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The Significance of Investing

Last Updated on January 15, 2019 by Sultan Beardsley

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Investing has become crucial to our economy and the dictation of foreign markets. Back in the robber baron days, when companies first began to offer equity in the form of stocks and bonds to the public, not many people had the knowledge nor resources to invest. However from this period up to the Great Depression, investing became much more prevalent in households and people among the middle class. This is due to the incentives created by those in charge of the markets. When margin buying and selling was introduced it gave anyone the ability to invest even if they didn’t have the money to purchase the amount of stock they desired. In theory, this would benefit banks and the stock market: more people buying stock caused prices to skyrocket, and the more people buying on margin, the more federal banks could make off of interest on the loans people took to buy stock. As more and more people began investing by using the banks’ money, it eventually caused the most catastrophic decline in our economy ever recorded. At this time, the majority of the middle class had put unreasonable amounts of their money into the stock market, and most of them lost everything. This was easily the most significant time in the history of the stock market as it led to a the birth of an entire new generation of investing.

When the stock market returned and the economy stabilized, mind you this was slightly due to World War II and the land lease act, more companies than ever turned to the stock market for funding, thus growing the market and the shares available in different sectors. This meant that more companies could vet their employees’ salaries in the form of stock rather than tangible currency. This not only created more shareholders and people investing in companies, but also broadened the different sectors in which people could invest. This truly began to dictate the economy and once again drove the stock market up. However this time around, people were more wary of investing in stocks after the recent demolition of our economy. In turn, the federal reserve began to create more control over what people were investing in, thus limiting the potential downside and risk for another fatal crash. This was accomplished by incentivizing people to invest in the bond market, and the stock market, by changing the federal interest rate. Still true to this day, when the federal reserve lowers the interest rate on bonds, more people invest in the stock market as there is less of a return on the bond market. However, when the Federal Reserve raises the interest rate, more people invest in bonds as they’re making more money on their investment and banks are having to borrow money at a higher rate thus causing the stock market to go through a correction. These actions by the Federal Reserve have had great influence on the market and kept it at a relatively reasonable rate of growth and expansion.

Investing is significant, especially in this country, for it truly dictates our economy. Furthermore, people should be taking a percentage of their money and investing in order to have some money put away that is actually increasing in value with time rather than lying dormant, thereby losing value due to inflation. When we have an excess of “still money” it halts our economy and can cause a crash. That being said, get out there and read some more articles on how you can begin investing your money!


MS Money Move and it’s Chief Operating Officer who is a scientist and individual investor, as well as its affiliates are not registered financial advisors. Our posts should serve as educational material to help you conduct due diligence research. Posts and articles are not directives or recommendations to invest in any security. We reserve the right to buy or sell any security for ourselves without any notification except when required by law. We are not responsible for the action of our affiliates. Investment theses may change due to the variable nature of the securities market. Because of this there is great risk when investing in stocks and options which can result is capital loss. Additionally, past performance by MS Money Moves or any security is not a predictor of future performance. Everyone should conduct their own research and due diligence before making an investment decision. We recommend you consult a financial advisor regarding any investment action.   

The biotech sector is especially volatile. Stock prices may fluctuate substantially based on material or nonmaterial developments. We encourage everyone to familiarize themselves with clinical trial processes, relevant terminology, FDA/SEC rules and regulations, and the general processes of drug & therapy development/approval. Always do independent research in a security prior to investing.

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