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Lesson 7. The Markets > The Big Bang - Pg. 39

The Markets 39 The Big Bang Even if you don't actually own stock in foreign companies, their performance can provide great insight into the future performance of the American markets. The day of the Big Bang marked the beginning of a global market. As the increased globalization of trades continues, the effects of a day's trading around the world will continue to directly affect the performance of other international markets. A recent example was the collapse of many Asian markets, an event that dealt a fierce blow to the stability of the American markets. International investors who were awake during the open hours of Asian trading were aware of the impending damage hours before the American ex- changes even opened. In this particular example, I'm proud to say that the American markets were strong enough to withstand the blow, and the damage was quickly repaired. The Big Bang was a red-letter day in trading history. On October 27, 1986, the London Stock Exchange dropped its restrictions on allowing foreign investors to participate in their mar- kets. Symbolically, this day represents the unification of markets around the world into one global marketplace. Plain English Other Markets In addition to the markets already discussed, which deal primarily with stock, a number of different markets exist to service the trades of derivatives, options, futures, and other stock-like investments. These niche exchanges are of great importance to their particular products, although their ex- changes may not be as widely known. The Chicago Board of Trade, for example, deals almost exclusively with the exchange of grain