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Transcript of Business
Emily Van Cleave
The Stock Market as
an Economic Indicator
How does it work?
What is the stock market?
Stocks are bought and sold
People gain or lose money
Prices go up and down
Some people become rich
Some people lose their money
Buy share in company ownership
Companies sell so no loans
Quarterly earning reports issued
Stock markets for different companies
Important to dynamic economic activity
Started in 12th century France
1531--Belgium stock exchange opened
No official share exchanged hands
East India companies sponsored voyages
England--sold in coffee shops
British East India Company powerful
Had government-backed monopoly
No regulations for issuing shares
Crash--stocks banned until 1825
1773--first exchange in London
NYSE most powerful in U.S.
London regulated, NYSE wasn't
NYSE still most powerful
Now global, not just U.S.
Many other countries developed exchanges
Investors study trends to decide
Millions of stocks each day
AMEX - American Stock Exchange
NASDAQ - National Association of Securities Dealers Automated Quotations
Two other major U.S. exchanges
Incorporation--turning business to corporation
Share owner can advise corporations
Prices not fixed--up/down
Supply and demand change prices
Also inflation, interest rates, etc.
Effects on U.S. Economy
Companies grows, so economy does
Economic indicator of U.S. prosperity
Can ruin economy (Great Depression)
Investors confident=more business growth
Investors unsure=less business growth
Corner stock in United Copper
Brokerage and bank failures followed
Backed the Trust Company of America
Created Federal Reserve system
J.P Morgan and trust-company presidents
Roaring 20s to Great Depression
Much money lost
Federal agencies to prevent repeat
World War II helped stop