Thursday, June 6, 2013

15 Interesting Facts About the Stock Market

Ticker Tape Trivia


By Molly Mann Jones for DivineCaroline.com




I was an English major in college and didn’t go near a math class if I could help it, so my knowledge of stocks and trading is limited. But my interest in the history of Wall Street is keen, so I’ve collected many tidbits of information about the U.S. stock market over the years. For example, did you know the origin of the term “bull market,” or when ticker tape came into use? Here, fifteen fun facts about our nation’s financial trading center, from StockMarketTrivia.com.

Let’s Get Our Terms Straight

1. A stock is a share of ownership in a company that can be bought, sold, or traded. A bond is a loan to a company that can be bought, sold, or traded.

2. The origins of the phrases bull market and bear market are obscure. A bull market is characterized by investor confidence, and the Oxford English Dictionary (OED) cites an 1891 usage as the earliest for the term. It may come from the French bulle sp├ęculative, meaning a speculative market bubble. The OED points to London bearskin “jobbers” (market makers), who would sell bearskins before the bears had actually been caught. The bear became associated with short selling; jobbers would sell bearskins they did not own in anticipation of falling prices, which would enable them to buy them later for an additional profit. That would explain why the term bear market refers to declining investor confidence and deteriorating financial conditions.

3. The Dow Jones Industrial Average is one of several stock market indices created by Wall Street Journal editor and Dow Jones & Company cofounder Charles Dow. The average is named after Dow and one of his business associates, Edward Jones; it’s an index that shows how thirty large, publicly owned companies based in the United States have traded during a standard session. It is the second-oldest U.S. market index after the Dow Jones Transportation Average, which Dow also created. Along with the NASDAQ Composite, the S&P 500 Index, and the Russell 2000 Index, the Dow is one of the most closely watched benchmark indices. Although Dow compiled the index to gauge the performance of the industrial sector within the American economy, the index’s performance continues to be influenced not only by corporate and economic factors, but also by domestic and foreign political events and natural disasters that could affect economic scenarios.

History of the NYSE

4. Stock trading may have begun as early as 9000–8000 BC, at which time clay tokens were used for accounting. Unfortunately, writing hadn’t been invented at that time, so there is no way to confirm this possibility.

5. Later, around 4000–3000 BC, an item called a bulla (plural: bullae or bullas) came into use. This was like a clay purse that contained accounting tokens and was completely sealed. The bullae often had seals imprinted on them, and eventually had notations written on them designating how many tokens were inside and what they represented: for example, a certain number of sheep. These inscriptions on the outside of the bullae led to what is called cuneiform, the earliest form of writing, and may have been another source of the phrase bull market.

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