Exchanges such as The London Stock Exchange (LSE) and Euronext Amsterdam are of course large and well-known. But perhaps the most famous of them all is the American New York Stock Exchange (NYSE). In addition to the NYSE, the NASDAQ is popular amongst US investors. Ever thought about investing on the NYSE or the NASDAQ? Here are 10 fun facts about the US markets.
The Big Board
The New York Stock Exchange is the largest stock exchange in the world and therefore has the nickname, The Big Board. The stock exchange opened its doors in 1792. Contrary to expectations, not the US, but the Netherlands was the first country to open an exchange. The Amsterdam Stock Exchange was opened in 1602 and was the first real stock exchange in the world.
If a company wants to be listed on the New York Stock Exchange or NASDAQ, strict rules apply. To be listed on the NYSE, a company must have at least 1.1 million publicly-traded shares outstanding as well as a minimum collective market value of $100 million. For the NASDAQ, companies are required to have 1.25 million publicly-traded shares and a collective market value of $45 million. For securities on both the NYSE and the NASDAQ, the minimum listing price is $4.
This label was created in 1923 by Dow Jones employee, Oliver Gingold. He coined this title, derived from the highest-rated blue poker chip, for high-priced stocks. Today, the name blue chip no longer stands for expensive stocks, but also for stocks from well-known companies that have passed the test of time. Companies such as Apple, Coca Cola & Boeing are examples of blue-chip stocks.
FANG became FAANG
The most popular stocks within the tech sector are collectively called the FANG. This acronym stands for Facebook, Amazon, Netflix and Google (Alphabet). A second 'A' was added in 2017. Referring to Apple. All five FAANG companies are traded on the US market, NASDAQ, and can regularly be found in the NASDAQ100.
The most expensive share on the NYSE
The most expensive stock for sale on the NYSE in terms of price is that of Berkshire Hathaway. CEO Warren Buffett and vice-chairman Charlie Munger have worked for decades to create a reputable company. Since March 12, 2019, market capitalisation has been worth $500 billion, making it one of the world's largest listed companies. The reason for the high price is the fact that Class A shares of this conglomerate will never undergo a stock split.
The current price per class A share is over a whopping $300,000. Don’t have that amount to spare, but still interested in a Berkshire Hathaway share? Then you are able to invest in Class B shares, which are trading around $200. Initially, only Class A shares of this product were offered. Due to high demand of a lower-priced option to invest in Berkshire Hathaway, Buffet and the board began offering Class B shares. Class B shares carry less voting rights than the Class A shares and also are able to undergo stock splits. Additionally, if an investor holds Class A shares, he or she has the option to convert these into an equivalent amount of Class B shares if the shareholder wishes to do so. However, it doesn’t work the other way around. Holders of Class B shares are unable to convert their Class B shares into a Class A share of equivalent value. Whether you decide to invest in the Class A or Class B shares, with DEGIRO the transaction fees are only €0.50 + USD 0.004 per share.
NASDAQ100 represents 103
The NASDAQ100 is one of the three most important indexes for the US markets. It represents the 100 largest non-financial companies that are traded on the NASDAQ. Contrary to what the name implies, there are not 100 but 103 companies on the list. In addition to simply being in the top 100, several other rules apply to be admitted to this famous index. For example, to be eligible, the publisher must have an average volume of 200,000 shares per day.
The origin of the Dow Jones
The Dow Jones Industrial Average (DJIA) represents the 30 largest companies traded on both the NYSE and NASDAQ. The name derives from Wall Street Journal editor, Charles Dow and his collaborator Edward Jones.
One man can move the world
The biggest fall in the price of all time on the Dow Jones Industrial Average was triggered by a single investor. On May 6th 2010, in just a couple of minutes, the Dow Jones dropped 10%. Some blue-chip shares were temporarily trading at a penny. What caused this sharp drop was an algorithmic trade which was programmed to take trading volume into account, rather than price or time. This led to a large sell order in “e-mini” futures on the S&P 500, valuing $4.1 billion. Normally, this trade would be executed in several hours, but in this case, it was executed in 20 minutes. This day in trading history is referred to as the “2010 Flash Crash.”
Jeans permitted for the day
The New York Stock Exchange has a notoriously strict dress code. Their policies state that it is not acceptable for men or women to wear jeans on the trading floor, even if you are a guest. However, the exchange made an exception this year when Levi Strauss & Co. launched its IPO on the 21st of March.
Own a piece of the New York Stock Exchange
In 2006, the New York Stock Exchange became public after its IPO. Following this, the NYSE merged with Euronext. Later, the two merged with the Intercontinental Exchange, which now includes 12 different exchanges. Therefore, by owning shares of Intercontinental Exchange (NYSE:ICE), you own part of the NYSE and other exchanges across the globe.
The information in this article is not written for advisory purposes, nor does it intend to recommend any investments. Please be aware that facts may have changed since the article was originally written. Investing involves risks. You can lose (a part of) your deposit. We advise you to only invest in financial products which match your knowledge and experience.
Sources: Investopedia, NASDAQ, NYSE, Reuters, The Economist, FT, The Motley Fool, Forbes