![]() Starting in the 1980s, the government allowed banks to cross state lines, expand their business, and consolidate the industry into a small number of large firms rather than thousands of small banks. Finance maintained its 20% share until the Great Depression when the collapse of the banking sector and the severe government restrictions on banks after the 1930s reduced the Finance sector to about 10% of the total capitalization by the 1960s. Until 1836 when the second Bank of the United States lost its charter, the Bank of the United States as a company was a giant among a sea of minnows.īanks and insurance companies continued to grow after the Bank of the United States lost its charter in 1836, but at a slower pace than other sectors, especially Transports, and Finance shrank to 20% of the stock market by the Civil War. For the first 50 years of the stock market’s existence, finance was the stock market. In 1791, finance was the only sector listed on the stock exchange as banks and then insurance companies were provided funding by investors. The graph below illustrates the capitalization of each sector based upon stocks included in the U.S. From canals to railroads to airlines, transports have been and always will be an important sector of the stock market. Because of the historical importance of transports, GFD treats transports as a separate sector, not as part of the industrial sector. Global Financial Data recognizes 12 sectors rather than 11. In the 1800s, finance companies and transports largely dominated the stock market, but starting in the 1880s, other sectors began to grow in size, squeezing out finance and transports until today transports represent such a small portion of the total capitalization of the stock market that GICS doesn’t even recognize it as a sector. The graph shows the evolution of the 12 GFD sectors that make up the American economy over the past 200 years. They say a picture is worth a thousand words, and that is certainly true of the picture below. Who knows what the GICS will look like 10 years from now. Since then Real Estate has increased the number of sectors to 11 and Telecommunications has become Communications. Over time other sectors were introduced and in 1999, MSCI and S&P created the Global Industry Classification System (GICS) which broke the stock market down into 10 sectors. ![]() ![]() When stock market indices were introduced in the 1800s, there were two types of indices, railroads and industrials. Railroads represented over 80% of the stock market by the middle of the 1800s. Oddly enough, there were 11 sectors in 1825 as there are 11 sectors in the GICS system today.Īs the stock market evolved, so did the sector classification. Gas, Light & Coke Companies received a separate classification in 1819, and by 1825, The Course of the Exchange had 11 sectors: Canals, Docks, Assurance, Bridges, Water Works, Literary Institutions, Mines, Gas Light & Coke Companies, Roads, Iron Railways and Miscellaneous as the main components of the British stock market. Mines, Bridges and Literary Institutions were added in 1817. By 1845 there were not 3 railroads but 244 railroads. On August 30, 1811, Iron Railways were added as a sector, including the Surrey, Cheltenham and Severn and Wye Iron Railroads. ![]() On January 1, 1811, coverage expanded to two pages and stocks were divided into different sectors: canals, docks, assurance, water works and miscellaneous companies. ![]() Twenty securities were listed in The Course of the Exchange from 1747 to 1811 as a group. The Course of the Exchange made the first attempt to break the stock market down into sectors in 1811 when it expanded its coverage of stocks to include shares other than the three sisters, the Bank of England, South Sea stock and East India Company that dominated the English stock market in the 1700s. ![]()
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