Evening star., 1962-05-29

yesterday?
Although it wasn't anything
October 90, 1929 when 1874
million shares changed hands
on a much smaller total of
available stock, yesterdays sell
off jolted the local financial
community.
II think the activity was a
elimination of what's been
going on in the last week or 10
days." said Millard West, jr.,
partner in Auchincloss Parker
& Redpath. Certainly it was
a dramatic collapse" ;"
The Major Factors
Like several other investment
specialists interviewed, Mr.. West
suggested these factors lie be-
hind the general decline: Dis
turbance of public confidence
brought to a head by the steel
crisis, a tremendous supply" of
new issues brought to the mar
ket in the past six weeks and
"a valid Securities & Exchange
Commission investigation of a
rather glamorous stock market. !"
Mr.. West noted that 10 to Is
new stock issues a day have
been throwing thousands Of ex-
ira shares into circulation, as
the SEC cleared them faster in
recent weeks, creating a drug
on the market. Previously,
perhaps three or four new is
sues a day was normal.
On a more cheerful note, he
added that at today's price
levels, certainly there are some
good values around now" for
the investor.
Other Opinions
other opinions from Wash
ington brokers offered these
explanations:
Richard L. Bruce, senior vice
president of Rouse, Brewer,
Becker g. Bryant: THE basic
reason is this conflict between
big business and big govern
ment, when the President made
U. S. Steel back down.
"But the psychology Of the
public also is to look now for
income rather than growth.
More and more ask us, What
does the stock yield?' And a
lot of people feel initiation is
not as rampant and are putting
money into savings and loan
associations.
81 may be wrong, but I think
we're due for a market correc-
stion on the upside. If not, we're
in for trouble"
George Ferris, ST., senior
partner, Ferris & Co.: prices
have been dropping constantly
for the last two months, and
fear psychology has taken hold
of inexperienced investors. But
one Of the biggest mutual funds
tells me it has more money
coming in than in redemption
of its shares. From that stand
point, I think there's sufficient
money behind the market to
prevent panic.
Triggered by Steel
Il can't believe tine strong
holder Of stocks Is dumping
them on the market. Business
developments don't warrant It,"
Agreeing that the steel epi-i
sode touched it off, Mr.. Ferris
cited the outflow Of gold and
an unbalanced budget as other
factors. But he termed the war
threat in the Far East aI
minor" influence, adding,
We've had situations erupt SO
often there"
II do think Wen have lower
prices but it's getting near the
bottom and money will come
into the market, though pos
sibly not this week." he said.
Robert c. Jones, jr., execu-
tive partner. Jones, Kreeger &
Co.: zone major factor that's
little understood is that many
convertible bonds, such as
those of American Telephone g.
Telegraph, are sold on a Is per
cent Margin"
Margin means the down pay
ment a buyer makes. The Gov
ernment now requires a 70 per
cent down payment or margin
to buy stocks, e.g., you must
pay az 4Odob ptO Ccckl 4OI cdCIl
800 worth of stocks, with only
$50 allowed on credit.)
Too Much Credit
Mr.. Jones suggested that too
many people buying converti-
BILE bonds in several hundred
companies on rs per cent credit
influenced selling. when you
get a sharp decline you get
margin calls from brokers, and
if you don't put UP more money
the broker sells your stock to
cover it,"
He added that because Of
the activity in AT&T, the most
UNITED STATES II