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do nothing but cover the stock markets. Even those who traditionally never dealt with stocks are now covering this subject. And the Internet has made stock investors out of many whose idea of the word stock a few years ago was the inventory levels in department stores. The fever has certainly been contagious. The point was driven home for me when a window cleaner I hired a few months ago tried to give me a tip on a penny stock he had bought and seen its value double in a short few weeks. And let's not forget that just the fact that you are reading this book also demonstrates the widespread interest people have taken in stocks.

But what are stocks? In order to understand the concept of stocks we must travel to the past to find the roots that gave rise to today's stock market.

The History

It's 1790 and the US federal government is in need of money to deal with the Revolutionary War debt. Independence has come with a heavy price tag. So the federal government issues $80 million worth of bonds and sells them to the public, in effect giving birth to the US investment markets. In 1792 the New York Stock Exchange sees its humble beginning when a few brokers and merchants sign an agreement to trade securities on a common commission basis. Bank of New York was the first corporate stock traded. In 1817 the New York Stock & Exchange Board (NYS&EB) was formed with offices on Wall Street. Later on the name was changed to the New York Stock Exchange (NYSE). The rest as they say is history.

Today the US and many other countries have stock exchanges where corporations have their stocks traded. Times have changed but the basic principles remain the same. The exchange is an organized location …