"CAPITAL MARKETS, MONEY AND VALUE"
Tuesday, 28th November, AD2006 

Our day started early. Leaving our hotel we were greeted by unusually warm and balmy weather for November. We headed downtown in a cab and jumped out a short walk from Wall and Broad Streets. At the security checkpoint we were ushered inside and reached the main trading floor of the New York Stock Exchange just before 9.30 AM, in time for the fall of the opening bell. 

The trading floor of the 'Big Board' is always an invigorating experience. 
On a busy day, well in excess of 3,000,000,000 shares will change hands of the 2,700 foreign and domestic companies listed on the world's largest and most prestigious stock exchange; a market with a total global market capitalization of $21 trillion.

Our modern stock markets are an amazing powerful capital tool far beyond the comprehension of the mercantile banker and investor of old. 

Joint stock trading companies began to emerge in Holland and England in the late 1500's and early 1600's, revolutionizing global commerce, business and trade. This new kind of 'company' made possible opportunities that previously were not feasible; enterprises where, due to 
the size to the objective, substantial capital was required both initially and ongoing, where risk was considered to be an element in the business, and when longer term increase in value was evident despite immediate and short-term profits being low or absent. 

As England and Western Europe continued to expand its markets, trade and shipping, so more joint stock companies appeared, attracting further capital investment from public stockholders. These 'financiers' were able to invest in a company and in substitute, own a part of that company, its assets and present and future earnings. 

Initially, mostly 'market makers' handled various companies' stock; financial houses and stock brokers that matched buyers with sellers, and generally promoted the stocks of the companies they represented. With time, central stock exchanges appeared, aiding the trading of shares of 
numerous companies on single exchanges, the Amsterdam Stock Exchange being the first, established in 1602 by the Dutch East India Company. 

Without a doubt, the advent of these capital markets paved the way to the Industrial Revolution and was instrumental to the opening up and development of the new world and global trade and markets. 

Large amounts of capital could be amassed from a broad array of investors and channeled into large enterprises or projects not otherwise achievable through private ownership and financing alone. Both normal and professional investors could get a chance to share in the increasing 
values and earning of promising enterprises that were established and managed by other professionals. 

With time, huge efficiencies have been built into these markets. Instant global computerised trading makes possible the exchange in ownership in many millions of companies globally at any given moment. A global financial media infrastructure reports to the world a company's market 
announcements, press releases and financials within a few seconds of them being released. Within moments, the broader market has received and assessed the information and made a judgment over that company's present and future accomplishments, which is reflected instantly in that company's market capitalization and share value. 

In today's markets, professionally managed capital is constantly searching for value. Seasoned professional investors search for opportunities; the existence of missed priced stocks, "undervalued" companies, where real asset values exceed current market valuation. Our modern capital markets make possible our global infrastructure, industrialization, technology and way of life. Further they provide us with the opportunity to identify, search out and invest in value. 

But the real questions remain; what is true tangible value, how do we identify it and measure it? Finally how do we own it, control it and profit from it? 

Sincerely - Philip Judge pjudge@anglofareast.com