Evening star., 1935-11-07
The Rising Stock Market.

Wall Streets boom market, stimulated
according to some analysts OF financial
conditions by the election trend in New
York and elsewhere indicating reac-
ton against the New Deal and also by
the signs of business recovery afforded
by resumption of dividends in some cases
and extra dividends in others, may be
only flash in the pan. Again, 1t may
be a token of genuine convalescence.
Since the great collapse of 1929 there
have been several revivals of stock trad
ing with upward movements in the price
lists, followed by reactions that have in
some cases set new "lows" and have fiat
tened out the averages. So frequently
have these movements taken place that
the public has become somewhat wary
of the Street.
There are certain indices of genuine
business recovery, however, which can
not be discounted in terms Of suspicion
of the stock market on general principles.
Every reliable report of the activity Of
the basic industries is to the effect Of a
steady improvement in production, which
in turn means increase in employment,
which in turn again means wide spread
of funds in wages. Retail trade has been
constantly improving for months, as
these additions to the wage-earner class
have contributed to the volume of sales
for a wide range of commodities. The
distribution of funds by the Government
in the various forms of dole has added
to the current of circulation and to the
consumption of goods.
1t remains the part of wisdom to regard
the rising stock market as an index Of
economic betterment and not as an
opportunity to make quick profits by
speculative buying. The fact that the
range of price is at present upward Is
no guarantee that 1t will continue in
that direction. The market has freak
ish way of turning soft" suddenly, in
consequence of conditions of which the
general public is not aware at the time,
or the significance of which is not known
beyond a limited circle. 1t has way,
too, of responding to the manipulative
influences of those who buy low, force the
price up by back-and-f forth trading and
then sell finally at gain which does
not represent any actual accrual Of
greater value. New legislation has been
enacted which is supposed to correct this
evil, but it is not assured that it will work
effectively or promptly enough to head
off an occasional killing" by the insiders.
As surely as little apples grow on
some large trees there will be a repe-
tition of the slaughter of the innocents
in the stock market if the lessons Of the
past decade are not borne in mind by
all who are tempted to play this most
fascinating game. To the person who
has bought stock at low price. perhaps
at the depth of the depression. the
temptation to sell at good profit and
to reinvest in something substantial when
the market reacts to lower levels may
safely be obeyed. But there is almost
sure sorrow ahead of those who flock in
on the rise, especially without the cash
for full payment, hoping for a quick
turnover and neat profit. For such
winning is but temptation to repeat,
and usually repetition on that basis of
transaction is cruelty costly in the end.
Those who are lured by the rising
market must decide whether to deal in
it as investors or as spectators, and
be content with moderate returns in
the former case and prepared for
eventual losses in the latter. For the
amateur market speculator almost
invariably loses.