The Wilmington morning star., 1945-07-06
BABS0N BERATES
PESSIMISTICS
By ROGER w. BABSON

BABSON PARK, Mass, July O.
Certain well-know investment coun-
sellers have for some months been
very bearish. They believe that
socks are too high and that 1t IS
a mistake to invest money in stocks
at the present time. I assume that
they also mean that those having
stocks should Immediately sell
them. Of course if these men stick
long enough to their bearish at
titude. they will eventually prove
themselves to be fright" but this
may take some years. In the mean
time, while they have constantly
been bearish, stocks have constant
ly gone further up in price.
l also find men of experience
who believe that after the war our
country will be headed for della
ton rather than initiation. They look
for lower commodity prices, re-
duced wages, lower rents and othe-
features of deflationary move
ment. Here again these pessimists
will some time be rewarded if they
stick to it long enough; but I be-
lieve they are absolutely wrong so
far as concerns the immediate
postwar period of perhaps some
years duration.
OF course, there will be periodic
breaks in the present bull market.
A "Communistic scare" may occur
at any time. When the professional
stock operators in New York have
sold out their holdings they always
dig up some pessimistic news to
try to break the market in order
to again pick up cheap stocks. Or
the other hand, I believe that any
such breaks in the market would
be temporary. It now looks as il
the present bull market may rur
| two or three years more.
| Both the pessimists and the
| optimists refer to World War I anc
what followed World War l as evil
dence for their present forecasts
The pessimists point to the big
break which occurred in the early
II POS; while the optimists refer to
| the continuous bull market which
existed from 1923 to 1929 when the
Dow-Jones average went up from
Sc to 1856.
I insist that we are living in ar
absolutely different world thar
existed in the latter years of Worlc
War I. Certainly this country is II
an entirely different position with
absolutely different conditions ex
listing. Both the pessimists ane
optimists should agree to this /
they have any sense of proportions
In fact, the pessimists can com
pare our present huge national deb
today with the comparatively small
national debt existing in 1919. u
the other hand, the optimists cal
prove that following World War l
TIE United States will be the strong
est, richest and most productiv
nation in the world. Furthermore
cur country, for some years, will b.
free from competition from Ger
] many, Japan and other previou
competitors.
| Mind you, am not talking abou
what will happen after, say, 1916
Some day the whole world mus
pay for the sins of the past decade
Only spiritual awakening ca
prevent it. Then there again wi
be unemployment, business failure
and real estate readjus. ments. Rus
STA, China and certain othe- cour
tries with cheap labor will the
take world markets away from u:
The E ng l s h-speaking countrie
may then be threatened with
| semi Communism OF some kline
| Between now and when such tim
comes, however, l expect to sc
much higher stock prices. Wit
nearly. $50, 1000, 900, 900 in pocket
and cash drawers, with only
very limited supply of securities
purchase, stock prices must Sc
higher.
1t is true that the Dow-Jones IL
dustrial Average which was ~
1882 now stands at around 100; =:
remember that it went up to 800
1929 and could as well sell asai ,I;,1
that former high. Before seil an
any Observation-Disclosures $50 -,
take time to compare their pre ar,
prices with the highs Of lszs. ~
is very important when collloa, as
with study Of how prices
on a "times earnings oaSAs'
= e1Y WAR BONDS AND elAM'-