Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-04-07
MEN. AND MONEY
By M. S. Rnseyser.
(Coryright. 1927

Downright. 1927
The speculative mind, which articu-
lates It's opinions through the pur-
chases and sales of securities at the
stock exchanges. continues to show
discrimination.
Unlike the custom in numerous
periods OF the past, there is no cur
rent disposition to buy or sell the
board. There has been, except in
brief periods, no uniformity Of move
/ ments. In recent weeks stocks have
declined and advanced simultaneously.
The general average of prices has
made little net progress in the last
month or so, in spite of spectacular
| advances OF individual shares to I'M
precedented SUBMITS. In typical
speculative cycles Of the past such a
situation usually accompanied distri-
button of shares by pools and iudicious
individuals to less discerning anna
tours.
The recent irreguIarity Of the mar
ket, however, has been not inaccu-
rate mirror of conditions in the world
of industry and commerce. Industries
have been affected unevenIy by pros
perity, and within particular industries
the gains have gone to an increasing
extent to the largest and most eff.
cient units. Falling commodity prices
have tended to narrow profits, and in
the heightened competition the less
efficient factors have found the sled
ding hard, while dominant concerns
established new peaks for net profits.
This general situation resulted in 8
per cent more commercial failures in
the first quarter of the year than in
the first three months of 1925.
Speculative Switches Logical.
Dun's reported 6,643 commercial
mortalities for the first quarter of
1927. Except for the adverse years
Of 1915 and 1922, this constituted the
highest number on record for any cor
responding period. In the light OF
such conditions, speculative switches
from shares of companies that are
hard pressed to those of enterprises
which have shown a capacity to thrive
is not Illogical. 1t helps to explain
the irregularity at the market place.
The average price OF Is representa-
tive industrial shares recently was
more than 100 per cent above the
level prevailing 10 years ago, when the
United States entered the war. Rail
road shares ON the average were more
than 35 per cent higher than in 1917,
and in 1921 and 1922 railroad shares
were quoted far below the 1917 prices.
These averages help the outsider to
visualize roughly the extent to which
the stock market has already gone
toward discounting favorable economic
conditions. Purchases at these higher
levels are obviously fraught with a
larger element Of risk.
Experienced brokers have been i'm.
pressed with the ability OF the general
1 tive Ia nd I'M in
spite OF weakness in particular groups.
Change i'm Markets Size.
I'm the past" said one astute COM
mentator, radical readjustment of
prices in any important group, such
as the oil stocks, has been enough to
bring about general liquidation in the
whole list The diff, ,ence between
the present and the former markets
is an important indication of the
change in the size of the market and
in the size and characte" of it's follow
ing. The market outgrew domination
by single individuals and small groups
several years ago. 1t is now so big
that no single group of securities
seems to constitute dominant factor
in 1t. This would mean that it would
take events or change of national or
international Importance to upset the
market as a whole.
ION the other hand, the present situa-
ton may be due to money conditions
and to the exertmely liberal margins
maintained by the small portion of
the public which is participating in
the speculative activity. II this last
is the case, the difference in action
between the present and former mar
kets will be eliminated when public
participation grows to substantial pro-
~ nj t11. So,
speculative purposes becomes less
plentiful"
Another thoughtful broker--if the
EXPRESSION is not a contradiction in
termS--offered this Interpretation:
There was time not so long ago
when the number of stocks traded in
was much smaller. with relations in
the marketplace more intimate, when
sensitiveness was more acute and
when severe epidemics Of ole kind or
another would range far and FIRE.
quently without great excuse.
Gossip Is Less Factor.
To-day the market place is not the
village it was. Gossip goes on there,
but 1t doesn't travel as far or go as
deep. Now we can get closer to the
facts, and they count. The market
place is now a metropolis. It is CO.'S
mopolitan.
Nor is 1t an exclusive domestic
trading center. 1t is now interna.
tional and the forces are many and
varied that keep it alive, with buying
and selling going on for all sorts of
reasons, in all sorts of stocks, on or
ders coming from all sections of the
country, if not from the four corners
Of the world.
And SO, we have great variety of
circumstances continually changing
the aspect of things and tending more
and more to make the market place
an arena Of irregular activity instead
Of the old erstwhile stamping ground
wherein they fiocked together on the
slightest pretext under the leadership
Of the mysterious They
There is nothing for sale In the
market place except what is brought
there to be disposed of. There isn't
an ounce Of anything left there over
night and nobody knows exactly what
the next day is going to bring forth"
The cycle of speculation has ad.
vanced so far that an individual is
imprudent to hold securities except
on the basis of knowledge of their
proven earning power and intrinsic
merit. The best grade of securities