Why was stock market created?

I think the stock market was created for the mutual benefits of both the investors and company owners. The idea that brought about the stock market came at a time when people wanted to build huge businesses, but there was just a little capital to actualize their dreams. So, the idea of selling stocks now came as a form of partnership. When an investor buys shares of stock from your company, he automatically becomes a business partner, he has access to a percentage of whatever profit you make, but this also depends on the legal terms and conditions on the stocks.

Those who are partnering with your business by buying stocks are known as shareholders or stockholders. A lot of people participated in this, and the increasing rate at which people were investing in it demanded a marketplace where stock exchange can be done. A lot of people actually benefitted from this when it started, but today, only professional investors are actually making something out of it.

It’s interesting to note that the first stock markets were actually coffee shops or cafes. It didn’t take too long for someone to figure out a place dedicated to trading stocks would be preferable to a coffee shop. The need to have a place to buy and sell shares began shortly after the Dutch East India Company offered to share the risk of sailing around the world in exchange for the profits to be earned by bringing back spices, textiles and china from the East Asia.

In Europe, the first actual stock exchange was formed in London in 1801, though companies were not allowed to issue shares until 1825. The first stock exchange in the United States was the Philadelphia Stock Exchange however the New York Stock Exchange, opened in 1817, quickly became more famous.