If you think that that markets do grow to the skies, think again. Stock exchanges can go up up a long way in price but it won’t go for long in time:
It could last to Christmas, it could fold tomorrow, but my feeling is that unless this bubble is cut down by the Fed, the final move will be large and quick.
Everyone has heard about the stock market, many people talk about it. If you turn on the news, it is hard to go by without it being mentioned at least once. Nevertheless, when asked about what is the function of stock markets, only 67% get it right.
In simple terms, the stock market is the aggregation of buyers and sellers of stocks. You can get rich in the market, but it can also be your financial ruin.
A stock exchange, on the other hand, is a regulated marketplace that connects buyers and sellers of diverse financial securities such as stocks, bonds, and warrants. In other words, it is the physical place where the trade takes place. Stock exchanges date back more than 400 years. The first stock exchange was established in Amsterdam in 1602 to trade shares of the Dutch East India Company.
Each country will usually have at least one stock exchange where its leading companies will list their stocks (or shares). Today there are less than 20 stock exchanges with a market capitalization of over $1 trillion. The so-called ‘$1 trillion club’ exchanges account for more than 80% of the global market capitalization.
The New York Stock Exchange
You probably heard about the The Wall Street Crash of 1929. The Great Crash as some people like to say, was a major American stock market crash that occurred in the fall of 1929.
The crash was so deep that it started in September and ended only late in October, when share prices on the New York Stock Exchange collapsed – taking the life savings of many Americans.
It was the most devastating stock market crash in the history of the United States.
Founded in 1792 and has been the world’s largest stock exchange since the end of World War I when it overtook the London Stock Exchange. It has a market capitalization of $22.9 trillion and about 2,400 listed companies. According to the 2017 data from Gallup, more than 54% of Americans had invested in stocks listed at the NYSE. The NYSE alone accounts for roughly 40% of the world’s stock market capitalization. Stocks traded here appear in the SP500 and Dow Jones indexes.
The NASDAQ Stock Market
The Nasdaq is on its final run and is going vertical, a classic end of bubble move. The NASDAQ can be a trader heaven and a speculator hell at the same time. You can refer to the dotcom crash for the general shape of what looks possible next.
Founded in 1971 in New York City. NASDAQ is considered the Mecca of technology companies because of many of the world’s most significant technology. Companies such as Apple, Microsoft, Facebook, Amazon, Alphabet, Tesla, Cisco, and others have done IPO and have equities listed here. As of November 2018, NASDAQ had a market capitalization of $10.8 trillion, with an average monthly trading volume of $1.26 trillion.
The Hong Kong Stock Exchange
Beijing finally pulled the trigger on national security legislation for Hong Kong, leading to total panic in the city’s $5 trillion stock market.
The Hang Seng Index plunged 5.6%, its biggest loss since July 2015 when a bubble was bursting in Chinese equities.
With all the uncertainties surrounding Hong Cong, real estate companies suffered the brunt of the selling, with an industry gauge sinking the most since the global financial crisis. The main concern for investors relate to the city’s uncertain future will spur investors and residents to shift assets overseas.
Founded in 1891. It has close to 2,000 listed companies, about half of which are from mainland China. It has a monthly trading volume of $182 billion and a market capitalization of $3.93 trillion. In 2017, the exchange closed its physical trading floor to shift to electronic trading. Some of the biggest companies listed at the Hong Kong Stock Exchange are AIA, Tencent Holdings, PetroChina, China Mobile, and HSBC Holdings.
The Shanghai Stock Exchange
The Chinese stock market turbulence began with the bursting of the stock market bubble on June 2015. The crash was long and ended only in February 2016. A third of the value of exchange shares was lost within one month of the crash.
The Shanghai exchange is the largest stock exchange in China and has a market capitalization of $4.02 trillion. It is a non-profit organization and has more than 1,000 listed companies. Though its origins date back to 1866, it was suspended following the Chinese Revolution in 1949. The Shanghai Exchange, in its modern avatar, was founded in 1990. Stocks listed at the Shanghai Stock Exchange have ‘A’ shares that trade in local currency and ‘B’ shares that are priced in the US dollar for foreign investors.
The Tokyo Stock Exchange
Founded in 1878 and is among the top 10 largest stock exchanges in the world. It has close to 2,300 listed companies with a combined market capitalization of $5.67 trillion. Trading at the Tokyo Stock Exchange was suspended for four years after World War II. It resumed operations in 1949. TSE’s benchmark index is Nikkei 225, which consists of the largest companies, including Toyota, Honda, Suzuki, and Sony.
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About the author:
Hi, I am Leblon Blue. Mid-thirties senior manager on a large corporation. Happily married for seven years and waiting for my first kid. I have dedicated my past 15 years to build an engineering background and a stable career. After working in Europe, Scandinavia, and Latina America, I am now based in the Persian Gulf, where I manage the performance of a large corporation that operates in the region.