Shanghai trades $1,278 billion. The London Stock Exchange Group only trades $165 billion per month.
Stock market bubbles aren’t new
We all remember the .com boom and bust, and know about the 1929 Wall Street crash, but financial bubbles aren’t anything new. All the way back in 1711, the South Sea Company was at the heart of a huge bubble, which cause share prices to collapse by 1720. Even earlier, there was tulip mania – back in 1637, some tulip bulbs were selling at 10 times the annual income of a skilled labourer.
The earliest book about stock trading was written in 1688
You may follow today’s stock gurus, but the first book on stock markets dates back all the way to 1688. Joseph de la Vega wrote a book entitled Confusions of Confusions at that time, discussing the workings of the stock market in Amsterdam. If you read the book, you’ll see all of the excesses and unpredictability of modern markets.