Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-10
PRICES OF STOCKS
ON INCOME BASIS.
Many Issues Now Yield At
tractive Return on Capital
Investment.
BY CHARLES r. SPEARE.
rectal Dispatch to The Star.

]
crate and prolonged.
At the end of q week that has wit
messed further serious declines, but In
which acute liquidation seems to have
been completed, the averages stand ma
terially lower than q week ago. AL
! though there were over 100 stocks that
on Thursday morning declined below
the prices of october 20, the recognized
averages of the list did not break
| through the minimum October figure.
Out of 10 representative shares
| Thursday, four were some points higher
at their lowest level than they had
previously been and two were un-
changed. OF the other four stocks
three, namely, United States Steel. Gen.
eral Electric and Atchison, showed an
average decline of 10 points from their
lowest on October 20. This plainly
indicated that the force Of the selling
movement had spent itself and while
| the subsequent rallies have been dis
apuointineiy small, the market has not
since given any additional signs OF dis
| treSs.
Reserve Strength Of Country.
Those who have been convinced for
many months that the stock market
could not go on discounting the future
the way it had been doing, appraising
stocks at from 20 to so times earnings
and ignoring the credit strain imposed
IN this country and on all the rest OF
the world in consequences OF TINS m
fiation, had never anticipated q DreaK
of the SuddennesS or the size that mas
occurred since the middle Of Septem-
her They had not suficiently taken
into account the effect Of fright once
it became general on q greater body OF
ueople than had ever been identlned
with speculation, and who, like the
hundreds Of new stocks created ana
dealt in on the various exchanges OF the
country. were to have their flrst test
under panicky conditions.
The fact that tremendous mornen-
tuna of sales of securities mas peen
checked and that, so far as care1ul
investigation proves, there nave Deen
No serious financial difficulties growing
out of the smash in prices, Is the
strongest proof possible OF the reserve
strength Of the country. its people ana
its institutions.
Big Buyers Take Losses.
One Of the unusual and damaging
effects of the series Of abrupt decllnes
in stocks since the middle OF laSt
month has been the extent to which
individuals and corporations have been
led into buying on reactions OF rela.
lively large proportions, only to tind
themselves a few days later with losses
from what they assumed were par
gain levels. On october 15 leaolng
banker in an interview stated that al
though in some cases speculation mas
gone too far in the United States, the
markets generally are now in a healtny
condition. The last six weeks have
done an immense good In shaking down
prices"
Comparing IS active listed stocks on
that day, and not including any of
the inflated public utilities, with the
| low quotations of last Thursday, 1t Will
| be found that the difference Is repre-
sented in an average decline OF 90
| points. In the interval there had been
| two occasions, namely, october "a and
| October 80, when the panicky state OF
the market prompted men and corpo.
rations who withheld their purchases
| up 10 those days TO make them on q
large scale. For instance, between Oc-
tober IS and october "a there was an
average decline of ~ points in the fol-
lowing stocks: United States Steel,
General Electric, Consolidated Gas,
Montgomery Ward, New York Central,
Anaconda, General Motors, Union
Carbon and Carbide, Atchison and In
This list on the later date. however,
was of an average of SO points from
the highest prices of the year.
Asset Values in Stocks.
On october 30 the same 10 stocks
were additionally down an average OF
| 25 points from that reached on october
| "a and later, as indicated above, part
| of their list went even lower than dur
| ing October The effect of this I'M
usually protracted liquidation has been
| to reduce the buying power OF large
interests who had every reason TO ex-
| pect that purchases made say on Octo-
| Der "a, would quickly realize them a
profit and who can no longer be counted
on for the support which they had al
ways held in reserve for market situa-
| lions such as those of last month. This
| is one of the most unsatisfactory phases
| of the market outlook as 1t includes
| the position of the public which bought
| heavily for cash last week and, fortu-
| nately, owns what 1t bought.
Many stocks are now at prices which
represent asset, or liquidation values
| There are not few that are selling
! 10 to 20 per cent below their breakup
i value. From the standpoint of invest
mentS primarily, stocks today are more
entitled to- consideration than they have
been in two years. In some cases the
| Weld has doubled as prices have de-
| ciined and dividends have been in
| creased. In other issues the returns
! havesrisen from 25 to so per cent over
those on the former basis Of prices and
dividends. This would include stocks
of the character Of General Motors
National Dairy Products, CONSOLIDATED
| Gas, Anaconda. Baltimore 81 Ohio anc
Chicago a. Northwestern.
After having been so much below
bonds in their average return, stocks
have now reached an income basis
which may well encourage investment
in them by those who would in other
times be likely to employ their funds In
bonds and preferred shares.
Effects Of the Break.
On the financial side of the UMPIRE
cedented break in common stocks will
undoubtedly bring to an end the perioc
of excessive f1otations of junior securi-
ties of investment trusts and trading
corporations the abandonment of various
bank and public utility mergers ant
other promotions of tn esort that have
figured as the leading tragic episodes o.
this and recent weeks, and an easier
| money market. The shrinkage In brok
close to 30 percent, since the middle o.
October, is a guarantee that the period
of credit strain is permanently over
On industrial or business conditions
the consequences of the defiation in Sc.
curities, which has reduced the buying
power Of many individuals and corpora.
lions and temporarily lowered the cour-
age and initiative of the public, ART
likely to be pronounced. 1t is generally
admitted that they will have their frs
and most serious effects on luxury
trades. II is doubtful, however
whether they viii end there. The f1na
months of the year are among TIT
most important in the retailing of mer'
chandise. It is hardly to be expected
J that, after the experiences of the las
two weeks. the public will buy will