Origins of the Stock Market

When did the world begin officially investing? When did the stock market originate? The stock market origin goes back to 200 years. The origin of the stock market was laid in Europe before the industrial revolution 400 years ago. Many established merchants of this wanted to invest in huge businesses. However this could not be raised by a single merchant. They therefore came together to pool their funds together and begin a new business as partners. Each partner contribution to the venture was represented through a unit. This practice was the originator of shares. This gave birth to joint stock Business. Thus the origin of stock market began.

Originally stock market trading began on an informal note. With the increase in the number of businesses floating shares the quantity of shares increased and the need for an organized place was felt to exchange the shares. Initially the trader met at coffeehouse, this was used as a marketplace. Gradually the coffeehouse changed and acquired the name stock exchange.

Thus the stock market foundation was laid in 1773. This gave rise to investment banks, brokers, investment advisers and fund managers.

Kenya began dealing in shares in 1920’s when they were still a British colony. However there were no rules and regulations, no formal marketplace to administer the stock market activities. Trading was done on the basis of gentlemen’s agreement. During this time people engaged themselves in stock markets for side income. Mainly accountants, estate agents, lawyers and auctioneers were involved in it.

Trading in the early days began in coffeehouse and parks in the 1700s. The first exchange was formed in Philadelphia in 1800 and in 1817 in New York and this regulated the trading rules.

In the early years of the 1900’s people gained enormous amount of money from the market. It was considered risk free to invest here since till this time there had not really been any significant crash. The market lost its title after the notorious crash of 1929 which subsequently lead to the Great depression.

However this was not the last time the stock market experienced a doom. Since then the market has seen numerous fluctuation in its graph. Very often such downturn wipes out a person lifetime investment and savings.

After the 1987 crash the government intervened to protect the investors from getting bankrupt, however their efforts till now has been in vain since the stock market continues to be volatile.