The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1917-03-08
VALUE OF SECURITIES
MARKET QUOTATIONS
FlUCTUATioN IN MARKET PRICES
DO NOT NECESSARILY lNDi.
CATE CHANGE IN VALUE

market and the gambling table tn
dividing line is very thin. In tn
past score of years the broad economi
value of securities markets has bee
appreciated to a greater exetnt, en-
lightenment as TO the functions o
markets has supplanted ignorance, an
their true social and business statu
is becoming established, says Charlie
A. Stoneham & Co. III their marke
letter.
Yet we find there is much to b.
dane in the way of eradication 0
false impressions as to the meaning 0
market fluctuations. to the influence
that govern price changes, and as t,
the relationship of market prices Il
values.
/ We wish to correct the impression
that ones gain is anothers loss, ant
| vice versa We wish to eradicate thu
thought that legitimate speculation il
common gambling; to set forth the
true principle of compensation, In tina,
such compensation is not between tive
individuals, but between individuals
and Mother Earth, the source of all
original wealth.
Speculation and Gambling.
1t is not our purpose to enter into
an economic discussion of wealth. But
1t is necessary to point out few
principles, in order to demonstrate the
difference between legitimate specula-
ton and gambling.
1t is necessary, therefore, to keep
firmly fixed in the mind of the securi-
ties buyer. the fact that a share of
stock represents an interest in cor
poration in the pursuit of wealth. The
value of this interest. because it be-
comes a commodity through the
of the market is based on
two factors: First, the value of the
as measured in the accumu-
lated wealth of the corporation. and
the rapidity of its accumulation, COM
and, second, supply and demand for
these interests"
1t will be seen at once that the first
factor is of greater preponderance
than the latter, and that it is always
the true determining factor. The Sec
ond sways prices from time to time,
being governed by differing individual
opinions.
This brings us then. to the import
nee of market quotations; of the
values fixed more or less arbitrarily
by the sway of individual opinion. and
their relationship to real values.
In the past two years the value of
securities has been expanded hundreds
of millions of dollars. 1t has come
from the expansion in the value of
original wealth, chiefly through the
greater value of minerals. through the
greater circulation of this original
" wealth, through it's manufacture and
through commercial
activity.
Gain Does Not imply Loss.
Does it follow that someone lost
these hundreds of millions of dollars?
terest in a corporation has grown
steadily, as the aggregation of wealth
Of corporations has accelerated that
there has been loser for every gain?
Does it follow that because an in
vestor has bought an interest in
for $40, and that the in
terest is now worth 800. that some
body has lost $50 in the transaction?
Let us look at the diverse side of
he medal. In the recent market
break there was much talk of millions
ost in the shrinkage in value of Sc
talk Of millions made. 1t
viii be recalled that the recent break
vas caused by no loss in the accumu-
ated wealth of corporation. no slow
ng up of the pace at which wealth
vas being decline in earnings. 1t was
merely the arbitrary fixing of values
" the law of supply and demand.
An Illustration.
If you had paid $1,000 for an interest
n corporation, believing on the
ssets and earnings of the corpora
ion that interest was worth $1,000,
loes it follow that because someone !
vas willing to sell similar interest
or $3.50, that you have lost $3.50 on
he transaction? Does 1t follow that
because someone else is willing to sell
lis interest for $3.50. there is any
legitimate reason why you should alter
he opinion you held when you paid
i 900 for your interest, and sell yours
or $3.50?
Not unless the assets and earnings
If the corporation have declined so
Is to make your interest worth less.
1t will be seen, therefore that 1t is
possible for market prices to be raised
II lowered without anyone gaining or
osing. Values are the true standard
md 1t has been our experience that
hese are the eventual stabilizing mar
,et influences. However, the market
s swayed by the working out Of sup
sly and demand. market prices always
,ome back to the levels established
~ values.
Basis for Legitimate Speculation.
In the differences between the mar
set prices fixed by supply and de-