South Bend news-times. (South Bend, Ind.) 1913-1938, 1919-02-09
The Outlook
Present Position of Prices as Related to the Long Savings
of Street

Taking a long range view of the
course Of prices, the bull market
which lasted from January. 1915. to
November, 1916. carried the 5O-stock
average up from 50 TO 1O1: the bear
market OF 1917 cancelled the whole
of this advance, with the average
at So in December. Then came
slow rise 10 so last November. when
the armistice was signed. and this
! was followed by n rection TO 20.
with the high point of last weeks
rally at 1870.
In other words about half the 1918
advance was lost at the low point
of Jan. 81. 1919. and prices stood
at a point about one-quarter of the
way up from the bottom Of 1915
TO the top Of 1916.
When we consider that the low
prices Of early 1915 were made just
after the reopening of the stock
| exchange and were practically on
panic level, with a great deal of
selling from abroad. and with the
whole world standing aghast at the
outbreak of what had previously
been regarded as an unthinkabIe ca
lamity, we can hardly avoid the
conclusion that prices only about 10
points up from that low level must.
under present conditions, be regard
ed as relatively low.
What Is the Long Swing?
At this halfway point in the de-
cline from the 1913 advance, it is
pertinent 10 consider whether that
rise should be regarded as a small
bull market, and the present decline
as the early stages OF a bear mar
| ket; or whether the recent drop 10
I a level of 20 is a big reaction in
( bull market" which began in 1918
and will he continued, after the re-
action, TO still higher figures than
were recorded last fall.
Our belief is that the latter by
pOthesis is likely TO prove the cor
rect view. There are various rea-
sons for this conclusion.
Let us take, first the action OF
the market itself After the semi
panic which ended at a little below
SIS. Dec. 90, 1917, prices bounded up
ward II points in a little over two
weeks TO above 6S. Approximately
this level was maintained. with mi
nor fluctuations, for four months,
until about May L. Next came an
advance to "a. accomplished in about
two weeks, followed by a reaction
TO 50 and another long period OF
I inactivity ranging point or two
above or below the price Of - as
mi \ ssr.s.
riod lasted another four months. un-
I'll about Oct 10.
Then came the brief peace boom.
| lasting about a month and culmi-
mating at so. During this period the
market was fairly active. with wide
fluctuations in many isues, notably
the specialties: but the market pre-
scented few or none OF the aspects
! Of the elimination of a genuine bull
market The period of activity was
not long enough. public participa-
! tion was not sufficiently general, the
number Of issues in which the ac-
Iuvity appeared was limited. and
bank loans on stock exchange col
/ lateral did not become greatly ex-
| tended-iu fact they were sternly
held i'm check by the federal board.
The collapse was very sudden.
/ Prices were back 20 the 70 level in
about two weeks after the high
point was touched. and since then
they have ranged between 10 and
10. Therefore. with the exception
OF this abortive peace boom, We may
say that the level of the market has
changed hut little for a period Of
Inearly nine months, since May. 1918.
| In short. the market of the last
I13 months. while the net result has
been an intermittent advance Of %
points 20 a decline of 10 points
have not at any time presented the
appearance of n real bull market
with the exception OF about one
month last fall Just before the sign
/ ing of the armistice
Money and Banking Conditions.
We have discussed the action Of
the market itself first, because We
lconsider IL the most important
Stock prices constitute a sort OF in
/ dex number in which are combined
the effects Of all the varies and
! world wide economic and financial
factors which enter itno the invest
ment situation. The judgment Of
any one person viii az times be
wrong. But the market itself rep-
rescnts the combined Judgment OF
the financial and investment inter-
ests Of the world
=. Is only since 1919 came in that