The market tends to recover because it rests on trust and ownership, but recovery can take decades, so what matters for you is whether your investments will be worth enough when you need the money. For a century the stock market has been treated as a machine of endless growth, with the promise that it always recovers eventually. The video tests that promise by going back to the beginning, starting with spices in 17th-century Amsterdam.
It then covers how the modern market is built, the long stretches when investors waited decades to break even, and why the better question is a personal one.
Watch the full video here, or skip to the breakdown below.
The stock market story at a glance
- How it all started: spices, trust and ownership (0:47)
- Reward, risk and speculation: the tulip bubble
- The modern stock market (8:29)
- When the market did not recover in time
- One market, one building
- Your personal economy (19:21)
How it all started: spices, trust and ownership
It is 1602 in Amsterdam, and spices like pepper, nutmeg, cinnamon and cloves are worth more than gold. Reaching them meant months-long voyages around the Cape of Good Hope toward Java, Sri Lanka and India, and many ships never came back. Rival trading companies kept sinking each other’s ships and money, so the Dutch government merged six of them into the Dutch East India Company (VOC), the world’s first publicly traded company.
The voyages were too expensive and risky for any one person, so the Dutch spread the risk by selling ownership stakes to the public. Ordinary people could now own part of a fleet, trade routes and warehouses meant to last decades. The Amsterdam Stock Exchange was set up to track owners and let them trade shares whenever they wanted. The foundation of the stock market was born together with the first public company: trust and ownership.
Reward, risk and speculation then became the three pillars holding up the asset.
Reward, risk and speculation: the tulip bubble
Pepper was called black gold. It preserved meat, covered the taste of spoiled food and signaled wealth, and the promise of that reward created the pull of the whole system. The voyages were risky, and that disagreement about what was safe and what was worth betting on created opportunity. When people began meeting in coffee houses and on the streets to trade shares, prices rose and fell, and speculation was born.
Then came tulips, a status symbol that was beautiful and hard to grow. People traded the bulbs, the potential of the flower, in taverns and the backrooms of inns, which analysts say is what we would now call a futures market. In 1636 it turned manic, with people mortgaging homes and trading life savings. In one popular story, 12,000 guilders was offered for 10 bulbs of the rare Semper Augustus and refused. That was more than a small townhouse in Amsterdam, when skilled workers earned about 300 guilders a year.
In February 1637 a routine tulip auction in Haarlem drew no bidders. That tiny event popped the bubble, because the market had run on the belief that someone else would always pay more. Buyers vanished, sellers panicked and prices collapsed, and people realized they were holding flowers. It was the first recorded asset bubble.
Just because people agree something has value does not mean it actually does.
The modern stock market
The phrase the market always goes up did not come from Amsterdam. It came around 1976, with Jack Bogle, who launched Vanguard 500, the first index fund for the average investor.
Today there are about 60,000 publicly traded companies across more than 60 exchanges. The big five are the New York Stock Exchange, NASDAQ, Shanghai, Japan and Euronext. A century ago the top five were London, New York, the Paris Bourse, Berlin and Amsterdam, and only New York is still there, still number one. In 1990 Tokyo briefly led. Exchanges lose dominance, but that does not stop individual investors winning: £100 invested monthly in London from 1990, with dividends reinvested and ignoring inflation, would be about £162,000 today, against £42,000 under a mattress.
Indexes measure these markets: the S&P 500 tracks the 500 largest US companies, the Dow Jones the top 30, Nasdaq mostly US tech, the FTSE 100 the top 100 UK companies and the Nikkei 225 the top 225 in Japan.
When the market did not recover in time
The Nikkei is the most telling case. In the late 1980s it was stronger than the Dow, Tokyo held more than 40% of the world’s stock market value and the index peaked on December 29, 1989. Then it crashed, and it still has not fully recovered.
The setup was the 1985 Plaza Hotel agreement, in which five major economies moved to weaken the US dollar. The yen rose fastest because Japan was so export-focused, so Japan cut interest rates from 5% to 2.5% to stimulate the domestic economy. Cheap money flowed into stocks and property, creating a bubble that nearly tripled the Nikkei in four years. When the Bank of Japan raised rates in 1989, heavy borrowers could not hold overvalued assets. Stocks lost more than 60% and Tokyo property fell 70 to 80%. It became known as the Lost Decade, which the video says should be the Lost Two Decades.
Picture being 30 in 1988: savings down more than half by your mid-30s, a flat market through your 40s and 50s and only a nominal recovery in your late 60s, with inflation eating the value. There are other cases. After the 1929 crash the Dow did not regain its high until 1954. The stagflation of the 1970s left the S&P 500 with almost no inflation-adjusted gains over 16 years, and Italy’s market is still below pre-1999 levels.
One market, one building
Diversifying across countries sounds like the obvious answer. But the video says one country holds more of the market than the next top 10 combined, and since 1980 that market has been connected to all the others.
Before the 1970s exchanges were national and a New York crash took weeks or months to reach other places. After World War II the US dollar replaced the pound as the global reserve currency, and then Nixon took the dollar off the gold standard, letting currencies trade freely. Computers, satellite trading and global news followed. The result is a single megastructure of rooms, towers and bridges, with every country connected by corridors that move capital, news, fear and optimism in real time. The foundation is still trust and ownership, only global now, so when one part weakens the whole building shakes, and every investor is affected.
Your personal economy
Does the market always go up? Doomsayers say no, especially with so much concentrated in one market run by unpredictable people. The video says yes in the long run: assets will collapse under bubbles, risk will be ignored, rewards will slow and speculation will keep being a rollercoaster, but as long as humans exist there will be trust and ownership, and with that foundation markets recover.
That answer does not matter much to you, though. You do not live in the S&P 500 or pay rent with a global index. If you invest $100 a month for 20 years, what counts is when you will withdraw the money, whether it grew enough for your goals and whether the parts of the market you chose recovered in time. A crash in year 19 of a 20-year plan makes eventual recovery irrelevant. A crash five years from retirement is a threat to your lifestyle, and a college fund invested too aggressively the year your child starts is your stress.
So build a strategy around your time horizon, life events, cash flow needs, practical risk tolerance and the markets that reflect your opportunities.
The market does not need to work forever. It just needs to work in time for you.
Ask a better question
Stop asking whether the market will go up and start asking whether an investment will get you where you need to go when you need to be there.
History says the market recovers. It does not say when, and that gap is the part you have to plan for.
FAQ
Does the stock market always go up?
In the long run the video says yes, because markets rest on trust and ownership and keep recovering. But recovery can take decades, so it may not happen on your timeline.
Where did the stock market begin?
In Amsterdam in 1602, when the Dutch East India Company became the first publicly traded company and the Amsterdam Stock Exchange let people trade its shares.
What was the first asset bubble in history?
The tulip trade of 1636 and 1637, where people traded bulbs at absurd prices until a routine auction in February 1637 drew no bidders and prices collapsed.
How long did it take the Nikkei to recover after 1989?
It peaked on December 29, 1989, lost more than 60% and, per the video, still has not fully recovered, which is why the era is known as the Lost Decade, or two decades.
Does diversifying across countries protect you?
Only partly. The video says one country holds more of the market than the next 10 combined and global markets now move together, so a weakness in one part shakes the rest.
What matters more than whether the market goes up?
Your personal economy: when you need the money, how much risk you can bear and whether your investments recover in time for your goals.
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