Evening star., 1923-08-05
INVESTORS DISPLAY
GREATEST CAUTION
Attention Divided Between
Foreign and Domestic
Business 0utIOokS.
MANY OUT OF MARKETS
Foreign Bonds Furnish Surprise of
Week-Big Earnings Reports
Appear Discounted.
MANY OUT OF MARKETS
BY GEORGE L. HUGHES.

Special Dispatch to The Star.
NEW YORK. August 4.-Until trad
ing was brought to a sudden halt by
President Harding's death the secur-
ity markets of the week had moved
with no more pronounced character
tistic than hesitation. While the
news of the nations loss was received
everywhere with the most sincere eN-
pressions of sorrow, confidence was
manifested in the character and abil-
ity of the new President to fill the
pectedly called. and the underlying
conditions which govern both invest
ment and speculation were regarded
as remaining substantially unchanged.
Lack of Buying Power.
Attention this week has been di-
vided between the foreign and the
domestic situation. Both were re-
garded as holding certain disturbing
possibilities. but it was the condition
abroad upon which the greater stress
was laid 1t is, of course, hard TO
say just what influences investors,
actual and potential. 1t is plain, how
ever, that IT is absence of buying,
rather than real liquidation, which
has been mainly responsible for the
recent decline in securities. There is
always a greater or less amount of
selling for short" account, but un-
less this induces real holders to dis
pose of their holdings il has no per-
tmanent effect. A decline will extend
to the point where support is at
tracted either from the speculative or
the investment interest.
Important Bear Factors.
In the present mood the speculative
group is mostly working toward low
er prices while the investor stands
aside 1t becomes important. then,
to analyze, if possible. the reasons for
this investment lethargy. AS has been
said above. just now foreign affairs
are doubtless the cause of much of
this diStruSt. In vague sort of way
1t is expected that break between
France and Great Britain and the
''colla pSe" of Germany, about which
50 much is said. will react unfavor-
ably in the extreme upon our own in
GuStrial position. No one explains
exactly how this is to come about, but
the psychological effect is all the
greater because the process Is so OBJ
SCurc.
So much has been made of the mis-
fortune OF the wheat farmer and the
lack Of Il world market for his prod
uCt. which lack. in part at least. Is
alleged to be due t. Europe 5 inability
10 buy, that not until the situation
a
or the other will this feeling OF doubt
be removed. The chances are that
even were the worst torebodIngs TO
be realized the effect would be only d
little more diSconcerting than the
present uncertainty.
Foreign Bonds Prove Surprise.
And Yet II must be admitted that
this uueasiness about European DIS
turbances shows very little in the
Trrl h.. A.Af 8
show the mOSt-the foreign bond
market 1t has been one OF the most
striking phenomena OF the week that
the Very great weakness in French
ana Belgian exchange has had no
counterpart in French and Belgian
bonds These bonds are selling away
above the lows of the year made last
January and February. The eXplana
tion seems to be that the holders have
become hardened to the recurring re-
ports of crises abroad and refuse to
become alarmed. even when the in
terndtional statesmen use the most
pessimiStiC language.
While concern over the European
problem has deterring effect upon
investment buying. the remarkable
prosperity at home seems to have no
stimulating effect. Three great in
dustrial corporations have just made
reports showing the full years divi-
dends at present rates earned in the
first six months of 1928 and their
stock continues to sell around the re-
GENTLY established low points.
Too Many Unknown Factors.
In the case Of United States Steel
tins condition might be explained by
the small return present investment
in the stock gives. but that does not
-uffice in the case of Studebaker or
American Locomotive. 1t may be
urged that the market is discounting
greatly reduced earnings i'll the sec
"nd half of the year, and robably
there is something to be said on this
- ore. This. however. hardly accounts
ior the returns to be had from the
shares of the public utilities. the busi-
ness of which is fairly uniform
through good times and depression
alike. Probably. just as in the matter
Of the foreign situation, so with
things at home it is the fact that
there are so many unknown factors
that keep the investor out of mar
ket which would ordinarily look SO
attractive.
1t is not only merchants and specu-
latorS who have vivid recollectionS
or the great deflation of 1920 and 1921
Investors remember il well, also, and
until they are able to get a clearer
view of the future they do not pro-
pose to take any chances. The edu-
eating effect of the price slump two
years ago can hardly be overempha-
sized.
HiEh-grade Bonds Steady.
In one particular the situation is
distinctly encourag ging. Through all
the decline in stocks, both speculative
and investment. the higher grade
bonds have remained steady. The
market has been dull and there has
been little new buying, but, on the
other hand. prices have not gone
down. Even should all the uncertain
ties, domestic and foreign, operate tC
prevent any great recovery in stocks
the outlook for the better bonds is
generally thought to be good.
all q rEArnnE or nIIRn