The Wallace miner. [volume] (Wallace, Idaho) 1907-current, 1919-01-30
Ing a nice profit.

Ing a nice profit.
Suppose, though. that Hacls
mad paid this so cent dividend and the
stock had advanced instead of declin
ing In that case the bears" would
endeavor 10 cover their short" sales
They would do this by buying stock in
the open market as speedily as posi-
Die. They would of course have to
pay more for il than the amount for
which they sold it, They would then
turn back the stock to the original
owners and receive the deposits they
had put up as security, but they would
have lost the difference between the
amount they were forced to pay for
the stock, plus the interest and the
amount for which they sold.
How Values Are Made.
In any normal market there is al
ways considerable short interest
There is also at the same time likely
to be a considerable long interest. The
conflict between these two interests
together with the influence exerted by
selling or buying by the public, is the
force which largely fixes the prices
of stocks. A very active long interest
with large buying orders will force
prices up. On the other hand, large
short sales make heavy offerings and
prices decline. The hammering of
prices of stocks caused by the con-
slant short selling drives the prices
down often to a point where the long
interests see chance to make an adj
vance. Their efforts are frequently
aided by the public, which, seeing
stocks react upward always send in
large buying orders. Buying from
these two sources Immediately alb
serbs all the stock which the shorts
offer. AS soon as this upward move
ment begins, in fact sometimes before
the advance comes, the shorts or bears
scramble to cover and force prices up
on each other, which usually is very
rapid and if conditions are right the
public keeps sending in large buying
orders and we have what we call a
bull" market.
Public Hates Bears"
The public at large is of the opinion
that the bears" are an evil to the
stock market and that if it were not
for them stocks would never go down.
If they are an evil. they are a neces-
sary evil. They stabilize the market,
for they are the chief sellers on an
advancing market and are the buyers
on a declining market. Without the
short interests on declining market,
when buying orders are scarce, stocks
often times would go to unreasonably
low levels which would cause great
losses to the public and possibly pan
les The Shorts also enable the pub
lie to buy securities cheaper. For in
stance, suppose you gave your broker
an order to buy few thousand shares
of a certain stock and\it happened thai
on this day no selling orders were ir
the market. Without the shorts sell
ing to your broker, your stock might
cost you an unreasonable price. So as
it is, when your broker goes into the
market to fill your order, he can, i
your order is high enough, get offer
ings from the shorts, which he takes
RI All your order
1t takes lots of nerve to be on tn
short side of a market. Every tim
you make a short sale, you are selling
| it to someone who thinks it is goin
higher. The purchaser also Nigh
have some inside information whic
will advance the stock when 1t is mad
public. Maybe there is deal ON t
manipulate the stock to higher levels
So you can see that the life of tn
shorts" is not always rosy one. Blu
remember, anybody can buy stocks
he has the money, but it takes res
nerve to sell them.