Voyages and the first shares · 1100s–1600s
1100s
Shares in a voyage: the commenda
In Venice and Genoa, stay-at-home investors fund a merchant's voyage and split the profit.
A merchant sailing to Alexandria or Constantinople needed money for cargo. Under a commenda contract, investors who stayed home put up the money and the travelling merchant did the work. If the ship came back, they split the profit, often three quarters to the investors and a quarter to the merchant.
If the ship sank, investors lost what they put in and nothing more. Many people could each own a slice of many voyages instead of betting everything on one.
💡 Why it made sense then
One voyage could make or ruin a family. Splitting a voyage into pieces let people share the risk, and owning pieces of several voyages spread it further.
Ideas it gave us
- 📈 Share
A share is a single unit of a company's stock. The number of shares you own divided by all shares outstanding is your percentage of ownership.
- 🎯 Diversification
Diversification is spreading money across many different investments so a loss on one has less effect on the whole portfolio.
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