Imperial Valley press., 1940-01-01
Babson Says First Half
O. 30 Will Bring Best
Business Since Boom DAYS

the building trades. Real estate men
specializing in new, modern pro-
perties should witness better values
and Stiffening rents as the months
work along. However, I see no hope
for old, large houses, or other out-of
date buildings.
High Earnings; Big Dividends
Hence, the first half of 1910 pro-
misses to be good period for most
of us. I am particularly optomistic
on investors income. Business pro-
! fits in early 1910 ought to be the
best in three years in most lines
and the best in ten years in other
lines Earnings will run 80 to so per
cent over 1899. The heavy indus
tries should report the biggest jump
in profits-up so to 100 per cent
with consumer industry prifits up
10 to 25 per cent AS result in
vestors are slated for some very plea
SAINT dividend surprises-checks 25
to SO per cent bigger than a year
ago.
With a combination of high bus
mess volume and a bright outlook
for profits, this is not only a strange
war; it's a strange boom as well.
Despite all the optomistic news,
sentiment is bad. Investors refuse to
buy under valued stocks selling at
to II times earnings and yielding
to 10 per cent Yet they stampede
to buy the bonds of government
which has failed to earn its charges
for ten years, and which yield only
one to two per cent!
BulliSh on Stocks
Second-grade issues of concerns
covering their interest comfortably
are selling for 30 to 70 cents on the
dollar while 312 per cent Triple A"
corporation bonds are gobbled up at
prices to yield as little as three per
cent. Some time-maybe not in the
first half of 1940-but sooner or
later, the bond market must take its
medicine just as the stock market
of 1928-29 had to take its knocks.
So I am moderately bullish on care
fully selected stocks and medium
grade bonds for~early 1940,bu l
am bearish on "high-grade', long
term bonds.
World commerce is all muddled up.
You cannot make strong forecasts
about it. The best you can say is
that our trade with Canada, South
America and Italy will be the high
spot CT the exports and import pic
tIre II early 1910. Our commercial
treaty with Japan expires on jan
uary Is. If it is not renewed our
trade in the Pacific may be sharply
Curtailed. However, think some
thing will be worked out with the
japanese.
No forecast on the war or its
duration is possible at this time. 1t
may be all over tomorrow, or it
may Wag on for years. The i'm
portant point right now is to recog-
nize that wars effect on BUSINESS is
being over emphasized. So far, it
has neither helped nor hurt, Amer
lean business. When, and if, fighting
freaks out in earnest, Allied war or
dcrS will help our business But un-
der no circumstances would the
EelligerentS buy as much from us as
they did in 1915-l7. The war is in
no sense the major prop under our
current boomlet. That's why I say
war or peace, early 1910 will see the
best business in ten years.
The first half of 1910 will come
the closest to good times" that we
have seen since 1929. Readers must
not think, however, that I believe
everything is hunky-dory. Real
prosperity is as far away as ever.
Real prosperity is merely a synonym
for progress of civilization. With
millions of men jobless at home and
millions more trying to kill each
other aboard real prosperity is not
even Just around the corner" Real
prosperity and lasting peace will
return only when the desires and
goals OF our and all other peoples
change-that is when. we all prac-
tice what Jesus taught 1000 years
ago.