From: leona@Happy-Man.com (Leona_Troese)
Subject: Solid Value #718 -- Irving Wolfe's Commentary of late September
Followup-To: sender
Keywords: solid value commentary wolfe
Reply-To: Leona_Troese@Happy-Man.com
Organization: Happy Man Corp., Vashon Island, WA 98070-7399
Date: Thu, 8 Oct 1992 15:48:00 GMT



Copyright 1992 Happy Man Corp., Vashon, WA 98070-7399, 1 206 463 9399
One hard copy may be made for individual, personal use only.

What follows is Irving Wolfe's column, Commentary, from the most
recent issue of _Solid Value._  

Permission to distribute it via Usenet is hereby granted.

Because Solid Value's heart is its tables of Best Buys and 
former-Buy followups, this free distribution of Irving Wolfe's 
Commentary should be interesting to some Usenet readers without 
making subscriptions less valuable to those who actually invest in 
stocks for profit.  

=====

Years ago, the Securities and Exchange Commission forced financial 
and operating disclosures on companies whose shares were publicly 
traded.  These were intended to give smaller investors (and large 
investors who were not well-connected) access to much of the 
information that had earlier been available only to corporate 
insiders and their friends.  Public support for the securities 
markets was to be enhanced by leveling the playing field.  Despite 
the continuing existence of most of these rules, however, the stock 
market has become far less investor-friendly in recent years.  

The Establishment's acceptance of anti-shareholder "rights" plans 
that entrench current management and prevent takeovers that might 
oust it, whatever the cost to the shareholder; its willingness to 
close down the markets when they fall suddenly, in the hope that 
this interference with the return to fair value will perpetuate 
politically favorable over-pricing; its winking at leveraged 
buyouts that leave formerly secure bondholders with no equity to 
protect their investments; and, most of all, its permitting the 
once serious-minded stock and bond markets to become dominated by 
the no-money-down futures speculators in Chicago -- all these have 
made the market less attractive to the investor.  With stocks 
inherently less desirable because of these changes, I sometimes 
wonder if the values we calculate are systematically too high, even 
though they are already 16% below current market prices, on 
average.  

Recently, there have been persistent and believable rumors that the 
federal government has actually been pushing the stock market 
around, through large-scale intervention in the futures markets.  A 
subscriber's question about them brought forth my reaction, which 
is this commentary.  I am filled with questions.  

What happened to the level playing field?  Where is the market's 
economic function of assigning values and aiding the flow of 
capital?  Why should intelligent investors stay in this casino, if 
the deck is stacked and the dice are loaded?  Belief in the 
existence of these interventions weakens the trust on which a 
financial system is ultimately based.  

Whatever the truth of these rumors, even the appearance of such 
official misbehavior will result, in the long run, in lower stock 
prices than would otherwise prevail.  And the effect, though 
beginning slowly, is likely to be very long lived: Trust, as we all 
know, is quickly lost and only slowly regained.  
-- 
 Leona_Troese@Happy-Man.com      Happy Man Corp. 206/463-9399 x109
 4410 SW Pt. Robinson Rd., Vashon Island, WA  98070-7399  fax x108
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