5 Things You Should Know About Wall Street
There’s been many movies and, while some of us may recall Gordon Gekko in his Giorgio Armani suits and suspenders, others will be more familiar with the Wolf of Wall Street, which was based on the life and times of Jordan Belfort, played convincingly by Leonardo Di Caprio.
But before we go into the fun stuff, there’s a little history worth touching on, that little street in Lower Manhattan, not just considered to be the financial centre of the U.S, but also the epicentre of global finance. If you haven’t worked there, you’re not one of the club, some might say…
Wall Street gets its name from a wall built by the Dutch in the 17th Century. The wall was actually just a wooden palisade that was built on the northern end of New Amsterdam and was built to protect against the British, Native Americans and, ironically, the pirates, following a bloody battle where the Dutch went out and killed off their neighbours.
Some might say that the Dutch may have managed to keep out the British and the Native Americans, but there were likely to be a few pirates under the Buttonwood Tree, with a few pirates walking the streets and climbing the elevators today, the British still in preference of Saville Row and Threadneedle Street.
So perhaps less well known facts about Wall Street would be:
- While slavery was introduced to Manhattan in 1626, it took almost a century before the NYC Common Council made Wall Street the city’s first official slave market, which operated between 1711 and 1762.
- In the 18th Century, traders and speculators would gather under a buttonwood tree to trade securities and in 1792, the Buttonwood Agreement was signed, which was considered the beginnings of the New York Stock Exchange, formalising fee structures for members.
- Before the Buttonwood Agreement was signed, Wall Street was the site of George Washington’s inauguration in 1789, who quite appropriately features on the one-dollar bill, the oldest design of U.S currency in circulation. The Bill of Rights was also passed on Wall Street.
- In 1884, Charles Dow started tracking stocks, predominantly railway stocks and formulated an average of the 11, while also creating the concept of a bull and bear market, based on the averages.
- 1889 was the year that the Wall Street Journal came into existence, originating from a daily report known as the Customer’s Afternoon Letter. It took a century for the average to cover 30 stocks after the creation of the Wall Street Journal, which remains the number today.
With the beginnings of the New York Stock Exchange established in the late 19th Century, it didn’t take long for investors to realise the concept of risk with the Wall Street Crash of 1929, in what was likely to have hit the first generation of stock market investors, before enshrouding the U.S in the Great Depression.
The aftermath of the 1929 crash was one that left Wall Street in the dark for more than a decade, the U.S government coming down hard on the practice of purchasing stock on margin, sentiment to the practice of leveraging only beginning to ease in the late 40s, investors having to pay 100% of the cost of a stock even in 1947.
While the street trundled along, the Vietnam War leading to lower trading activity, it was Ronald Regan who changed American and returned focus to capitalism and business, not wholly unexpected when a U.S president was once a Hollywood actor.
The shift in the U.S economy, wars and depressions forgotten, brought a new breed to town. While ‘wanna-be’ actors made their way to Hollywood, holding their last few Dollars, there was another dream on the Eastern seaboard, one of fast cars, strip clubs, drugs, fine dining and particularly understanding wives, the use of cocaine becoming more associated with the highflying executives on The Street than the struggling artist in the Village.
To put it into perspective, in the heydays of the 80s, before the ’87 crash, one of the sell-side shops actually had a drug dealer on their payroll, sitting at one of the desks. Allegedly the said drug dealer became the head of the desk years later, apparently having a knack at trading…
The 1987 crash brought things back down to earth for a while, with more than a 100,000 jobs gone on the street alone. Gordon Gekko was the Hollywood epitome of Wall Street before the ’87 crash, the film released in the year of the crash.
I would however recommend reading Liar’s Poker, a semi-autobiographical book, written by Michael Lewis, a book capturing life on Wall Street as a Broker in the 80s, Gordon Gekko relatively tame compared with the brokers encapsulating the spirit of finance.
As the 80’s and 90s came and went, a recession here and there, the September 11th terrorist attacks on the U.S ended with over 40% of Wall Street estimated to have been destroyed, but even terrorist attacks could not bring an end to the Street, though perhaps the way of life for some.
The markets recovered as did Wall Street, it taking the financial market meltdown of 2008 to finally bring an end the cavalier activities that had made the residence of the street so much money, for it to be lost overnight, the Global Financial Crisis resulting in what some consider a depression far worse than the Great Depression.
The Street may have lost some of the old boys that epitomized the high flying image of the 70s and 80s, but there are a few still there, high up on the executive floors, with many a story to tell over a few glasses of Yamazaki Single Malt at one of the Gentlemen’s clubs in the City, but you’ll need to be a member…
Today, its back on its feet and the Dow closed at a record high on Thursday evening, the U.S president one that is also accustomed to television and business driving the markets, the trading floors above Trinity Church buzzing once more, with the Wall Street Bull standing in all its glory in Bowling Green Park.