The Washington times., 1934-04-12


So It seems
wise to hold Lewis Hansy
ones position in sound stocks, and
to add thereto moderately In cases
where the price Is reasonable with
respect to earnings.
One should note, however, that
. good many stocks are extremely
high in price when judged by
dividend yields. On this basis, the
standard averages" which mostly
include the old line leaders are not
only very high compared with past
periods, but are far out of line
with bonds.
They seems to reflect the abnor.
mally low and artificial money
rates. Thus one may infer that
they are held by wealthy individ.
uals and institutions who desire
. liquid disposition Of funds for
the present, and who figure that
such dividends as they receive are
better than nothing. Probably they
consider that such stocks as Amer.
tcan Can or Allied Chemical are
no more speculative than a good
many bonds, under the existing
unsettled monetary conditions.
The kind of stock which the
average man of small means
should consider, however, is not
Of this "high-flyer" type. OF
course, he should also avoid the
cheap cat-and-dog type, which is
purely speculative and moves
only on manipulation. But the
problem is not one Of mere
NQuidity. He wants reasonable
safety, but he also wants q good
return on his money, and assur-
ance that any further deprecia-
tion in the dollar will be COM
pensated by q rise in his stock.
While avoiding the cheap ma
nipulative stocks, therefore, he may
well look elsewhere than the rich
mans favor1tes. There are good
medium-price stocks which are
neither blue chip nor tipster
faVorites. Some Of the these are
behind the market
Such stocks, for example,
may earn something like $1.25
to $1.5O . share, pay some
thing ike 81 in dividends, and
sen I'm the eos. Their net
current assets per share may be
wcll up to the price Of their
stock, and their general finan.
Cial position be sound.
Then If they are in industries
which are not especially liable
to injury by New Deal-NRA-AAA
policies through labor and mate.
rial costs, they may be bought.
For example, the passing of the
dividend by Nash Motors is an
eye-opener. This action appears
to have been necessitated by
high operating expenses, for the
company sold many cars. Evil
IDENTIFY NRA cut earnings, while
the conservatism Of the company
In accommodating materials inven.
tories Cor inability to accumulate
because Of style changes) handi-
capped it in meeting inflated
prices.
ON the other hand, Wilson
preferred and A stocks, and
Armour preferred and A, have
benefited by inventories and
Government policies in boosting
prices.
New highs have recently
been made by such respectable
stocks as Beechnut, Glidden,
Reynolds Metal, United Drug,
and the Wilson and Armour
issues referred to.
AS long as the market con.
tinueS to creep, while bonds move
up and the 10 or is most active
stocks each day show net gains,
the present trend will probably
continue. The background for
1t lies in Cd easy money and
initiation (2) growing hope that
the back Of the New Deal, con.
Sidered as a radical scheme for
. planned economy" has been
broken.
Should the Administration de-
eide to "crack down" again Gas
by demanding more teeth" in
the stock exchange bilD, there
would doubtless be a relapse.
Otherwise q delayed Spring
rise" will culminate in a specula.
tive squirt, followed by reaction.
Meanwhile, there are enough un.
certainties to keep the rise a
creeping one.