With stock markets doing what they do best -go up- this weeks’ ATW opens up the history books and looks at the origins of stock markets and the central role they play in global capitalism.
Tracing back to the start of the 17th century, stock markets began with the launch of the the Dutch East India Co. in 1602. Investors were given the opportunity to buy, sell and trade their paper shares (and they were paper back then) in the company. The opportunity for returns came from anticipated profits from trade between Europe the East Indies and Asia. Central to the share structure was diversification, where investors were able to lower the risk of loss by investing in different voyages, where ships laden with goods would either returns with goods they could sell in return for profit, gold, or end up at the bottom of the ocean. In return for the paper shares, companies could finance the exorbitant costs of trans-oceanic trading missions. You can learn more by clicking here.
From these early days to the present, the stock market has served two very important purposes.
- THE FIRST is to provide capital to companies that they can use to fund and expand their businesses.
- THE SECOND purpose the stock market serves is to give investors – those who purchase stocks – the opportunity to share in the profits of publicly-traded companies.
By bringing people and capital together to finance innovation through technology, stock markets are integral to our modern capitalist system and the high standards of living that depend on it.
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As clients’ of ours, we look to harness the growth potential of capital markets for you through a diversified approach that brings together best-in-class investment funds. Like the early Dutch East India Co, our approach mitigates investor risk by ensuring your capital is not concentrated in a single investment. This combined with the institutional expertise of the large wealth management companies we partner with, positions you as our client, for a better investment experience.
A lesson in history. Class dismissed!