Evening star., 1925-12-05
STOCK MARKET IS AIDED
BY BOOM In BUILDING
Babson Saws Turn in Wall Street Will
Come When Suppl, Surpasses Demand.
Short Selling Factor Now.

/ in a theater: that is. they all want to
get out at once.
The present stock market rise has
been greatly helped by the remarkable
! boom in building which this country
has witnessed during the past few
wears. This has reached eXtraordi-
nary proportions AT figures beyond the
most optimistic hopes. OF course, this
/ building boom cannot always con
tinu" and in certain cities it has al
ready reached its height.
In these cities rents have begun to
decline and there are many vacancies.
with large number OF empty houses
for sale. As a part o. the building
boom and each is dependent on the
nther-the automobile industry has eN-
panded with great rapidity. If the
automobile manufacturers produce as
! many ears in 1926 as they plan on,
, there must Of necessity be lot of sur
plus cars.
The building boom and the auto
-nohile boom have been caused by the
/ fact that there have been more buyers
Of real estate and automobiles than
there have been sellers. .\s soon. how
over. - tneHr = an oNerSupply of
houses and automobiles. then there
/ will he more sellers of real estate and
automobiles than there are buyers.
\ panic in the building industry and
! the automobile industry is perfectly
within the range of possibility
Other Stock Market Factors.
There are. of course. other factors
which always provide fertile ground
for advancing stock market prices.
Easy money such we have been en-
JoyinG the past two years always
tends for higher stock market prices.
Good wages with general employment
prov ide the basis for large retail sales.
which in turn keep the wheels of in
duStry moving.
During the past few wears this situ-
alton has been greatly augmented by
( 4 rapid development in installment
sales. sometime, however, the posi-
| bilitN of expanding retail sales of all
kinds of goods on the installment
plan will reach and pass the limit of
its usefulness. When this time comes
there surely will he a collapse.
Moreover. a partial payment plan
, serves more as q stimulant than
curative. People do not buy more in
the long run on a partial payment
system. hut merely buy more al first
or at one time. Hence when this
stimulant of partial payment sales
loses its effect. the relapse will he all
the more severe.
Short Selling in Stocks.
Many wonder why the market
comes back so quickly after each
break. The reason for this is that
there has been more short selling dur
ing the past year than perhaps ever
before during a rising market. When
legitimate sales are made-and, of
course. there always must be a seller
when there is a buyer and vice versa
the transaction is completed when
the sale is made. In the case of short
selling. however, the transaction is
! not completed when the sale is made.
/ The transaction is completed only
when the seller covers; that is
buys back the stock at a lower price
to enable him to deliver what he
previously sold
During the past year certain invest
ment COuuSelors and economic SerV-
ices that We're wrong on the market
were not content merely TO advise
their clients not to buy stocks. bur
went further and advised them to sell.
Hence there is hiG short interest in
the market and whenever there is n
Continued on Nineteenth PaGel