On an October morning 25 years ago, MarketWatch started providing real-time news and market data to the general public on the internet. Individuals were fleeing their stockbrokers for new online platforms, like E-Trade and Charles Schwab, and hungry for financial data and information that did not cost upwards of $10,000 annually to access.
1. Online brokers and the rise of the day trader The internet and the discount brokerage model combined in the late 1990s to unleash a powerful new force on financial markets that was led by E-trade and Charles Schwab SCHW . By 1998, million of Americans had moved their retail trading activities online, reshaping Wall Street forever.
But it all went awry in August 1998 as Russian markets imploded after Moscow devalued the ruble, defaulted on domestic debt and declared a moratorium on payments to foreign creditors. LTCM’s highly leveraged exposure to Russia resulted in the hedge fund’s collapse, with the Federal Reserve coordinating a then-historic $3.6 billion bailout led by the fund’s creditor banks.
Other Wall Street analysts told Wired that MarketWatch was a “scrappy company” that unlike a newspaper “won’t have to contend with newsprint, delivery trucks, unions, and other messy expenses.” Subsequent rule changes, culminating in what the SEC deemed the “National Market System,” had a similar effect, speeding technological trends that had been decades in the making while aiming to create a freewheeling market where exchanges and other venues, including electronic communications networks and so-called dark pools, would compete to provide best execution on trades.
The human tragedy of 9/11 was overwhelming and the terrorist attack on the World Trade Center and Pentagon also clearly targeted financial markets and the people who worked to keep them functioning. U.S. markets did halt trading on 9/11 and the New York Stock Exchange would stay closed for four trading days, the longest period it had sat empty since 1933, during the height of the Great Depression.
6. The Enron scandal On December 2, 2001, Enron filed for bankruptcy court protection. At the time, it was the biggest corporate failure in American history and symbolized the excesses that had taken place in financial markets. A Houston energy and trading company, Enron had started 2001 as the nation’s seventh largest company with $100 billion in reported revenue and a high-flying stock before collapsing amid accusations of accounting fraud.
In response to the Enron scandal, federal lawmakers passed the Sarbanes-Oxley Act, requiring sweeping new accounting and recordkeeping practices for corporations. Three years later, MarketWatch ran the following headline: “Andersen’s Conviction Overturned.” As MarketWatch told it, in a unanimous decision written by Chief Justice William Rehnquist, the the Supreme Court said “the jury instructions were flawed in important respects.
By March 2007, many American homeowners were unable to make their mortgage payments. Housing prices fell. Ben Bernanke argued that the problems associated with subprime loans were “contained.” MarketWatch reported that the Federal Reserve chairman at the time saw limited impact from subprime. “We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial systems,” MarketWatch reported Bernanke saying.
“This is a revolutionary product that has the chance to really impact people’s lives,” Jobs told Jon Swartz, now a MarketWatch Silicon Valley correspondent. Jobs compared the iPhone to the original Macintosh and iPod. “This is the ultimate digital device.” Lehman Brothers collapsed under the weight of souring real estate assets, sending shockwaves across the world and sparking a financial crisis. Within hours of the bankruptcy filing, one of the biggest money market funds was forced to “break the buck,” unable to fully pay its investors because of the Lehman Brothers commercial paper it held. MarketWatch reported how the Reserve Primary Fund “put a seven-day freeze on investor redemptions after the net asset value of its shares fell below $1.
The true identity of Satoshi Nakamoto remains a mystery, but the technology he introduced has had a profound impact on markets. Bitcoin BTCUSD popularized the idea of digital currencies powered by distributed software known as blockchain. There are now more than 12,000 digital currencies with a combined market capitalization of nearly $2 trillion. Bitcoin is still the most widely traded and highly valued.
The problems began in 2009 as a new Greek government revealed that the country had been running much larger budget deficits than previously disclosed. The pain spread, with countries such as Ireland and Spain seeing their previously sound fiscal records undone by the collapse of massive property bubbles. Shackled to a shared currency, devastated economies were forced to embark on internal devaluations in an effort to regain competitiveness.
