Wall Street Essays

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Wall Street

To many a metaphor for a semi-real place where fortunes are made and lost, Wall Street is actually a very real place with a very rich history. Among investors, “Wall Street” refers to the collective set of financial institutions in New York City including stock exchanges, banks, brokerages, commodity markets, money markets, hedge funds, etc.[1] These institutions buy and sell securities in capital markets. Securities are contracts, to borrow money or fund a company for a stake in its ownership for example, that can be traded at a price. Capital markets are the markets, like stock exchanges, where these securities are traded. Generally, companies need money to produce what they sell and investors have this
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In 1903 the NYSE moved to its current building on Wall Street. In 1907, a panic caused by the collapse of the Knickerbocker Trust bank was considered the worst crash in Wall Street history to date. During WWI, the Exchange was closed for five months, the longest period in its history. After the war stock prices soared on Wall Street, and stock market speculation became widely popular.[4]

The 1929 Crash

The 1920s was a decade of intense stock market speculation. The stock market permeated popular culture much more than it does today. In 1929, a British correspondent wrote, ““You could talk about Prohibition, or Hemingway, or air conditioning, or music, or horses, but in the end you had to talk about the stock market, and that was when the conversation became serious.”[5] During the 1920s, stocks listed on the NYSE more than quadrupled in value. People believed that the market could only keep going up. A prominent Yale economist, Irving Fisher, is known for claiming in the 1920s that stocks were absolutely not overvalued and that, “The nation is marching along a permanently high plateau of prosperity.”[6] Believing that stocks would just continue to increase in value, many investors bought stock without researching different companies’ profitbablity. When people buy stocks just because the market is going up and not because the company whose stock they buy is
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