The New York herald., 1922-06-25
Moving Up
And Down in
Wall Street

THE STOCK MARKET BARON
ETER. BY William Peter Hamilton.
Harper & Brothers.
"HESE discussions. as Mr.. Ham,
ilton says of the series Of re-
printed articles composing his
book "are designed less for specu-
lators than for those who wish to
study the stock market barometer as
a guide to the general business of
the country" The stock market
barometer. as he defines it, "is the
recorded average of prices in the
stock exchange" and Mr.. Hamilton
discusses them in his book ION the
tested. theory of the late Charles II.
Dow. the founder of the Wall Street
Journal"
"Dow's theory" he explains, s4s
fundamentally simple. He showed
that there are simultaneously three
movements in progress in the stock
market The major is the primary
movement like the bull market which
set In with the reelection. of McKin-
ley in 1900 and eliminated in Sep
tember. 1902. checked but not stopped
by the famous stock market panic
consequent on the Northern Pacific
corner in 1901: or the primary bear
market which developed about Octo-
Der, 1919. eliminating June-August.
1921" Coincident with this primary
movement (Which tends to run over
period of year. or at least a year.
and is generally much longer). or. I'm
the course of it. is Dow's secondary
movement" represented by sharp
rallies in primary bear market and
sharp reactions in a primary bull
market. Concurrently with the
primary and secondary movements Of
the market, and constant throughout
there obviously was, as Dow pointed
out. the underlying iuctuatfon from
day to day.
In practice Dow's theory develops
many Implications" One OF the best
tested OF them is that the two aver
ages corroborate each other and that
there is never a primary movement,
rarely secondary movement, where
they do not agree. The ''Dow-Jones
average is still standard, although II
has been extensively initiated. There
have been various ways of reading It
but nothing has stood the test which
has been applied to Dow's theory.
The weakness Of every other method
Is that extraneous matters are taken
In from their tempting relevance.
There have been unnecessary at
tempts to combine the volume of
sales and to read the average with
reference to commodity index num-
bers. But it must be obvious that
the averages have already taken
those things into account, just as
the barometer considers everything
which affects the weather. The price
movement represents the aggregate
knowledge of Wall Street and. above
all. its aggregate knowledge of COM
ing events"
Mr.. Hamilton proves his point and
his faith in the stock market barom-
eter by giving an analysis of the
market and its history since 1897;
but what is even more impressive Is
his fortnight belief in the instru-
ment of which he is the advocate.
He says of it,: There is no business
so small that it can afford to disre-
gard the stock market barometer.
Certainly there is no business SO
large that it dare disregard it. In
deed. the most serious mistakes In
the management of great business
have come from a failure of these
navigators Of the great liners OF the
sea of commerce to take heed when
the passionless. disinterested stock
market called their attention to bad
weather ahead"
In the course of developing his
theme Mr.. Hamilton pays his COM
pllments with forceful vigor to critics
of Wall Street in Congress, in fiction,
in the press and in the movies. He
exposes as fallacious the idea that
the market can be manipulated to
tho nYtnnt connnaonl,. cha rr,od h. Tia