How Investing Became Cool

The Emergence of Wall Street into Popular Culture

Jacob Gibson

  Bankers and stockbrokers are not generally viewed as the most exciting people in the world. Traditionally, they have been viewed as those guys who are always reading the Wall Street Journal or talking on their cell phones when they're out in public; they wear the same white shirt, red tie combination every day of the week, and there's no noticeable distinction between work and the rest of their lives. Not exactly the kind of people you'd want to invite to liven up a Christmas party. And if you do invite them, they usually end up standing before a group of bored and confused laymen talking about hedge funds or IPOs. This was a common perception in the past, but within the last decade this image has changed considerably. The field of finance and investments has seen a considerable increase in popularity, and these same bankers and stockbrokers might even be considered cool now.

  The 1990s saw the climax of the longest bull market in recent history. As John Cassidy pointed out in an article for the New Yorker earlier this year, interest rates were low, unemployment was low, and thanks to the Internet bubble the Nasdaq was climbing at an unbelievable rate. To the average American, it started to become apparent that the stock market was a good place to turn to make a quick and easy profit, and the seemingly infinite growth made it seem like an almost risk-free investment. Soon everybody was talking about stocks like they were the newest and hottest fashion trend, and it was impossible not to notice. In a recent Money magazine article, Joseph Nocera says that in 1994, 34% of American households had some money in the market, up from just 10% in the 1950s, and this number climbed even further to more than 50% by 2001. Most of this money was invested in the form of stock and bond funds, primarily through 401(k) plans, in which Americans had invested over a hundred billion dollars by 1995. This number only got larger, and by the end of 2000 there was more money in mutual funds than there was in the entire banking system. By this time, there were actually more mutual funds than there were stocks listed on the New York Stock Exchange and the Nasdaq combined. Americans were pouring money into these investments with an almost religious fervor, under the assumption that they were all going to become filthy rich.

  The Internet contributed largely to the frenzy, primarily because it was the emergence of new Internet companies that fueled the insane growth of the market and the illusion of easy money. started it all in 1995 when its initial public offering of stocks doubled the value of the company in the first day of trading. As Cassidy points out, this proved to be the best opening day for a stock in Wall Street history for an issue of that size. Over the next five years, more than 400 other Internet firms went public, making IPOs an almost everyday occurrence, and it wasn't long before Yahoo! and eBay were household names. Internet stocks were the new hot item, everyone was trying to get a piece of the action, and just as with any other fad, anybody who questioned this irrational growth of the Nasdaq was shunned.

  With the Internet boom, the stock market was not only brought out into the public spotlight, but it was also brought much closer to the average American, giving Joe Schmoe much better access to the loot. In the past, getting involved in the stock market required calling up a broker, asking for prices and advice, and letting the portfolio managers worry about trading, diversifying, and managing risk. However, at the same time that Amazon, Yahoo! and eBay were blowing up, companies like E*Trade and Ameritrade decided to jump on the bandwagon and launch websites of their own that offered deep-discount, no frills online brokerage services. This allowed anyone with an Internet connection to open an account and trade stocks at will, without any professional intervention whatsoever, so that people who previously could not afford the brokerage fees required to trade actively in the stock market were becoming their own brokers. According to Cassidy, eight hundred thousand Americans had online trading accounts by the summer of 1996, and the number was growing daily. People who had known absolutely nothing about the market a few years earlier were now passing tips at backyard barbecues and playing stocks like scratch-off lottery tickets.

  This new populist stock market culture was also helped along by a huge influx of market-related information into mainstream media. It was no longer necessary to subscribe to the Wall Street Journal or Barron's for expert research and advice, since websites like the Motley Fool and Raging Bull provided these things in a much easier to digest form and even offered a forum for average investors to swap gossip and exchange notes. In addition to online resources, Americans could also turn to any of the many business publications that sprang up in the mid-90s, such as Fast Company, Industry Standard, and Business 2.0, or tune their TVs to CNBC, which had just shifted its focus from consumer news to Wall Street and added a stock ticker for the general public to view at any hour of the day.

  With the information and the means, the little guy found himself on the same footing as the pros, and gave in to the temptation of quick riches. The term day trading found its way into the everyday American vocabulary as people everywhere started cashing in their life savings for a chance at the booty. And as if that weren't enough, even the most financially ignorant people were deciding to try and start up their own hedge funds. As Nocera says, the stock market had become mainstream.

  Once Wall Street and the Internet bubble had finally saturated the Internet and the news media and taken over households all over America, it was only natural that they should find their way into our entertainment media as well, glamorizing, or at least limelighting, the lives of investment bankers and stock brokers. The Internet Movie Database gives a few examples, such as the movie American Psycho, released in 2000. Any images of stodgy and boring old bankers with large guts and bigger cigars are obliterated when we see Christian Bale playing a young and vital investment banking vice president, snorting cocaine at hot spots all over New York City. And the same can be said of Boiler Room, also released in 2000, which portrays young and hip superstars Vin Diesel and Ben Affleck as stockbrokers who make millions of dollars and spend it all on drugs, alcohol, and Ferraris. While some might argue this isn't the most wholesome lifestyle to imitate, it is entertainment, it is Wall Street, and mainstream American moviegoers everywhere ate it up.

  Now of course, the Internet bubble has burst. A lot of those companies that made inexplicable amounts of money in dramatic IPOs have since dropped off the face of the Earth, and most of the overly ambitious little guys have found themselves with nothing to show for their trading binges. Some of the largest and seemingly most stable companies in America have found themselves bankrupt, and the glory stories of the mid-to-late 90s have been replaced on the evening news with corporate fraud and accounting scandals. However, the damage has already been done. The stock market frenzy of the past decade left a lot of Americans fully exposed to the explosion, so we were forced to watch while our mutual funds and 401(k) accounts suddenly dried up. At a time when we would like to think that it was all just a fad and forget about it, we are being more affected than ever by the unpredictable turns of the stock market.

  The incredible rise and fall of the market in the 90s was a brutal lesson in elementary finance for laymen and professionals throughout cities, suburbs, and rural towns all over America. It grabbed our attention and pushed the stock market into the foreground of American culture. To borrow from the title of a book by Edwin Perkins, Wall Street has left its mark on Main Street. If you've understood everything I've said without too many visits to a financial dictionary, then you've proven my point. For the most part, the American public has been educated, and stock market lingo has made its way into everday speech. Perhaps it is only a matter of time before a diversified portfolio becomes as much a part of the American Dream as apple pie and white picket fences.

Sources cited: Ameritrade, Inc. 21 Oct. 2002; Cassidy, John. "Striking it Rich; The rise and fall of popular capitalism." The New Yorker. 14 Jan. 2002: 63; E*Trade Financial. 21 Oct. 2002; Internet Movie Database. 21 Oct. 2002; Nocera, Joseph. "Welcome to the Money Revolution." Money. Fall 2002: 34-38; Perkins, Edwin. Wall Street to Main Street: Charles Merrill and Middle-Class Investors. Cambridge: Cambridge University Press, 1999.