Why did New York need another stock exchange in 1968? Why was the New York Stock Exchange, American Stock Exchange, and Pacific Stock Exchange insufficient? An unprecedented bull market coupled with paper-based systems.
I’m in my 50’s and don’t remember “Wall Street” not having both the NYSE and NASDAQ as the two main exchanges. I am old enough to remember the AMEX being part of the numbers on Wall Street Week back when it was on PBS, but not old enough to recall any companies listed on that exchange.
The hows and whys of this type of financial infrastructure is rarely told in business histories, and when it is, the stories are often greatly simplified. Which is why you often find tidbits of truths hiding elsewhere in other stories, like the passage below in The Snowball, which is a biography of Warren Buffett, with barely a mention of the NASDAQ.
Too many paper tickets and systems that relied on physical movement of stock certificates. Systems that seem today like they belong in the 1800s, not a year before the moon landing.
Public vs. Private Companies
But more interesting is the mention of the “under-the-counter” market and the “Pink Sheets”. Here in the 21st Century there is a fairly clear line between private company and public company. Public companies are those listed on the stock market.
That line wasn’t so clear in 1968, nor in December of 1980, the time of Apple’s IPO. I talked about that in a prior post, how Apple was considered an “over the counter” stock, despite being listed on this new-fangled NASDAQ exchange.
Buffett loved the Pink Sheets
And speaking of over the counter and Pink Sheets, Warren Buffett never did disclose to his investors back in the 1950s and 1960s how he made them so much money. The Buffett biography never said, but in The Snowball there are hints. It sounds like Buffett was far from afraid of buying shares in companies that were public, but unlisted.
In fact, it seems Berkshire Hathaway itself was only traded over the counter back in 1963 when Buffett started buying its shares. We know the company wasn’t listed on the NYSE until 1988! I’ve seen hints that it was on the NASDAQ before then, but if so, that couldn’t have been before the 1970s, as the NADSAQ didn’t exist before 1971.