Will the Disconnect Between Wall Street & Main Street Continue?

Posted On May 22, 2020 12:38 pm
By: Steve Smith

While the disconnect between Wall Street and Main Street seems as old as the creation of the stock market itself and has reached baffling proportions in the past few months, it didn’t really start out that way. The New York Stock Exchange (NYSE) was formed over 200 years under a tree by Wall Street, in what became known as the Buttonwood Agreement, in an attempt to establish some rules after the 1792 financial panic.

It consisted of some 24 stockbrokers and merchants signing an agreement establishing the parameters that they’d only trade with each other and represent the interests of the public, which meant that the confidence that they had in each other was the confidence that they had in the market. Meaning the success, or failure, of the merchants, AKA Main Street, would be the determining factor in how Wall Street valued the stock.

We’ve come a long way from this quaint notion; the progression from a true stock exchange which served the purpose of a pathway for companies to raise capital by allowing individuals to buy ‘shares’ as a manner of partaking in company growth and future profits to the dominance of large institutions to near-total financialization of stock-related securities has led to a large disconnect between Wall Street and Main Street.

The explanation or justification is the… Continue reading at StockNews.com

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About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.