The Stock Market in Twelve Eras

Three panics, three clocks

On October 29, 1929, the ticker tape printing trades from the New York Stock Exchange fell 152 minutes behind. The price an investor read belonged to another point in the trading day. News of the crash travelled; confirmation of each sale travelled much more slowly. (Source)

May 6, 2010, was almost the reverse. In less than five minutes, S&P 500 futures and an exchange-traded fund tracking the index lost roughly 5%; they recovered that stretch over the next quarter of an hour. Regulators later reconstructed millions of trades across connected markets. The reaction had spread faster than its explanation. (Source)

In 2020, the clock belonged to the pandemic, the economy, and monetary policy. From a closing high on February 19 to a low on March 23, the S&P 500 fell 33.9%. By August 18 it had passed its earlier closing high. (Source)

Three panics, three clocks. Together they shed light on information delay, the channels through which stress spreads, and recovery time; they do not prove that panics have been accelerating over the long run. What changes is the market's nervous system: how information travels, what it costs to act, who decides, how decisions are financed, and which rules apply.

The twelve eras below organize that history of the U.S. market. Their boundaries are approximate, not statistically established regimes. The opening scenes are reconstructions; the final one is hypothetical.

1 · 1871–1914 · Telegraph and gold standard

Recreated scene. A broker in Chicago waits for a quote from New York. As he writes it down, someone closer to the exchange has already seen the next move.

The telegraph and the ticker brought markets hundreds of miles apart closer together. The New York Stock Exchange dates the ticker's introduction to 1867. Even so, each price had to be transmitted, printed, and distributed. Between a trade and the moment it became known, there was still time for someone else to gain an edge. (Source)

Railroads capture the promise of the period. They required vast amounts of capital and could redraw the economic map. They also forced investors to distinguish a real transformation from the price paid to take part in it. That distinction will return in other eras.

By the early twentieth century, the dollar was linked to gold, and money and credit had little flexibility when demand for cash suddenly rose. Laws and exchange rules existed, but neither the SEC nor an operating Federal Reserve did. During the panic of 1907, J. P. Morgan gathered the heads of financial institutions in his library and locked the doors until he had secured support. The episode helped spur the reform that created the Federal Reserve in 1913. (Sources S38 S44)

What it left behind: faster communication within a financial system that still depended on private arrangements when liquidity ran short.

2 · 1914–1933 · Ticker, margin, and collapse

Recreated scene. October 1929. A buyer who used credit to purchase shares receives a demand for more collateral. He searches the ticker for a price at which to sell, but the quote he sees is late.

The era began with an interruption that is hard to imagine today: faced with war in Europe, the New York Stock Exchange suspended stock trading from July 31 through December 11, 1914, inclusive. Bonds resumed trading under restrictions before stocks did. (Sources S07)

After the war, radio, automobiles, and electrification fed the promise of prosperity. Buying on margin magnified the bet. In some cases investors put up barely a tenth of a share purchase's value, though terms varied. If the share price fell, the broker demanded more collateral or sold the position. (Source)

The 1929 crash was not a single day. Between its 1929 high and 1932 low, the Dow Jones lost around 89%. The collapse of credit, banking failures, deep economic contraction, and policy decisions all figured in that long descent. (Source)

What it left behind: credit lets investors participate with less of their own capital, but it can also force them to sell precisely when holding on requires cash they do not have.

3 · 1934–1945 · The great architecture

Recreated scene. A small shareholder opens a company report looking for figures that once depended much more on promises, rumors, or a seller's word.

The response to disaster changed the bargain between companies and investors. Federal securities laws passed in 1933 and 1934 expanded disclosure requirements and gave rise to the SEC. The Federal Reserve received authority to regulate broker credit used to buy shares. (Sources S40)

The uptick rule, adopted in 1938, restricted short sales under specified price conditions. It did not prevent an investor from selling shares they already owned. (Source)

New rules did not restore prosperity overnight. The recession of 1937–38 interrupted the recovery: real U.S. GDP fell by roughly 10%. Then war reordered production, debt, and expectations. The modern market architecture was born in a decade of fragility. (Source)

What it left behind: mandatory disclosure and a federal supervisor at the heart of the U.S. securities market.

4 · 1945–1968 · Bretton Woods and institutional investors

Recreated scene. A worker accumulates benefits in an employer pension plan. Without following a single quote, she has an indirect stake in a portfolio of shares.

The postwar years brought growth and a different way to pool savings. Pension funds and mutual funds gave greater weight to portfolios managed for many beneficiaries. One decision could represent thousands of people who would never call a broker. That changed the scale of orders. (Source)

The monetary framework was different too. Bretton Woods, agreed in 1944 and implemented afterward, linked the dollar to gold for foreign monetary authorities and other currencies to the dollar. That exchange-rate order framed much of the postwar period. (Source)

On May 28, 1962, the market suffered a sharp fall that the SEC later examined. Neither growth nor professional management had removed the possibility of buyers suddenly pulling back. (Source)

What it left behind: large professionally managed portfolios, tying the market more closely to the savings of people who did not trade directly.

