New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-09-04
A Time to Hold Steel

Question: have been reading The
Tribune ever since Horace Grecleys time.
Information OF great interest. am wish
ing your advice or opinion on my holdings
OF forty-seven sharea OF American Tee-
phone and Telegraph stock, average price
100; eighty seven shares of United States
Steel preferred, average price 100; twenty
fvs shares of United statcs Steel common,
up In Steel common. and It looks like
long wade to come out even. especially
VINE when the IN income return Ia less than peT
pass the dividend. I had in mind switch
to American Telephone and Telegraph to
cover the loss and still not decrease my
be appreciated. Am seventy three years
old My working days are nearly over be-
want as much income as possible with
safety and to know how I can better my
position financially, according to your
opinion--A. e. G.
Answer-You have picked out a bad
time to consider selling Steel common.
The industry is in an unprecedentedly
dull state as to operations, and the
price of the stock, which has what we
believe to be real value of about
261, reflects the condition of business.
We see no reason to fear an early cut
in dividends, however. The holder Of
stocks of this speculative character
cannot expect to put them away and
forget them, as the phrase goes, but
ought to watch them constantly and
compare the price he paid to the prob
able future course of the market. If
he is not able to do that (and it re-
quires foresight and skill) he should
conilne his investments to high grade
issues. He will thus escape such large
losses in principal as you would have
II you sold Steel now, and will, in the
long run, realize better yield. This
conclusion is borne out by the fact that
you now find yourself in possession Of
securities having a market value of
Sl6,!24 and yearly return of $1,157,
or about ~ per cent. There are plenty
OF bonds which yield that high, but do
not carry the same risk Of reduction
In income or loss Of principal. Your
Steel preferred is high grade, of course,
and you have no loss on its cost. You
have your choice of holding three
stocks and seeing it through or selling
all or part of them. On the basis of
yield alone we think you ought to sell
your Steel common, which will bring
you about $1,000, and buy, say, one
Canadian Northern 7 per cent de-
benture 1910, guaranteed principal and
AHSSASoC ny Zig 4JOIIlfHlOH SIOVeTnme0L,
and one international Mercantile Ma
rlne 6 per cent, 1911, at about 10, to
WELD SIS per cent 1t is first mort
gage and collateral bond and safe. we
think. Thus you would increase your
income from $125 for the Steel to $3.50.
and you would be much safer, in our
opinion. Your American Telephone
and Telegraph stock is q good invest
ment, but we are inclined to thing it
forms too great proportion of your
total capital. Considering your years,
twenty shares would be enough. If
you sold twenty-seven shares for about
$2,781 and bought two French IS at
about SO and one Ohio Gas and Electric
hrst mortgage sinking fund bond, 1947,
at about 88, to yield 7.O5 per cent, iyou
would reduce your income S23 n year.
but would be in better investment
position, we think.