(Prosperity)
Define: The Market
It turns out the Dutch are good for more than tulips, chocolate, and an anything-goes stay in Amsterdam.
Wall Street, in Lower Manhattan, the self proclaimed center of the financial universe, gets its name from the wall where the original Dutch settlers, of the island that was then New Amsterdam, swapped and traded their goods. Today, it is the address of the New York Stock Exchange. Trading still happens on a daily basis, just not in actual goods like produce, pots and pans, but in a wide variety of securities.
The NYSE, (also known as the Big Board) founded May 17, 1792 is the oldest and largest stock exchange in the US. Along with The Tokyo Stock Exchange and London Stock Exchange, The NYSE constitutes the hub of the financial world. These exchanges and their multinational peers compose the global financial market. And, just like the Kwik-E-Mart, this market never closes. All sorts of securities can be traded internationally (though the procedure is more complex) and there’s rarely time during a full day when an exchange or other trading system somewhere in the world is not open.
Up until the 20th century, exchanges and markets had physical bases. But in 1971 that changed, with the creation of the National Association of Securities Dealers Automated Quotations. Referred to as NASDAQ, this is an electronic screen based equities trading market - the largest of its kind in the US and the world’s first electronic stock market.
Transactions on exchanges and NASDAQ are known as trades. The original Dutch settlers were bartering face to face for goods and services on Wall Street, since then things have changed only slightly. We’ve moved from a barter system to one were technology and cash establish an efficient method of trading - and the property involved is intangible.
So if the backdrop of CNBC really looks like a bunch of men in smocks trying to unload their Barry Bonds baseball card for a Manny Ramirez – well, that’s because that analogy is not too far off.
Market Behavior
Bull Market: stocks experience a period of increased and sustained returns
Market Dip: stock prices fall 5% from their most recent peak
Moderate Market Correction: stock prices fall 10% from their most recent peak
Severe Market Correction: stock prices fall 15% from their most recent peak
Bear Market: stock prices fall 20% or more from their most recent peak