Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-05
IRREGULAR STOCK
MARKET FORECAST
:; IN NEXT FEW MONTHS
CONTINUED From Eighth page.)

ferred shares of about so per cent be-
tween September and the middle of No
Vember, there was shrinkage of nearly
20 per cent in this newest family group
Of securities. The public attitude to-
ward them has so completely reversed
itself in the past so days that many Of
them are quoted much below their
Iquidating value. Even at this level
their markets are nominal ones.
As an illustration of how the siren
song of the stock ticker fascinates and
draws to it men of mature Judgment,
the published reports this week Of the
three companies identified with the Ma
tional Investors Corporation are IL
Illuminating They all cover the year
ended December 81, 1929 The second
corporation secured its capital OF $l0,-
100000 on November rs, 1928. About
IS per cent of this was invested in 81
prominent industrial and public utility
stocks and a small group Of foreign
bonds. The remainder was put out on
call. This company took advantage Of
market conditions to the extent that,
during the year, it realized profits on
the sale Of securities Of $1,125,825. At
the end of December the excess cost
Of securities purchased over current
market value was Sl.176,7l7.
The third corporation financed itself
at the end Of last July with a paid-in
capital of SIO,4OO, 600. Its funds we're
available when the market was mate
rally higher than on the date when the
second corporation was formed, but
still lower than in subsequent months
1t invested about 80 per cent in Sc
curities al the higher level and left the
balance on call. Before the market col
lapsed it had taken s467,757 in profits
on security sales. At the end Of De-
cember, however, 1t showed an excess
of cost over market value on its port
folio of $1,6l2,055.
Light Shed on Stock Buying.
Now we come to the period of the
intensest speculative excitement, the
highest price level of the year and the
unsatisfied demand of the public fol-
finance company stocks, with the Fourth
National having available in the middle
Of September a paid-in capital of ST.
100000. OF this it apparently invested
about SIS per cent, or slightly over
SIS, 900 900, and held 81 700 900 in re-
serve in call loans. 1t bought practi-
cally the same stocks as its sister cor
porations, but in double the quantity
IN all, over 100000 shares-and pre-
sumabiy at much higher prices. Con.
sequently, we find in its income &C.
count of December 81 loss of 81, 147,.
three times income from interest ant
dividends, and shrinkage in the
market value of its portfolio of $685.
75e, or about IS per cent.
These facts throw some light on thu
character of the buying of stocks latC
last Summer when they were so high
What was done in this series of cor.
porations was duplicated many time
over in others. 1t is a healthy sign
I,ou,eveI IN And finance coy1nnauv man,
ayers willing to expose their errors anC
TO acquaint their shareholders with cur,
rent conditions. For this the Nationa
Investors Corporation is entitled II
, much credit.
The probable effect Of a common mis-
Judgment of the market situation a
that time will be period Of undue
conservatism. from which many goot
stocks will suffer. although intrinsicall.
they may be worth more than eve
before.