Pearl “Polly” Adler, of Russian-Jewish origin and born in 1899, was sent by her parents to the US in 1913 to escape the increasing pogroms in Imperial Russia. By 1920 she was procuring prostitutes to work at brothels in New York City.
She opened a club in 1931 at the newly completed building “The Majestic,” which included a bar designed to look like Tutankhamun’s tomb. Her club’s reputation spread to include some of the most famous of New York society, theater people, politicians, and underworld until 1945. Ms. Adler’s brothels provided the finest smuggled alcohol, food from selected private chefs, and the best girls, “tall and beautiful, gliding down the staircase like swans on a mirrored lake.”
Times and views on prostitution changed. Secret trysts often through the smartphone/computer and online pornography, made the business easy and inexpensively accessible. For the most part, elegant and glamorous grand “Gentlemen’s Clubs” no longer exist.
The US Securities and Exchange Commission deregulated the securities industry in 1975. The public reason was that the “Old Boy’s Club” and fixed commission rates did not address the needs of retail customers. That was not true. There was fierce competition.
Merrill Lynch was “Bullish on America,” introduced on television during the 1970 World Series. E. F. Hutton had the best research, so “when E.F. Hutton talks, people listen.” Boutique firms like Paine Webber offered high-net-worth client services, including lunch in corporate executive dining rooms.
Charles R. Schwab opened the first “discount brokerage” in 1975 with trading commission rates half of what the Old Boys charged. The firm did not provide research, a personal stockbroker, or the dining room. An investor could come in at lunchtime wearing “work clothes” from a construction job and feel at home. Wall Street had come to Main Street.
Trade*Plus was the first consumer-oriented online trading application in 1985. That was soon followed by the “Black Monday” crash in 1987.
Online “Day trading” took off in 1997. Between 1995 and 2000, the Nasdaq Composite index reached a price–earnings ratio of 200. In February 2000, the NASDAQ 100 index peaked (inflation-adjusted) at 8,300. By December 2000 it traded at 4,200. A “man on the street” stock favorite, Pets.com, began operations in November 1998—with a listing day price high of $11.00 in February 2000—and was liquidated in November 2000 at $0.20.
From 12 online brokerage firms in 1994, this increased to 140 firms by 2001. In 2022, more than half of American families, 58 percent, were invested in the market. That was an increase from 32 percent in 1989. Perhaps most importantly investors 65 and older own 43 percent of the US stock market and the wealthiest 10 percent of American households now own 89 percent of all US stocks.
Making investing in the stock market more easily accessible and less expensive is beneficial. The stock exchange makes more income from transaction fees. Companies have a larger market for their Initial Public Offerings. More liquidity is created from an increased number of investors and that is good for the stockbrokers.
However, offering access—not just checking prices—to the market between Instagram and Twitter on a Smartphone is not about investing. It is all about trading the market. Just because everyone can access the stock market does not mean everyone should.
People used to get their music from the radio, and this created stars. The first music video broadcast on MTV in 1981 was The Buggles’ “Video Killed the Radio Star.” Who now listens to the radio for their music? Who goes to a “Gentlemen’s Club” to fulfill their fantasies?
Maybe the Old Boys still have a hidden agenda that is not beneficial for the newbies.
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