5 · 1968–1975 · The paperwork crisis and the end of the postwar order

Recreated scene. A Wednesday in 1968. A clerk faces a pile of stock certificates. The exchange is closed today, but the work of recording earlier trades goes on.

Trading volume outran the capacity to process certificates and paper records. For a substantial part of 1968, the New York Stock Exchange closed on Wednesdays so member firms could catch up. Across the crisis as a whole, the SEC counted around 160 member firms that went out of business. Prices travelled by wire; ownership took longer to settle in the books. (Sources S13)

The crisis accelerated a shift toward more automated recordkeeping and settlement. Modernizing the mechanics of trading did not settle the question of what companies were worth.

In August 1971, the United States suspended the dollar's convertibility into gold for foreign central banks. The 1973 oil shock added to inflation and weak growth; in those years the S&P 500 went through a bear market. The postwar framework had come apart. (Sources S45 S16)

What it left behind: the need to modernize settlement, and a reminder that even a good business can be a poor investment if bought at too high a price.

6 · 1975–1987 · Freer commissions and derivatives

Recreated scene. May 1975. For the first time, a saver compares what different brokers charge for the same trade.

On May 1, 1975, uniform stock-trading commissions came to an end. Competition began to reduce a visible cost that investors had long taken for granted. Trading still carried other costs—the gap between buying and selling prices, taxes, and the impact of a large order—but the explicit price of the service was no longer protected. (Source)

The menu of instruments expanded too. Cboe's first listed options began trading in 1973, and CME launched S&P 500 futures in 1982. A portfolio could take exposure or hedge risk without trading every share. That flexibility also drew markets more closely together. (Sources S19)

Portfolio insurance sought to protect portfolios by selling futures as prices fell. On October 19, 1987, the Dow Jones lost 22.6%. Mechanical hedging contributed to the episode, alongside other factors and strains on liquidity. (Sources S21)

What it left behind: cheaper trading and more accessible hedging; a shared protective rule could add to selling just when buyers were scarce.

7 · 1987–1997 · After the crash

Recreated scene. A trader tries to reach an intermediary as prices jump. She wants to know whether her order went through, not merely the last quoted price.

The crash left practical questions: when should disorderly trading stop, and how can intermediaries keep financing their obligations? After 1987, market-wide trading pauses were approved for extreme falls. On October 20, 1987, the Federal Reserve announced that it was prepared to provide liquidity to the financial system. It was a response to that crisis, not a standing promise to rescue every stock price. (Sources S42)

The decade also showed how an electronic market could preserve quieter privileges. In 1994, Christie and Schultz observed that Nasdaq market makers avoided certain price increments. The SEC documented practices that widened quotes. A small investor paid a commission, but also the gap between the best price to buy and the best price to sell. (Source)

The regulatory response made room for new ways to compete for orders. The screen was modern; the rules for displaying and improving prices had to catch up.

What it left behind: mechanisms to pause severe declines and fresh attention to costs hidden inside quotes.

8 · 1997–2005 · Electronic trading and decimal prices

Recreated scene. An individual checks prices on a computer and places an order without speaking to a broker. The share price is visible; what the trade will cost at execution is less clear.

The internet brought market information into more homes. Electronic platforms competed with traditional intermediaries for orders. In 2001, decimalization was completed: the minimum quoting increment fell from one sixteenth of a dollar, 6.25 cents, to one cent. Quoted spreads generally narrowed, although that did not mean every trade cost a cent. (Source)

Smaller price increments made it easier to improve a quote. A historical pattern profitable on paper might cease to be profitable when entry and exit costs changed; another might never have been tradable. Telling the two apart requires data from the period.

The technology boom had its correction: the Nasdaq Composite lost nearly 78% between its closes on March 10, 2000, and October 9, 2002. In 1998, Long-Term Capital Management had shown another danger: sophisticated models, abundant financing, and positions that were hard to unwind. The Federal Reserve Bank of New York brought private firms together to help arrange a solution. (Sources S25)

What it left behind: broader electronic access and a discipline for investors: include real frictions before calling a pattern in old data an "edge."

9 · 2005–2009 · Speed and fragmentation

Recreated scene. An order can reach several trading venues. One shows a buyer, another a seller. For a moment, nobody has a single, complete picture of both.

Regulation NMS in 2005 strengthened protection for the best automated, immediately accessible quotes. In searching for prices across trading venues, orders and information travelled through a more complex network. Seeing a quote and responding before someone else could be valuable, even if neither trader knew more about the company. (Source)

In August 2007, several quantitative funds suffered concentrated losses. Khandani and Lo found results consistent with common deleveraging among similar strategies. The next year, the 2008 financial crisis exposed much larger problems of credit and solvency. (Source)

What it left behind: a market spread among connected venues, and a new question about how quickly counterparties can disappear.

