What are The Differences Between Main St. vs Wall Street

What exactly is Main Street?

The slang “Main Street” is colloquially used in reference to the singular investors in the economy, the employed, and the economy in general. This is in contrast with the term “Wall Street”, which is used in reference to the money markets, major commercial banks, brokerage firms, and other financial institutions. Also covered under the term “Wall Street” are the large corporations and the top-tier employees, executives, and managers that run them. The idea of Main Street v Wall Street often comes up in rhetoric regarding two groups and their divergent goals, interests, depths of knowledge, and political power.

The term “Main Street” can also be used in reference to a small-scale investment company, in contrast to the larger and multinational investment firms that are found on Wall Street. The firms on Wall Street are designed to serve the needs of large investors who have assets valued in millions of dollars, while the firms of Main Street are set up to serve smaller and more local players by providing investment services that are more personalized.

The Strict Divide

In many circles, Main Street is seen as the antithesis of Wall Street. Unfortunately, this can result in the cultivation of unhealthy attitudes across both parties. Many Wall Street professionals look at Main Street professionals with disdain, imagining that they have no real knowledge of the financial game and play at a level that can never be compared to that of a basic Wall Street banker. Over on Main Street, Wall Street professionals are believed to be rogues who have lost all conscience.

Despite this seemingly deep divide, the truth is that both sides are highly dependent on each other. The activities of Main Street with its banking system and entrepreneurs are needed by Wall Street to provide capital, while Wall Street helps Main Street organizations get much better interest than they would if they simply used savings accounts or municipal bonds. This truth is often lost on both parties, however, and is often used to fuel further extreme viewpoints.

The Battle Between Main Street and Wall Street

Financial extremists often believe that anything that is good for Wall Street will definitely be bad for Main Street and so forth. For instance, when regulations are put in place to protect investors on Main Street, Wall Street investors complain that their ability to create freely and be profitable is being encroached upon. Similarly, Main Street investors complain that Wall Street practices reward short-term results and risky acts that threaten large shares of profit. While both statements are correct, both parties must find ways to work past their differences.

This does not mean that everything goes great whenever Main Street and Wall Street come together. Sometimes, when they get along too well, there are dangerous repercussions for the economy, such as the possibility of an economic depression. An example of this would be the last financial crisis where there were challenges with securitization and poor rating systems. So while extremism on both parts is not wanted, over cooperation that tilts toward corruption is not advisable either.

If you would like to speak with one of our M&A advisers more about both of these types of markets to gain a better understanding, please reach out to us via our contact page!