The Fascinating World of Stock Markets
Stock markets have existed for over a century, constantly evolving and becoming more complex. They are ever-changing, with a growing reliance on algorithms to understand market behavior. In this post, we’ve compiled incredible facts about the stock market that will truly amaze you.
The Mysterious Bull Statue at the Bombay Stock Exchange
At the Bombay Stock Exchange, a bull statue stands in front of the second gate of the building. Traders have a superstition that whenever this gate opens, it foretells a market crash.
- The gate first opened in 1992, followed by the infamous Harshad Mehta scam.
- In 2001, the gate opened during a visit by US President Clinton, and the stock market experienced a major crash.
- In 2008, the gate opened again to install a new statue, and the markets crashed once more.
This superstition has become so widespread that even rumors of opening the gate can lead to a rush of selling positions.
Women as Rational Investors
The theory is straightforward: men are often influenced by testosterone. Stock market success can boost their confidence and lead to more irrational investment decisions. In contrast, women tend to make consistent choices, regardless of their stock market performance. This theory is supported by a 2016 paper from the University of Leicester (Bose, Subir and Ladley, Daniel and Li, Xin, The Role of Hormones in Financial Markets). Notably, hedge funds managed by women tend to outperform those run by men (almost 60% vs. less than 40%).
The World’s Oldest Stock Exchange
The Amsterdam Stock Exchange, established in 1602 by the Dutch East India Company, holds the title of the world’s oldest stock exchange. It initially dealt with printed stocks and bonds. In 2000, it merged with the Brussels Stock Exchange and the Paris Stock Exchange to become Euronext, now known as Euronext Amsterdam.
Origins of ‘Bear’ and ‘Bull’
The terms “Bear” and “Bull” likely originate from these animals’ attacking postures. The bull thrusts its horns upward, while the bear swipes downward. Historically, middlemen speculated on the future price of bearskins by selling them before receiving them from trappers, anticipating a drop in price. These middlemen were called bear jobbers or simply “bears,” signifying a market downturn. Bulls represented the opposite, signifying an upward market movement.
Monkeys: Surprisingly Intelligent Investors
Surprisingly, monkeys can be more intelligent investors than humans. In late 2008, the Russian magazine “Finans” conducted an experiment in which they placed 30 cubes with the names of companies traded on the stock exchange in front of a circus monkey.
The monkey selected 8 cubes, forming an investment portfolio from these shares. By year-end, this portfolio showed higher returns than the investments of 94% of Russian joint investment managers.
Sachin Tendulkar’s Influence on the Stock Market
What if I told you that Sachin Tendulkar and the Indian National Cricket Team impact the performance of the stock market in India?
It’s true, according to research by two esteemed professors at Monash University, Australia.
The study reveals a sharp and significant decline in stock market prices the day after India loses a match, with the fall being more than seven times greater than the movement following a win by the Indian Team.
Furthermore, when Sachin Tendulkar is involved in a losing match, the market declines even further (18% more compared to when he is not involved). Another study also showed that the market performs better when Sachin scores a century.
Stock prices are ultimately governed by supply and demand. Therefore, unusual factors, such as investors’ moods, can affect their participation in the stock market, impacting the supply and demand for stocks. This illustrates how the stock market is influenced by irrational and behavioral factors unrelated to a company’s actual performance.
Royal Enfield Bike vs. Shares
Seven years ago, Person A bought a Royal Enfield bike worth 1.6 lakh. He was a passionate young enthusiast rather than an investor. In contrast, Person B, a budding investor, purchased 700 shares of Eicher Motors (the holding company of Royal Enfield) at 240 each.
Today, Person A has upgraded his Royal Enfield to the latest Thunderbird 500cc with additional payment. Person B, the investor, now owns a 3BHK apartment and a Mini Cooper. Importantly, he didn’t inherit these assets.
In 2009, Eicher Motor’s share price was around 240, and it now trades at over 19,000. This illustrates the potential of the stock market.
The World’s Most Expensive Stock
The world’s most expensive stock is Warren Buffet’s Hathaway, Class A, priced at USD 2,13,330 per share. The company’s refusal to split its shares contributes to this high price.
The Cursed Month of October
October is often considered a cursed month for stock markets, as two of the worst market crashes in history occurred during this month. The first crash took place in 1929, with a 25% decline in share prices, and the second in 1987, when the market plummeted by one-fourth.
A $224 Million Loss Due to a Typing Mistake
In 2006, a broker for Mizuho Securities in Japan intended to sell a single J-Com Co. share for 610,000 yen. Unfortunately, due to a typing mistake, he ended up with 610,000 shares, each priced at 1 yen. This error caused Mizuho’s shares to plummet, resulting in a loss of around $224 million.
Walt Disney’s Generous Housekeeper
Walt Disney gifted Disney stocks to his housekeeper every year for the holidays. She passed away as a multi-millionaire.
The Remarkable 21-Year-Old Japanese Stock Trader
A 21-year-old Japanese stock day trader named Takashi Kotegawa turned $13,600 into $156 million over 8 years. He still consumes cup ramen for most of his meals. This practice not only saves time but also prevents him from feeling drowsy after large meals.
The Pirate Stock Exchange
In Somalia, there is a ‘pirate stock exchange’ where locals can invest in pirate gangs planning hijacking missions.
If you recall any more astonishing facts about stock markets, please share them in the comments section!