The stock market has proven to be a profitable money-making resource for a wide spectrum of people across the world. People have entrusted their time and money to the stock market since May 17, 1792. In this article I will look at the rise and fall of markets and how they can be caused by several things. In this article I will cover one of the main factors that contributed to the fall of the financial sector in 2008; I'll talk about what drives the markets and also some things everyone should know before investing their money anywhere. When investment banks, banks whose sole purpose was to buy and sell stocks, securities and other investments, were founded in the early 1900s, the establishment of the banking system was relatively simple. Investment banks back then were privately owned by partners who formed a corporation. The partners put in the money for the company, so they watched their money very carefully and did not want to make bad deals. They wanted to feel good but didn't want to put all their eggs in one basket. In the early 1980s, however, investment banks went public and thus had access to an unimaginable amount of shareholder money. Now shareholders are the people who buy the shares of a company, which means they own a small part of that company and the company can use the money they bought the shares with at their discretion. This gave investment banks a lot of power. They no longer had to worry about losing their own money, but if they made a bad deal they lost someone else's money. This gave banks a false sense of comfort. They started doing risky deals like credit default swaps which were done through derivatives. “The standardization of contractual terms allows a loan to be packaged… in the middle of paper… a mutual fund on a single security is a diversification, which is not achieved if you invest small sums of money in a few securities. For example, if you have $10,000 to invest, you can buy perhaps 100 shares of five stocks. When you buy a mutual fund, it might own 50 to 100 stocks, so if one stock explodes, the entire fund won't go up in flames. The manager ensures that the fund is not too exposed to any one stock or sector.” (Bold 1). You can also choose a large, medium or small investment that is more value or growth oriented, or get a combination of value and growth. It is important to have a professional manage your wealth because he has extensive knowledge of the markets and is very experienced in diversifying or spreading your money to create minimal risk with maximum profit. There is also another investment, typically for the very wealthy called hedge funds.