All corporations have some type of capital structure which is based upon the way the company has acquired its original and succeeding capital needs and made or lost profits over time. This is separated for legal and accounting reasons into different categories.
Two hundred twenty-one years ago a handful of men signed the Buttonwood Agreement at 68 Wall Street to form the New York Stock Exchange. In 1903 the iconic exchange moved into its current location on the corner of Wall and Broad streets. In 2005 there was a merger between NYSE and Archipelago Holdings, which also owned the Pacific Stock Exchange. That merger for the first time resulted in the NYSE going from a seat based, privately owned company to a public listed entity.
Mania, as described in the dictionary is “an excessively intense enthusiasm, interest, or desire; a craze.” Would you feel safe if you were involved in something which resulted in you fitting this description? Not me! Over the past 15 years or so the word mania has been increasingly used by the mainstream financial press to describe investor behavior in a number of different areas.
Stocks do not exist in a vacuum. How is the stock compared to its industry group? How is the group in relation to its sector? Are stocks better than bonds or gold?
Several steps are involved in processing a transaction at a brokerage house. The process begins when the client places an order with a broker. The broker writes the order ticket and submits it to these departments.
When the price of a stock goes up to a sizable dollar value say $100 or more, individual investors are more reluctant to buy. Or at least that’s what corporations and their investment bankers seem to think.
As with anything involving money, investing in stocks can be subject to fraud and abuse. The most important things to guard against are churning, unsuitable investments and boiler-room operations.
This is the last of a two-part series on Wall Street in the 1950s and 1960s.