The Bridgeport times and evening farmer., 1920-01-16
INFORMATION ON
 SECURITIES AND MARKET OUTLOOK

We are analyzing this situation
 particularly from the standpoint of the investor in corporate securities,
 and our chief interest is to determine
 what course he should pursue during the coming year, in the light of the
 foregoing deduction. I append below
 my broad conclusions in this matter. 1 CD Industrial Securities: Indus trial securities have, as a class, fully
 shared in the speculative mania of
 1919. Both old and new issues have
 been manipulated to higher levels 1 than ever before, and while the rises l in the prices of many of these issues
 have been justified, many others have
 not. It cannot be claimed, in many
 cases, that the prevailing quotations
 represent permanent values. but rather speculative or temporary values
 Where speculative industrial stocks 1 have moved up in response to recent large rises in commodity prices and not as Q result of increased and per- lmanent new business, they will surely recede as commodity prices decline. doubling of their earnings in the past few years as a direct result of a doubling of the prices of their pro- 1 ducts. When these prices drop and demand falls off, the investors will
 
 ly to seasoned preferred issues and well secured bonds. Holders of all speculative issues will make no mis- take in switching into more seasoned investments this year.
 @ Railroad Securities: Not only because of the present aJbnormally low level of standard railroad bond and stock investments. but because any crrumbling of the speculative, boom will mean a gradual curtail1ne ent of
 operating expenses, securities in this field should prove extremely attrac- tive investments in 1920. The return
 of the roads to private operation will mean elimination of wastefUl war operation and methods, and If we are justified in assuming that the pend- ing railroad bill wi7' be reasonably fair, the future of railroad investors should be secure. It will be @ year in which changes from uncertain in dustrial securities to well protected issues will prove a wise, far-seeing policy.
 (s) Public Utilities: There is prom ise of distinct improvement in the
 public utility field during 1920. Op- eratine costs on public utilities have reached their zenith and where the companies have come safely through the past trying period and franchise limitations are not deadly, investors in many issues should feel reassured. This is not universally true, and great discrimination should be exersied, but the obligations of we'll established power companies, lighting concerns and telephone companies should be benefitted by curtailment in operat- ing costs and renewed efficiency. Careful attention, however, should be given to fare and rate regulation ana limitation, which has caused the tltownfan of some of the strongest companies in the country during the past few years of rising costs and re- stricted incomes. Many traction conn panies have been crucihed on the at- tar of political stupidity.
 (4) Government Securities: United States Government bonds are of course in @ class by themselves, and the premier investments for the American. But the yield is comparatively small, and while there are moderate poss1- bilities of appreciation in price dur ing the coming few years, not many substantial investors care to place all their capital in them. For the inves- tor, however, who wishes to place capdtal where 1t will undoubtedly 1nn- prove with the trend of the times, there is a. wilde field for choice in the obli- cations of other countries. It is a mistaken notion to assume that only United States obligations are secure that those of foreign nations are today merely speculations. If we are to as sume that Great Britain, France ana Ttslv are to go to pieces and relapse into g. condition of barbarisn, with no hone for the future, then we must
 class our own Government obligations as specu1ative also. No such disaster co1d happen to Europe without af- fecting this country to a very marked degree. As 8 matter of fact, the se- c11rity of America and the recovery of Europe must progress hand III hand. and if Fundamentals are to oe permanentIy sound in this country they must be kept sound In Europe also. The great opportunity Tn TOT eie,n issues at this time Is based. TOT
 Americans. on the present condition of the foreign exchanges With sIer-
 ling at g. discount of 20 per cent the American can buy sterling bonds ~
 ner cent cheaper than can the Eng- iishman: with franc exchange at 40 per cent discount, the American can suy franc bonds 45 per cent cheaper +ban can the Frenchman- If, as we have assumed, the exchanges will, rom +bis N,ear on. slowly work toward na rity. then the value of these intern al obligations to Americans Will aoualIv appreciate. Five or ten years 1snca we wil probably be able to look
 hpck and see that year 1920 was the nariod of great opportunity in foreign government bonds