The terms “Wall Street” and “Main Street” very commonly get tossed around in conversations about the financial industry. As per Scott Tominaga, Wall Street collectively refers to the people and organizations that are directly connected to the stock market. This includes the stock exchanges, investment banks, large corporations, brokerages and other financial institutions. Their key objective is to generate profits for companies and other large investors. On the other hand, Main Street can be thought of as representing the little guys. This includes the everyday investors in capital markets and the small business owners who look to Wall Street to help them grow their money
Scott Tominaga sheds light into Wall Street and Main Street
In the domain of investments, Main Street is used to refer to general individual investors. On the other hand, Wall Street is known to represent security traders and professional investment managers. Main Street investors ideally invest in a relatively small sum of money. They are known to be less rational or sophisticated when it comes to making investment decisions. Wall Street investors are the ones who have a high degree of financial expertise and large amounts of assets under management.
Main Street and Wall Street might also refer to small investment institutions and globally recognized large investment companies. These two types of businesses tend to cater to varied business focuses. Main Street companies often offer investment advisory and financial planning assistance to local individuals or small firms. Wall Street companies also tend to target high-net-worth individuals, as well as large institutional clients like hedge funds, private equities and investment banks. They may help in fund management, initial public offering (IPO), as well as mergers and acquisitions (M&A), initial public offering (IPO), and fund management.
When it comes to economics, Main Street against Wall Street is also known to represent the opposition of the real economy against the capital market. It is also considered to be a representation of the middle class (the major players in the real economy), against the investment firms (the major players in the capital market).
Owing to the discrepancy in financial knowledge, net worth and size, conflicts exist between Main Street and Wall Street. At times, what is seem to be favorable for the Wall Street hurts Main Street, and what benefits Main Street might end up being unfavorable to Wall Street. For instance, the regulations put in place to protect Main Street investors may restrain the autonomy of the Wall Street businesses and their ability to innovate, thereby lowering their profitability. Certain Wall Street companies, on the other hand, might be large enough to be able to lobby for activities and regulations that benefit themselves by sacrificing the welfare of Main Street.
However, despite the conflicts discussed above, Main Street and Wall Street are highly mutually dependent from an investment perspective. As per Scott Tominaga, several Wall Street companies offer mutual funds, ETFs, and brokerage services to Main Street investors. Wall Street companies are also able to earn service fees and generate more returns by having larger pools of capital for investment. Main Street investors, at the same time, benefit from the financial expertise of the firms and the diversification of large portfolios.