Origin and Evolution of the Stock Market

Dutch East India Company

• 1600s: Employed hundreds of ships for global trade (gold, porcelain, spices, silks)
• High operational costs led to seeking investments from private citizens
• Investors got a share of the ship’s profits in exchange for funding
• Shares sold in coffee houses and shipping ports
• Invented the world's first stock market by selling shares

Modern Stock Market

• Companies raise funds from investors to support various businesses
• Education and media dedicated to understanding the stock market

Imaginary Coffee Company Example

1. Initial Advertising to Big Investors: Attracts large investors for initial funding
2. Initial Public Offering (IPO): Company publicly lists stocks
3. Buying Stocks:
   • Investors become partial owners
   • Helps the company grow
   • Increased demand raises stock prices
4. Stock Price Fluctuations:
   • Success leads to higher stock prices
   • Failure leads to stock sell-offs and price drops

Market Influences

• Market Forces: Material prices, production technology, labor costs
• Investor Concerns: Leadership changes, publicity, laws, trade policies
• Market Noise: Day-to-day fluctuations influencing perceived value

Human Confidence

• Impact: Can lead to economic booms or financial crises
• Investment Strategies: Long-term reliability vs. quick profit attempts

Accessibility

• Internet: Enables everyday investors to buy stocks like large investors
• Education: Facilitates understanding and participation in the stock market
• Goal: Trade stocks, support businesses, pursue financial goals
• First Step: Getting invested