The Democratization of American Finance
Have you ever heard of “buying a seat on the stock exchange”?
A seat on the New York Stock Exchange would, in today’s money, cost roughly 5 million dollars. A brief description of what it offers, according to Investopedia:
Owning a seat on the New York Stock Exchange (NYSE) enables a person to trade on the floor of the exchange, either as an agent for someone else (floor broker) or for one’s own personal account (floor trader). …
The phrase “owning a seat on the exchange” actually has very literal origins. Up until 1871, trading on the exchange was done in a “call market” fashion, which is a system by which only one company’s stock trades across the whole exchange at any one time. Trading members would sit in the assigned seats they owned and participate in the buying and selling of desired stocks as they were called for trading. After 1871, the trading of stocks became simultaneous and the floor trading that we’re accustomed to today became the norm.
Today, I can get a massive amount of information from any number of “discount brokerages” for free, and make trades for around 10 dollars per trade.
150 years ago, only one stock in the country could be traded at once. 50 years ago, you had to pay some person in a specific building in New York to talk to another person in that same building in New York to buy or sell a stock. Today, I can do everything from the comfort of my bedroom.
Which leads me to ask the question: given that we’ve only been doing this “stock market” thing for 50 years, are we sure that we’ve done it right?