In my most recent article I discussed some of the challenges from the early days of Wall Street. As it happens, my son Jared had the opportunity to have a private tour of Wall Street last week as part of some business research. He gained some valuable insights that I would like him to share with my readers here, in his own words:
Last week I had the opportunity to visit the birthplace of organized investing. My visit included attending the closing bell ceremony at the New York Stock Exchange. For me, it was like a child going to Santa’s Workshop. I met the traders we so often see on the news, walked those fabled floors where so much money has changed hands over the years, and of course I took a selfie in front of the CNBC hosts as they prepped for the closing bell.
As I wandered down Wall Street, I thought about the many people I’ve spoken with over the years who misunderstand what Wall Street is. Stock markets are just playgrounds for billionaires, right? It isn’t uncommon for people to think of Wall Street as a place where rich people become richer while the rest of us get left out.
The NYSE was started in 1792 by a group of 24 investors who were tired of the unstructured and secretive nature of securities trading. Beneath the Buttonwood tree at 68 Wall Street, they came to an agreement to standardize trading within the group. It didn’t take long for the popularity of the group to increase. They expanded rapidly, ultimately leading to what the world now refers to simply as “Wall Street.”
Before trading was normalized, companies were limited in their ability to raise capital to fund their growth. Private investors with the means to fund corporate ventures existed, but they were few and far between. Borrowing from a bank was an option, but in that day, it was not always easy or ideal. This created the need for the organized exchange of stock ownership so that companies could gather assets more quickly, allowing them to focus on their business model. Along with faster access to capital, this introduced the possibility that for the first time normal Americans could invest directly in big companies. It was no longer an opportunity reserved solely for the ultra-wealthy to build their empires.
It is easy for us to overlook what a great blessing this has been. As a financial planner I get to see first-hand how much the world of investing has changed from those early years. Millions of regular Americans, working in normal everyday jobs, have built their retirements investing alongside the giants of Wall Street. What may have begun as the playground for the ultra-wealthy, has become a tremendous wealth creation tool for America’s middle class.
Two hundred and thirty-two years ago, 24 investors created an organized approach that would allow trading to be easier and more accessible. Some still believe Wall Street to be the playground of billionaires. But Truthfully, Wall Street is where average investors can participate in the growth of America’s greatest companies right alongside those billionaires. According to a recent study by Bank of America, roughly 40% of American wealth is held in the $46 trillion dollar U.S. stock market. Thanks to that Buttonwood Tree agreement of 1792, much of that is held by America’s middle-class.
Don’t let misconceptions about Wall Street cause you to miss the opportunity to claim your share of this amazing economic pie.
Jared Wyson, CFP ® Is a financial advisor and partner at Wyson Financial/Wealth Management 375 E. Riverside Dr. St. George, UT 84790 – 435-986-9525 Securities and Advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment advisor.
