Evening star., 1955-10-23
Wall Streets
Blue Mondays
Discounted
BY HERBERT BRATTER

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President Eisenhower's illness was
promptly followed by a thrombosis
on the New York Stock Exchange
and other securities narts. When
"Blue Monday ended the country
counted the losses from the worst
break since 1929"
Was 1t really as bad as thatf
Was the two-year-old bull market
Just an Eisenhower affair that end
ed with his heart attack? Does the
break foreshadow bad business
ahead. as happened in 1929? In
vestors are wondering.
In fact, they have been wonder
ing for some time. Earlier this
year, after some witnesses before
the Senate Fulbright Committee
had cast aspersions on the optimism
OF the bullish stock buyers In Wall
Street, the market had q bad case
Of filters and sharply receded. Only
briefly, however: then the bull mar
ket resumed its climb toward new
high prices In the summer.
After three blue Mondays IN Q
row, this writer asked Chairman
Jason s. Armstrong Of the Securities
and Exchange Commission how the
stock market decline Of Septembers
October looks to him. How does II
compare with earlier market breaks2
Armstrons's Analysis
Z while the breaks on September
26th and several other days re-
fiected sharp declines in prices,
these should be viewed in the per.
spective Of the aggregate value Of
all listed securities" Mr.. Armstrong
replied. On September 30-after
the first bad Monday-the aggre-
gate value of all stocks listed on
the New York Stock Exchange was
only half Of per cent below that
On August 81 and was $50 billions
shove that Of Q year earlier.
Both in number Of shares and
aggregate market value" the CHAIR
man continued. ''the present mar
ket Is larger than those Of former
periods. BY comparison with the
SIS billion shares listed on the
NYSE September 80 having value
Of $198 billions. In September 1879
there were one billion shares valued
at 500 billions. This declined TO
$87 billions month later and
dropped to $72 billions by Noyen1-
Der /, 1929"
On the Monday after Ike's at
tack the stock market shed 62 per
cent Of its values. At the low, fol-
lowing two more blue Mondays. the
net shrinkage IN II trading days
was 9h per cent. the SEC calcu-
lates. In 1929 on the initial bad
day, also q Monday. values shrunk
1913 per cent and in the first II
trading days. 331a per cent. ON
this basis 1855 in not another
1929"
The 1916 Breok
Take the 1916 break. It Topped
5.6 per cent from values In the
first bad day and 81 per cent In
II trading days. So 1855 was
worse than the 1916 break. In
1887, too, one bad day shaved 4.7
per cent from stock values and II
trading days 8.5 per cent.
A bull market is one in which
optimism exceeds pessimism. There
are all sorts of measurements OF
the markets. Not all Of them agree.
But market students in the Cow
ernment do agree that the market
of September, 1866. was a 2-year-
old bull. No previous bull market
of this generation had lasted that
long. The tail end Of bull mar
ket is optimism that has outrun
itself. At that stage the market
doesn't need much Of y shock to
take flight.
When we see what has happened
to stock. prices this September
October it is interesting to note
that the breaks Of 1929. 1897 and
1916 all occurred in September or
October. There was no heart at
tack then. Maybe this is something
more than coincidence.
In comparing 1866 with 1929
market declines We should recall
that we deal in smaller dollars
today and that we have many more
listed shares. The II trading days
volume In 1865 was only IS million
shares. In 1929 1t was about 81
million In q like time.
An Honest Break
The SEC has no reason to think
that the recent break was anything
but an honest one. It has not OBJ
served any Of the manipulative &C.
tivities that the statute prohibits.
No bear raiding. No unusual for
eign selling. The triggering Of stop
loss orders was not unusual. with
minimum margins at 10 per cent,
distress margin selling has not been
q factor, as It was In 1929. The
market throughout has been
orderly.
The stock market reflects a spec
ulative guess as to future business
profits. Ipso fdcto 1t tries to be
ahead Of Developments. although
sometimes it wakes up to the fact
that 1t has been behind. Whether
the 1952-54 bull market has
ended no one yet knows. Business
and profits in 1856 as a whole may
not be as good as in 1855, but the
outlook for the next six months,
Washington economic seers say, is
still very good.
Maybe the market will try to
discount the farther future. But
how the stock market charts will
look next spring is anybody's guess.