The US has ten times the population and thirteen times the GDP of Canada, and so it’s reasonable that its stock exchanges see significantly more volume.
Exchanges in the rest of the developed world aren’t necessarily less *prestigious*, they just get less media attention because they’re lower value and volume.
Developing markets can have problems with regulation, corruption, and government mismanagement so they’re often treated with a little more suspicion from regulators.
Another thing to consider is that US corps have a massive focus on growth. Some non-US exchanges like Australia's have outperformed US exchanges in returns over some periods, but they tend to focus more on dividends, while long term investors usually favor growth.
There's also the inherent stability you get from the US given its global dominance. Ripples in US markets typically do affect foreign markets, but not vice versa, and long term investors who favor US markets are essentially betting on the US maintaining that influence. That trend doesn't seem to be changing any time soon, so it's far lower risk.
They’re big, diversified, and have a lot of trading volume. So they get a lot of attention.
Canada’s largest stock exchange is about the same size as Microsoft. So it tends to get less attention.
American stock exchanges like NASDAQ are well-respected because they're big and have lots of famous companies listed, like Apple and Microsoft. They follow strict rules to make sure trading is fair and safe for everyone. People from all over the world want to invest there because they trust it. Canadian exchanges like NEO are also good, but they're smaller and not as famous globally, so they're not as well-known.
Because they work. (Don’t tell wallstreetbets/AMC/GME folks I said that, LOL).
Many people (especially Americans) don’t fully understand the concept of a *market* because we’ve almost exclusively experienced retail experience. First, picture an auction like you’ve possibly seen on TV: A fast-talking auctioneer is up on stage rattling off prices and people indicate that they’re willing to pay a price by raising their hand or a paddle. It’s wild and exciting, right?! Now imagine there’s another crowd and another auctioneer directly behind them doing pretty much the same thing, but instead of buying, they’re selling.
Now, replace the 50-100 people you’re picturing with hundreds, maybe thousands, of people and put them in lots of time zones using various currencies. And instead of one pair of buyers and sellers, make it thousands. And at every pair of auctioneers, do this thousands of times an hour.
Accurately keeping track of who wins every bid and then facilitating the exchange of money for the security is a HUGE task, and a breakdown anywhere along the way is unacceptable and terribly time consuming to fix.
The role of the stock exchange is arguably terrible under-appreciated and something most people take for granted.
Are they though? Maybe from a US perspective they are.
But as a risk adverse European I don’t respect or trust Nasdaq nor Nyse and rather stick to stock exchanges in highly regulated EU countries like Euronext (Amsterdam, Paris, Frankfurt) or SIX (CH).
I would say it is a matter of personal preference. Most of my friends and colleagues who are also active in stocks don’t invest in American stock exchanges. Simply too much volatility.
The diversity of US stock exchanges gives you the option of investing in safe, predictable vehicles if you want. There are THOUSANDS of companies listed, including many that are based in europe.
They are respected because the NASDAQ 100 returns absolutely blows away any European ETF over a 20+ year time span. Seriously, go pull up a chart of the NASDAQ 100 and compare it to whatever European funds you are invested in and compare the returns since 1999, it is not even remotely close. Maybe some (but not all) of the European funds have lower volatility then the NASDAQ, but I can promise you they will still not look pretty during a global recession either.
I think this is the answer.
You are confusing "news coverage" with "respect". There is a huge amount of coverage of the US markets, especially the DOW index, which is just the performance of 30 companies! That's not respect, that's looking for news. You can find coverage of the corresponding DAX index on the Frankfurt exchange, but that's a highly regulated EU marketplace. The rules are going to minimize the swings in volatility.
The US exchanges are also regulated, but the regulations are wildly different. The US allows exchange trading funds tied to Bitcoin, where ±5% moves in a day are common. That would never be allowed in the EU.
But, Volatility is exciting, and newsy, and gives the pundits something to talk about; the US exchanges are set up for this action.
Why is it respected at all? how many % of Americans own stocks, like at all? Why bother respecting something that doesn't benefit the majority of the population?
The Federal Reserve's triennial Survey of Consumer Finances shows that in 2022, about 58% of American households owned stock, either directly or indirectly through mutual funds and other investment accounts.
What does that even mean? People’s accounts and retirement needs vary wildly and.. yeah some are not enough. That’s not what we’re talking about though, you said “how many % of Americans own stocks, like at all?” And I pointed out that a vast majority do (probably you as well if you have a retirement account).
Your reply that people are broke is kind of irrelevant, no?
The US has ten times the population and thirteen times the GDP of Canada, and so it’s reasonable that its stock exchanges see significantly more volume. Exchanges in the rest of the developed world aren’t necessarily less *prestigious*, they just get less media attention because they’re lower value and volume. Developing markets can have problems with regulation, corruption, and government mismanagement so they’re often treated with a little more suspicion from regulators.
