Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-17
CHAPTER VIII.
Pools and Investment Trusts.

Pools and Investment Trusts.
CWheu the Investment Trust came
into the arena the pool managers
tornd then had netG animal 10
contend NTH. Just ,DhGt happens 10
the pool 11hen the Investment TraSt
sims into the market is told in TINS
drticle)
"You can always tell what the public
will do. Won can sometimes tell what
the insiders will do; but you can never
tell what the investment trusts VIII 40
This somewhat cynical epigram, voiced
last Spring by an irritated pool man
ager, serves to focus attention upon one
of the most extraordinary situations
which has arisen in Wall Street history.
pool operators have been forced to ao-
inst ali their calculations, and some OF
their methods, to meet the influence OF
the trading activities in the stock mar
ket of the Investment trusts.
However, before entering upon as
cussion of the interesting. ana some
times amusing, subject Of the erect OF
investment trusts on pool operators. L
wish to say that I am offering no crit
icisn Of the Investment trusts. I am
not an expert in this field and am not
qualified to speak of the merits OF IN
vestment trust securities as investments,
or of the influence of the investment
trusts upon financial affairs in general.
FRANKLY. I see no reason why conserva-
lively managed investment trusts should
not prove permanently succesSful IN
America, as they have in England: buC
my remarks have solely to do with the
influence of investment trust trading
activity upon the pools and larger spec
ulative interests in the stock market.
Let me recite the history of a 1929
pool to illustrate the confusion into
which many operators were thrown be-
fore they learned to adjust their calcu-
lations to the peculiar conditions which
regulate the market policy Of some IN
vestment trusts.
Pool Assisted by Trust.
Early this year pool operator OF long
experience discovered stock which he
believed to be worth much more than
the market prices then prevalllng ne
formed a pool to foster activity in THIS
stock, a pool which perhaps should have
had more capital for the operation con-
tempIated. The pool manager was IN
duced to begin activities with small
"bank roll" because of the fact that he
succeeded in interesting an investment
trust of large resources in the STOCK ne
proposed to advance. This investment
trust made tentative agreement to
take certain pIOpOAJAOll VI VIC oAioA -
accumulated by the pool and to hold
these shares for investment until con-
siderably higher price level should be
established Arrangements of this type
have been common for many years be-
tween pools and large individual invest
ors or groups of investors. But the
agreement worked out in unusual fash
ion, as we shall see, when the investor
was an investment trust.
For the first few weeks everything
moved on schedule. The pool was rap
idly cleaning out" the market for the
stock and turning over a part of its
accumulations to the investment trust
Then came the March break of the
stock market. BY judicious trading the
pool manager prevented a drop of more
than 10 points in the issue he was
handling. But at this critical pass the
investment trust withdrew its support
The reason given was that it could not
longer carry line of stock at q
| loss.
Could Not Average" on Decline.
"I thought you were convinced of the
| value of the stock and were buying II