The Washington herald., 1912-09-28
THE TIME TO
BUY BONDS

tcopynsht 1872. b. c. ~ KsyA New Yort)
| The Oldest principle In merchandising
Of any sort Is that the right time to buy
10 when there are more sellers than buy
ers. and the right time 10 sell when fhers
are more buyers than sellers. This u
simply the application of the ancient law
trading which is that when the supply
is larger than the demand prices become
low, while II the demand is larger thar
| the supply. prices rise. The right time tt
buy Is when prices are-low. and the righl
time to sell Is when they are high.
To Apply these ancient principles OF
| trading to the bond business is something
like heresy, for there IS theory aDons
those who deal In Donds that the right
time to buy bonds is whenever you hap
pen to have the money and the right
time to sell them never arises. unless
something goes the matter with the bondi
and you have to sell them to protect
ourselves. Nevertheless, 1t Is not bad COM
mon sense TO figure a little bit on the
conditions in the bond market from tims
to time. and perhaps to strain a poin,
10 make your purchase at time when
the demand is less than the supply and
when prices consequently are lower than
normal.
The present seems to be such a time.
In one week in August fifty standard
bonds-that Is, bonds that are dealt IN
all the time In the market place-sold at
their lowest prices OF the year; and In
many instances these prices were the
lowest that have been recorded for many
years past. Some of them were lower
than the prices In the panic years of
1907 and 1908, and even in some of the
best bonds In the list the prices were the
lowest on record.
OF course. there is good and SUFFICIENT
reason for the general decline. The main
reason Is that the coupon on a bond is not
worth as much as the same coupon on
the same bond was worth ten or twelve
years ago. because II will not buy as
much bread and butter and clothing.
which. after all. Is the real criterion of
value In coupon. dollar bill. or any other
token of value.
II one allow fully for this discrepancy
In the buying power of the coupon. II yet
seems that at the present time great
many of these standard bonds are SELL
ing relatively cheaper than they have
sold in years past. There is good ground
to believe. therefore. even IL We take II
for granted that the cost OF living Is not
going to come down again in the next
couple OF years to anything like its old
level. that these good old standard bonds.
which are the backbone of the invest
ment market. are to-day on the bargain
counter. The best critics agree that pos
sibly they VIII De n little DIT cheaper
during the fall IL money should become
scarce; but the decline will probably be
really small II there is one. and the
chances are about even that there will
not be one. For II instead OF real tight
money in the fall il should transpire
that the banks and other money institu-
tions have plenty Of money 10 go around.
they will all be buyers Of bonds and the
supply will not be equal to the demand.
II that should turn out to be the case
the bargain counters in bonds will be
closed for the season by that time.
II man has money to invest at the
present time. therefore. II Is good sense
TO investigate this bond market 1t
is not the purpose Of this article
to recommend any particular bond or
any particular kind of bond.
and therefore. there is no list of bonds
included in the article. II the principle
of buying bonds when they are cheap