Another thing to consider is that US corps have a massive focus on growth. Some non-US exchanges like Australia's have outperformed US exchanges in returns over some periods, but they tend to focus more on dividends, while long term investors usually favor growth. There's also the inherent stability you get from the US given its global dominance. Ripples in US markets typically do affect foreign markets, but not vice versa, and long term investors who favor US markets are essentially betting on the US maintaining that influence. That trend doesn't seem to be changing any time soon, so it's far lower risk.
This isn't a eli5
They’re big, diversified, and have a lot of trading volume. So they get a lot of attention. Canada’s largest stock exchange is about the same size as Microsoft. So it tends to get less attention.
American stock exchanges like NASDAQ are well-respected because they're big and have lots of famous companies listed, like Apple and Microsoft. They follow strict rules to make sure trading is fair and safe for everyone. People from all over the world want to invest there because they trust it. Canadian exchanges like NEO are also good, but they're smaller and not as famous globally, so they're not as well-known.
We have a stock market???
Because they work. (Don’t tell wallstreetbets/AMC/GME folks I said that, LOL). Many people (especially Americans) don’t fully understand the concept of a *market* because we’ve almost exclusively experienced retail experience. First, picture an auction like you’ve possibly seen on TV: A fast-talking auctioneer is up on stage rattling off prices and people indicate that they’re willing to pay a price by raising their hand or a paddle. It’s wild and exciting, right?! Now imagine there’s another crowd and another auctioneer directly behind them doing pretty much the same thing, but instead of buying, they’re selling. Now, replace the 50-100 people you’re picturing with hundreds, maybe thousands, of people and put them in lots of time zones using various currencies. And instead of one pair of buyers and sellers, make it thousands. And at every pair of auctioneers, do this thousands of times an hour. Accurately keeping track of who wins every bid and then facilitating the exchange of money for the security is a HUGE task, and a breakdown anywhere along the way is unacceptable and terribly time consuming to fix. The role of the stock exchange is arguably terrible under-appreciated and something most people take for granted.
Are they though? Maybe from a US perspective they are. But as a risk adverse European I don’t respect or trust Nasdaq nor Nyse and rather stick to stock exchanges in highly regulated EU countries like Euronext (Amsterdam, Paris, Frankfurt) or SIX (CH). I would say it is a matter of personal preference. Most of my friends and colleagues who are also active in stocks don’t invest in American stock exchanges. Simply too much volatility.
What a weird circle of friends you have. That is definitely not the norm.
The diversity of US stock exchanges gives you the option of investing in safe, predictable vehicles if you want. There are THOUSANDS of companies listed, including many that are based in europe.
I am so thankful for my American retirement accounts from my time working there, compared to my pathetic Dutch pension.
They are respected because the NASDAQ 100 returns absolutely blows away any European ETF over a 20+ year time span. Seriously, go pull up a chart of the NASDAQ 100 and compare it to whatever European funds you are invested in and compare the returns since 1999, it is not even remotely close. Maybe some (but not all) of the European funds have lower volatility then the NASDAQ, but I can promise you they will still not look pretty during a global recession either.
I think this is the answer. You are confusing "news coverage" with "respect". There is a huge amount of coverage of the US markets, especially the DOW index, which is just the performance of 30 companies! That's not respect, that's looking for news. You can find coverage of the corresponding DAX index on the Frankfurt exchange, but that's a highly regulated EU marketplace. The rules are going to minimize the swings in volatility. The US exchanges are also regulated, but the regulations are wildly different. The US allows exchange trading funds tied to Bitcoin, where ±5% moves in a day are common. That would never be allowed in the EU. But, Volatility is exciting, and newsy, and gives the pundits something to talk about; the US exchanges are set up for this action.
Why is it respected at all? how many % of Americans own stocks, like at all? Why bother respecting something that doesn't benefit the majority of the population?
The Federal Reserve's triennial Survey of Consumer Finances shows that in 2022, about 58% of American households owned stock, either directly or indirectly through mutual funds and other investment accounts.
And how many of those were trivial sums that would never amount to much?
7% return on a dollar or a million is 7% return better than nothing
Hardly better at all, if the consequence is rich people screwing over the rest and eating their savings.
What do you think 401Ks or similar accounts are invested in?
But those are not enough to retire, you'd need twice that amount in today's world.
What does that even mean? People’s accounts and retirement needs vary wildly and.. yeah some are not enough. That’s not what we’re talking about though, you said “how many % of Americans own stocks, like at all?” And I pointed out that a vast majority do (probably you as well if you have a retirement account). Your reply that people are broke is kind of irrelevant, no?
It kind of seems like the person above thinks 401K is the amount not a type of an account.