Evening star., 1933-01-01


tuated irregularly and uncertainty since
then, neither has broken through the
midsummer resistance points.
Rally Reyerses Sentiment.
The slow continuous decline in Sc
curities Of all descriptions throughout
the first halt of the year gave the i'm
preston that the world was in the grip
of unseen but irresistible forces making
for continuous deflation and universal
bankruptcy. The decline was all the
more ominous because 1t was SO delib-
crate, marching on as glacier crushing
everything in Its way.
This doom was dissipated by the dis
covery that securities could rally. How
much Of it was cause and how much of
1t was effect no one can say, but the
fact remains that since the market
turned its followers-and that includes
the public which normally Is interested
In investment or speculation-have
taken counsel not of their fears but of
their reason.
Whether the bear market is over or
not, a great advance has been made in
the ability to look at the difficulties still
to be surmounted, great as they are.
calmly and even detachedly. This, of
course, follows from the sweeping nqui-
dation which has taken place in all
markets. Those who still hold securi-
pose Of them only when they must have
cash or when they are convinced that
q turn for the worse in the industries
represented Is indicated.
Process Of Defiation.
This liquidation can be presented
statistically by a comparison of the
market value of all listed stocks on the
Stock Exchange as Of November /, 1880,
November /, 1891, and November /,
1882. This is leaving out the 1929 mar
ket. which we all now know was grossly
inflated even at the panic prices of the
Autumn of that year. On November l,
1880. after the bear market had been in
existence IL months, all listed stocks
had a market valuation of $55, ,025,-
7l0,617. On November year later
the market estimate Of the equity in
corporations traded in on the exchange
was s34,246, ,649, sol, a def1ation of more
than s20, 900. 100000 or more than 81
per cent. On November / of this year
the market valuation, computed in the
same way. was s23, ,440, ,66l 1928, a drop
this time of more than $4,000, ,o00, 600,
or more than 81 per cent.
Now, after stocks have undergone
such terrific defation, any additional
losses have but Insignificant psyche
logical effect. II stock drops from
500 a share to $50 share, it is q
panic, If the same stock drops from
$40 a share to S5 share, which is ex-
actly the same percentage of decline, it
Is Just too bad. but no one gets excited.
The owner may be discouraged, but he
does not express it In any hasty un-
loading at that level. And when such a
beaten-down market does give sign,
however faint, of recuperative ability,
the effect on The mind OF the specula-
tor or investor is stimulating out of all
proportion to the extent of the recovery.
Technical Position Strong.
The same story is told by the tabula-
tion OF brokers borrowings. AS 1t stands
today, the ratio of leans negotiated by
Stock Exchange members to the value
Of all listed shares Is approximately at
the record low. The absolute low was
on August last. when this ratio was
1.1e per cent. on November / It was
I.Se per cent. At the peak Of the bull
market In 1929 1t was nearly 10 per
cent. what b true Of the ratio Of loans