What is Wall Street?

If you’re anything like me, and have been fascinated by the inner workings of the financial markets and its so-called flow of millions and a ‘get-rich’ platform after watching The Big Short or the Wolf Of Wall Street—One question every outsider has is: What exactly IS Wall Street?

The term “Wall Street” has come to mean two things in the modern vernacular of finance: a place where trading occurs, and a figure of speech for any of the capital markets. Wall Street is is the name of a street in lower Manhattan that is home to the NYSE (New York Stock Exchange) and financial institutions that have been around for centuries. Several other major exchanges have or had headquarters in the Wall Street area, including the New York Mercantile Exchange, the New York Board of Trade, and the former American Stock Exchange.You can go to Wall Street and stand surrounded by offices that collectively control trillions of dollars in wealth.

Wall Street is also a metonymy, or figure of speech, for capital market finance. The term is frequently used to describe a person, institution, or activity tied to high finance and banking. An example of this: American Century Investments is an asset management company in Kansas that oversees more than $1 trillion, mostly through mutual funds and institutional relationships. It is located in Kansas City, Missouri— nowhere near Wall Street physically, but it is very much a part of what people think of when they discuss the activity of portfolio managers, retirement plan administrators, and such.

History Lesson: Wall Street ran along a physical wall built when New York was still a Dutch Colony. Then-Governor Peter Stuyvesant ordered a 10-foot wooden wall that protected the lower peninsula from the British and Native Americans. It later became a street bazaar where traders met under a now-famous buttonwood tree. In 1792 these traders formalised the rules of the game and created the New York Stock Exchange.

HOW IT WORKS

Wall Street includes the bonds market, stock market, foreign exchange market, commodities and futures market. The original purpose of the securities market was to raise funds for companies to grow, be profitable, and create jobs. Securities trading has become so profitable in and of itself that trades have been established for just about anything you can think of.

UNDERSTANDING THE ROLE OF WALL STREET;

Wall Street, exists for three primary purposes:

1. To establish a market for institutions to raise capital through a centralised trading area that connects savers of capital with those who want to raise capital—Wall Street makes capitalism work, with the support of government regulations —by moving money efficiently to its most productive uses.

2. To facilitate a secondary market for existing owners of stocks and bonds to find parties willing to buy their securities so they can raise cash. —This facilitation is what makes the markets so successful, as investors have more confidence in the ability to use their portfolio as a source of liquidity.

3. To assist those who wish to outsource the job of investing their capital so the client can focus on their primary career or activity. —When you are a client of a high net worth, or with a lot of saved up capital looking to invest and trade, you are likely to hire someone else to manage your portfolios. If you are a high-earning and successful individual, you can pay someone else to handle your portfolio as you focus on generating more money and not on reading the news or prospectus to analyse your next trading move.

KEY TAKEAWAYS

• Wall Street is a street located in the lower Manhattan section of New York City that is the home of the New York Stock Exchange or NYSE.

• Wall Street has also been the historic headquarters of some of the largest U.S. brokerages and investment banks.

• Today, Wall Street is used as an umbrella term to describe the financial markets and the companies that trade publicly on exchanges throughout the U.S.

Index;

BONDS MARKET—Bonds are units of corporate debt issued by companies and securitised as trade-able assets.

SECURITIES MARKET—where trades of securities such as stocks and bonds take place based on demand and supply. Securities markets determine price and participants can be both professional and non-professional.

STOCK MARKET—the stock market allows companies to issue and sell their shares to the common public for the first time through the process of initial public offerings (IPO).

FUTURES MARKET—A futures contract gives the buyer the obligation to purchase a specific asset, and the seller to sell and deliver that asset at a specific future date unless the holder’s position is closed prior to expiration.

COMMODITIES MARKET— •Commodities that are traded are typically sorted into four categories broad categories: metal, energy, livestock and meat, and agricultural. For investors, commodities can be an important way to diversify their portfolio beyond traditional securities.

OPTIONS MARKET—An option gives the buyer the right, but not the obligation, to buy (or sell) an asset at a specific price at any time during the life of the contract.

• Wall Street is a street located in the lower Manhattan section of New York City that is the home of the New York Stock Exchange or NYSE.

• Wall Street has also been the historic headquarters of some of the largest U.S. brokerages and investment banks.

• Today, Wall Street is used as an umbrella term to describe the financial markets and the companies that trade publicly on exchanges throughout the U.S.


























































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