New-York tribune., 1920-01-12
In Wall Street

The trouble with the stock market
last week. was that favorable devel-
opments Of a positive character were
lacking. 1t is only two months since
a horde Of frenzied spectators saw
their paper profits, and even their
capital, swept away in an hour or
two of wild selling. The experience
was so recent that the speculative
public remains extremely cautious
and prefers to hold aloof, at least
until something happens to arouse
bullish enthusiasm again. Appar-
emily easy money is not in itself
sufficient to give the market the push
that would start it on a strong up
ward course, for call loans ruled at
6 per cent during a large part of
last week without stimulating .ap-
preciably the demand for stocks. It's
influence was, at best, negative
that is to say, the cheapness of spec
ulative funds made spectators
! somewhat less eager to sell. The re-
suit was that prices drifted rather
aimlessly in the dullest market for
some weeks. At the end those work
ing for lower prices had the advan-
tage, but it was slight one, the net
changes for the week not being i'm
portant as rule.
Wall Street is much less cheerful
than it was a week ago. Then
most traders wefe looking for higher
prices, for the conviction was widely
held that cheap money would induce
the public to enter the market again
and that as result a general ad-
vance of prices might be looked for.
But trading was confined chiefly to
the exchange of counters between
professional spectators. AS a re-
suit the turnover was light. At
times the market was almost at a
standstill.
One thing that holds the market
in check is the large mass Of undi-
gested securities. During the wild
speculation of 1919 almost every
new issue put OUT was well taken.
The trouble was that much of the
stuff would not stay put. When
prices began to break wide open
many spectators, and others who
thought they were investing, sold,
either because they had to or
because they were WISE Now the
promoters in some cases are loaded
up with their own securities and
cannot sell without breaking their
market. Inasmuch as many issues
of this sort are not good collateral
the promoters are carrying heavy
load.
J. 3.
Despite the unresponsiveness Of
the market many Wall Street per-
sons-perhaps a acknowledgement
stock prices to go considerably
higher. They base this opinion
largely on the belief that the market
has been overliquidated and that
stocks have been going into strong
hands. Perhaps this is true, and il
it is a quick advance might easily
take place. Once a buying move
nent gets. under way, considerable
support might be expected in the
form of purchases by those who sold
stocks last year to establish losses
for income tax purposes and cover
ing by those who are now short of
the market. But it is serious ques-
tion as to whether such an advance,
if it should come, could be sustained
for any considerable time. The
banking authorities might not be
disturbed by fairly active and ris-
ing market. Apparently they believe
that the overexpansion which existed
was rectified by the November break,
and as long as stock speculation
keeps in moderate bounds it is not
likely that the Federal Reserve
Board will take further drastic
action to reduce Stock Exchange
loans. Its efforts seem to be di-
rected chiefly against excessive
speculation in commodities
ton, the political commodity, re.
naming immune, of course. But
the trouble is that there is not
much moderation in anything these
days, and if the market were tc
assume feverish aspect the lie
would probably be, ,clamped on agair
without delay.
There is another reasons for be
lieving that long-continued. bull
speculation in stocks is unlikely a.
this time., 1t is that in. number o.
lines of business hesitation is be
ginning to appear. Price uncer
q tainty is the cause. Early last sum
\ mer business men displayed ever,
l evidence of confidence in the genera