Out was the Fed’s conservative approach to managing the economy. In was a novel and aggressive effort to stimulate growth and a new-found openness at the U.S. central bank that was often invisible to the public. The final tool in the Fed’s new toolkit was an effort to engage with the public, a huge change from a historically secretive central bank. Chairman Ben Bernanke in 2011 began to hold regular press conferences to explain the bank’s actions.Supporters contend the Fed’s makeover boosted the economy and saved it from tougher times. Critics argue the bank’s decisions more than a decade ago laid the seeds for the current bout of inflation — the highest in 40 years.
In 2015, a U.S. grand jury indicted Navinder Singh Sarao, a London-based futures trader, on charges related to the crash. Described in court papers as autistic, he was convicted and in 2020 sentenced to time served and a year’s home confinement.
The U.S. Securities and Exchange Commission, meanwhile, has a list of more than 250 Chinese companies, including e-commerce giant Alibaba, that could face delisting on Wall Street due to failure to comply with financial-auditing requirements. Meanwhile, U.S.-China tensions have escalated, with China angrily denouncing a visit by U.S. House Speaker Nancy Pelosi in August as fears rise that Beijing could eventually move to invade the self-governing island it views as part of its territory.
On the day of the IPO, in which the company raised $18 billion, MarketWatch curated a dedicated page to showcase all the staff coverage, with one analyst comparing the event to Halley’s Comet. MarketWatch’s financial and tech columnists were united in skepticism about the deal, based on its founder control, inconsistent financials and slowing growth rates. There were serious questions about Facebook’s ongoing transition to mobile.
During MarketWatch’s lifespan, the U.S. transformed from a net importer of oil to an exporter, producing as much as 13 million barrels a day. The national security implications were profound and the extra production kept oil prices lower, fueling the economy and the stock market. 17. The era of passive investing Jack Bogle created the first index fund in 1975, introducing an ultra-cheap way of getting broad access to the stock market through the Vanguard Group. The idea was to approximate the performance of the market instead of trying to beat it.
18. Unicorns and the rise of private markets In 2013, venture investor Aileen Lee coined the term “unicorn” to describe recently started private technology companies valued at $1 billion or more. Private market investing exploded and hundreds of new companies were able to raise massive funding rounds to finance their growth for years without tapping the public markets. Elon Musk’s SpaceX raised $1.5 billion in May 2022, for example, valuing the company at $125 billion.
“LBO is the new IPO,” tweeted private equity billionaire Orlando Bravo, contrasting the leveraged buyouts of his industry with initial public offerings that traditionally list private companies on the stock market. 20. ESG ESG, or environmental, social and governance, investing was introduced in a market paper called “Who Cares Wins” and aimed to channel investment toward conscientious disruptors or established firms changing the way they do business. The bets included makers of lithium batteries for electric vehicles , companies that recruit from HBCUs , or those that link CEO compensation more closely to certain metrics, including environmental performance .
It wasn’t the first time market behavior could be boiled down to a bumper sticker phrase. In the 1960s, the Nifty Fifty of blue-chip stocks like Dow Chemical and Eastman Kodak ruled the stock market. But in the 2010s, big tech companies captivated investors. In addition to FAANG, high-growth names like Tesla TSLA and Nvidia NVDA dominated market gains.
Stocks around the world plunged and the British pound dived to a 31-year low against the U.S. dollar after news broke that 51.9% of Britons voted to leave the EU following four decades in the trade bloc. Boris Johnson, now the U.K.’s prime minister, was among the most prominent Brexiteers, likening an exit from the EU to an escape from prison.
A steadily growing economy was also thrown into abrupt reverse. The U.S. contracted sharply in March and April after state lockdowns and strict limits on public gatherings were put in place. Gross domestic product shrank 5.1% in the first quarter of 2020 and a whopping 31.2% in the second quarter, plunging the U.S. into its first recession in 11 years and one of the deepest in history. Twenty million jobs vanished.
24. Meme stocks and online trading boom redux Mix together COVID-19 lockdowns, government stimulus checks, a torrent of central-bank liquidity, the advent of zero-commission trading and a new generation of investors versed in online gambling and other Internet pursuits — and you get a new boom in retail investing.
That said, not all of the surge in retail trading was due to the meme-stock frenzy, with analysts noting that many traders proved nimble in navigating the market’s ups and downs. It would be a mistake, they argued, to assume that the millions of new accounts opened in the midst of the pandemic will simply evaporate.
You could’ve named number 25 Joe Biden and the democrats. Could’ve also noted that inflation is following the path of oil which took off just after Biden initiated war on American oil.
Happy anniversary!