The Washington times., 1928-07-16
ST CK ADVANCE
BELIEVED
At PEAK
By RICHARD HATTON


analysts. and business specialists
are prolific with advice and opinion.
According to r. r. Keech & Com
pany a new school which breaches
euuities as represented by common
stocks. and maintains that invest
Ing IN bonds and putting one
money in savings banks Is out OF
date, may be right. But when the
income return on the stocks or
standard industrial companies IS
below the current. loaning rate OF
money and less than the yield on
high-grade industrial bonds ana
when market valuations show from
fifteen to twenty times net earnings,
we believe it is good time 70
leave such stocks alone.
During the war and Immediately
thereafter. when business was gem
erallv arfificially controlled, many
maintained that the law of supply
and demand had been superseded,
hut in 1920 and 1921 old supply
and demand came back with "a
vengeance.
1--WE believe" the company said
s'that business is on sound basis
and that fundamental conditions are
-enerally good, but we further be.
lieye that loans on securities Will
have to be considerably reduced
and that the prices of many m
dustrial favorites are still too nlgn.
.sOnr old fashioned idea that
stocks should sell at prices IN reia-
tion to present and prospective
earnings we feel will some day re-
assert itself and confound the
anostles Of lac new school.
More than ever we believe that
fhsssis the time to watch earnings
and prospects, the trend OF money
and Wall street loans. and possess
your soul in patience.
Prices Too High
An ANALYSIS by Mackay Co.
finds bond prices too high and
says.
viewing this bond market gem
orally. the present level of prices,
taking into account the trend over
mast wears. current tax rates, and
the commodity price level, Is reia.
lively high. according to an analy.
eiz ii the July issue Of the Invest
rlent Review published by Mackay
" Co. which adds that the major
norton of the upward trend OF
prices has about run its course.
.sThe analysis points out that the
ADVANCE cannot be expected 70
continue. at least not at the rate
81 the last few years, and that the
view held BY many authorities IN
the bond market that ~ per cent
returns on Iong-ter1n bonds are 70
he 4 thing Of the near future. can
not be expected as development
for the next several years
Regarding business. w j. Wolf
man believes the beginning Of the
second half OF the year finds busl-
ness and industry of the country
taken as a whole on good foundds'
ton and while not anyWise fore
casting a boom, presenting many
indications that the coming six
months viii be fully as good as
the corresponding period of last
year.
"A considerable amount OF irregu-
larity continues to be evident IN
conditions. but this is the situation
we always have with us and view
ing prospects generally there ap-
pears to be little upon which any
pessiTnistic outlook could be based.
Competition continues ute
strong in most lines and in many
instances there are complaints re
garding the small margin of.Drofit.
These are particularly numerous
from independent retail establish.
ments, coming into direct conflict
with units of large chain store sys-
TENS.
.'The steel industry although
operating in the first half of the
year at a record breaking volume
of business has at the same time
been doing business on an unsaiis-
factory profit margin, when tine
large investment in this basic line
Is taken into consideration.
"Since the death of Judge Gary
price conditions i'm the steel indus.
try have been far from satisfactory
and as yet it seems no one has seen
fit to accept the responsibility for
price sterilization formerly taken
by the late chairman 1f the United
States Steel Corporation. p
Too Much Gold
A summing up by Col. Leonard
P. .Ayres, of the Cleveland Trust
Company says:
Midsummer OF 1928 probably
marks the end of an economic era
in the United States, the termina.
ton of a fiye-year period during
which this country has Deen tae
temporary custodian of more than
its share OF the worlds stock 81
monetary gold. Probably thesa
years will be referred to in our
economic history as the period of
Coolidge Prosperity
During these five years this
country has had so great a supply
a credit that it has been able 10
finance simultaneously and without
difficulty such credit consuming
Undertakings as a building boom.
a Florida boom, a continuous bull
market, vast extension of install.
ment selling. rebuilding of its
manufacturing plant, and an enor-
NOUS extension of its highway sys
tenn. There has been credit enough
Tor all. and for all at the. same
time: Nothing has had to wait for
anything else.
As we pass into the second half
OF 1928 we. appear to be leaving a
period in which credit has vigorous
~ sought employment, and entering.
one In which enterprises must com.
pete for credit The outlook is
changed. and it is one to. which we
nave be2ome unaccustomed. The
STOCK market has become great
national bet against the continual
ton OF high interest rates, and since
me Federal Reserve authorities can
hardly reverse their present policies
until the excessive use OF credit for
speculation has been Terminated the
decision will probably be against
the stock market.
Ii interest rates must remain
high much longer business will