capital stock
-
Going short in 1608
Buying a stock, or taking a ‘long position’ in financial jargon, is what you do when you expect the price of that stock to go up. If, on the other hand, you expect the price of a stock to go down, you can take a ‘short position’. This can be done by borrowing stocks from a third party and then selling these. When the price indeed goes down, you can buy the stocks back at a lower price before returning them to the lender, and thus make a profit. Nowadays, this is an everyday activity for many stock traders, made easy by the services of brokerage firms. Remarkably, it was also daily practice in…
-
The oldest share
The VOC was the world’s first company whose shares were actively traded. It would therefore make sense that the world’s oldest share certificates had been issued by the VOC. It is not quite like that, however. The VOC charter of March 1602 stated that the company would issue registered shares. Subsequently, the introduction to the capital subscription ledger of August 1602 explained the procedure for transferring the ownership of a share. (Read more about these documents and the IPO of the Dutch East India Company in this blog post.) When two share traders had struck a deal, the buyer and the seller (or their authorized representatives) had to appear together…
-
Was the VOC the most valuable company ever? (Answer: NO!)
On August 19, 2020, the market capitalization of Apple crossed the $2 trillion mark (that’s $2,000,000,000,000). Apple is the world’s most valuable company right now. But is it also the most valuable company of all time? The Saudi Arabian oil giant Saudi Aramco was briefly valued at $2.03 trillion when shares amounting to 1.5% of its capital began trading on the stock exchange of Saudi Arabia in December 2019. (At the time of writing, it is worth a lot less, due to the fact that the oil price plummeted after the corona virus outbreak in early 2020.) However, numerous websites claim that at some point in history various historical trading…
-
What was the return on VOC shares?
Did investors in the world’s first IPO get rich? In this blog post, I’ll give the answer, based on VOC share price data that I collected from various archival sources during the research for my book. I’ve made my data available for download and reuse in a Google Sheets document. VOC share price data The price data are sketchy. Neither the exchange clerk nor the VOC itself recorded the prices. However, for the 17th century, I found 851 share price observations in financial papers and correspondences of merchants, notarial deeds, and, occasionally, newspapers. The following chart shows average monthly prices for shares in the Amsterdam branch of the VOC. (Shares…
