The Stock Market History

Includes information on historical stock market returns!

Stock market history spans several centuries and a vast amount of historical stock market data is now available.

The history of the stock market is very extensive and the system that is used now for investing in companies has evolved over centuries.

All the policies and regulations have evolved through time as the policy makers felt the need for them. The investment market was born in 1792 when five securities were traded. These included three government bonds and two bank stocks.

Birth of the NYSE

The Buttonwood Agreement was the historic pact that around twenty four brokers and merchants signed. They agreed to trade securities for commission. It is said that the New York Stock Exchange (NYSE) began as a result of this pact.

Slowly the market started gaining prominence and securities such as bank stocks, insurance stocks and government bonds began to trade. The requirement of rules and regulations for the proper conduct of trading was considered necessary as the volume of trades grew.

The New York Stock & Exchange Board was formed at Wall Street. In 1853, the board required the companies that were listed on the exchange to produce complete statements of shares outstanding and capital resources.

Stock Market Crashes

Stock market history records the first stock market crash in 1853 when the market lost up to 45% of value. In 1867, the first stock ticker was invented and this brought the current prices of companies to all investors.

In 1895, it was suggested that companies start providing annual reports to their shareholders. The Wall Street Journal published the Dow Jones Industrial Average for the first time in the following year. The Federal Reserve System was created in 1913 to control credit and to structure the banking system.

The 1929 crash of the stock market marked the beginning of the great depression. The Dow Jones reached the lowest value from its 1929 peak in 1932. It was 89% down at that point of time.

Regulatory Bodies

The Securities and Exchange Commission (SEC) was established to provide full disclosure to investors and to prevent fraudulent activities in connection with the sale of securities.

In 1966, the Securities Investment Protection Corporation was set up to provide protection to the clients of brokerage firms that collapsed.

The New York Futures Exchange was formed in 1979. In 1996, a real time stock ticker was launched in CNBC and CNN bringing stock market quotes to investors and traders instantly.

Communications Advances

The development of the internet gave rise to the online stock broker and clients can now trade and access stock market information at the press of a keyboard. This was a major development in stock market history.

Other stock markets developed around the world with a similar stock market history in tandem with the New York Stock Exchange which remains the largest global stock exchange.

Advances in communications technology was the driving force in linking global stock markets and today at any time there is a stock market open somewhere in the world.

Historical Stock Quotes

In the past, historical stock prices and historical stock data on stocks and indexes were hard to get hold of by value investors. Thanks to the internet, things have changed.

If you're looking for a historical range of data on an individual security, Yahoo! Finance and Investopedea Research are good sites.

Enter the ticker symbol of the stock in question on the main page to get the historical stock prices. This will take you to the 'Quotes & Info' page of the company whose ticker symbol you entered then, simply click on 'Historical Prices'.

This tool lets you enter a date range as well as daily, weekly or monthly closing prices. You can also download data to a spreadsheet using the 'Download to Spreadsheet' if you want to fiddle with the numbers.

Yahoo! Finance and are also a good places to go for historical index data. The major U.S. indexes are also on the 'Quotes & Info' page, or you can look up world indexes.

Stock Market History Graph

It is instructive to look back at historical stock market prices to gain insights on how the stock market operates over time.

This 105 year graph of stock market prices (scroll down to see the graph at this link) provides three insights ...

  • the stock market works in cycles based on greed and fear
  • the stock market has always recovered from periods of turmoil to rise above the previous market high - the good news
  • it sometimes takes a long time for investors to regain confidence in stock market investing - the not so good news!

The moral of the story for value investors is to commence to sell stock when the market shows evidence of over-heating and allocate funds to other asset classes e.g., cash and bonds.

They may offer better returns in periods of sustained recovery.

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