10 · 2009–2020 · Central banks and index funds

Recreated scene. A saver buys a fund tracking the S&P 500. He has not chosen the companies one by one, but he has chosen a rule for owning them.

After the financial crisis, the Federal Reserve kept interest rates very low for years and bought assets at scale to support the economy. Decisions on rates and purchases became an essential part of the market landscape. (Source)

Index investing kept growing. According to the Investment Company Institute, index mutual funds and index ETFs held 40% of long-term fund assets in 2020; the share reached 48% in 2023. A saver could delegate security selection to a known rule while other participants continued to analyze and trade individual companies. (Source)

Two episodes revealed different risks. The 2010 flash crash carried a fall across futures, shares, and electronic venues. In February 2018, a jump in the VIX damaged products that bet on low volatility: the index rose 115% on February 5, and the inverse note XIV suffered extreme losses. (Sources S30)

In 2019, Charles Schwab removed the base commission from certain online trades in stocks, ETFs, and options. Options still carried a per-contract charge, and other trading costs remained. (Source)

What it left behind: financing shaped by monetary policy, more portfolios following indexes, and competition on fees that made some trading costs less visible.

11 · 2020–2025 · The individual investor returns

Recreated scene. January 2021. Someone follows messages about GameStop on a phone and checks the price before deciding whether to buy. Others see the same posts but may hold very different positions and motives.

The pandemic brought together lockdowns, stimulus, investing apps, and intense attention to the stock market. The S&P 500's path in 2020 opened a new public conversation about who moves prices. (Source)

GameStop showed that online communities could focus attention and change demand for a stock. Options traded too, although the SEC staff report found no evidence of a gamma squeeze as an explanation for the episode. (Source)

Another development was the growth of S&P 500 options expiring on the day they traded, known as 0DTE. Cboe estimated that, through August 2023, they made up about 43% of average daily volume in SPX options. Hedging by options sellers can influence prices; Cboe's published analysis did not find a generally destabilizing effect. (Sources S34)

The S&P 500 had an annual total return of −18.1% in 2022. In April 2025, tariff announcements coincided with another burst of volatility: the index fell 4.84% on April 3 and rose 9.52% on April 9, when a pause in some tariffs was announced. (Sources S36 S37)

What it left behind: wider access and a more public conversation about investing, alongside very short-dated instruments whose particular influence must be examined case by case.

12 · Since 2025 · A possible cognitive transition

Hypothetical scenario. A professional asks an assistant to compare funds for her savings. The system summarizes reports, asks about her horizon and constraints, and proposes a decision. She remains responsible for accepting or rejecting it.

The date 2025 is a way to frame a possible transition, not a statistically established break. AI can help read documents, summarize results, and write analysis code. It can also make mistakes fluently. We do not yet know how much its adoption will change prices.

Electronic trading made execution cheaper; AI may lower the cost of some research and analysis tasks. Whether an edge disappears will depend on which information it uses, how quickly that information spreads, whether it can be traded, and how many others reach the same conclusion. Some edges may erode; others may arise from better questions or more careful execution.

Diversity matters, but counting providers is not enough. Two different assistants may place similar orders if they use the same data and pursue the same goals. One provider may serve clients with different horizons, risk limits, liquidity needs, and constraints. Between those extremes lie human oversight and specialized models. How much convergence will appear in decisions remains an open question.

What it may leave behind: a new division of work between people and systems. Its effect on market stability remains unwritten.

The twelve eras at a glance

The dates are approximate; some transitions overlap.

What a century and a half of market eras teaches

Information has value relative to the time and cost of acting on it. In 1929, the tape could fall behind. In 2010, prices changed before anyone could reconstruct why. An opportunity visible on an old chart might not have been available to an investor at the time; it can also vanish once commissions, spreads, and the impact of orders are included.

Crises change shape. Margin and banks mattered in the Great Depression. In 1987, portfolio hedging contributed to the fall; in 2007, research points toward common deleveraging by quantitative funds; in 2010, selling travelled rapidly between futures and shares. The last three stories raise a question about similar decisions made at once, even though their mechanisms differed. The next article in this series will examine each one closely. (Sources S20 S27 S02)

Infrastructure is part of the market. The 1914 closure, the Wednesdays of 1968, and trading pauses after 1987 remind us that a trade requires an order to travel, a counterparty to be found, financing to hold, and ownership to settle. When one function fails, the screen may display a price that is hard to obtain.

AI raises another question about who decides. Systems' data, goals, risk limits, and human oversight will matter. The third article will explore possible scenarios. A later piece will examine how to distinguish a genuine historical pattern from an illusion created by costs or prices that investors could never have traded.

The thirteenth question

The history of these twelve eras cannot predict a thirteenth. It does help us frame the question: if some research and orders are delegated to AI systems, how many different decisions will remain on the other side of an urgent sale? We will need to observe what those systems do, under which constraints, and in which market conditions.

The fear of a 1929 investor may feel familiar. The path between that fear and a price has changed again and again. Situations rhyme. The response, each time, is new.