| Show o I Analysis of Financial fI Markets ts I By J. J A. A HOGLE CO J Early Earb in September the average level of oC Industrial stocks reached ched about the tame same top as In February and thes two tots toIs In the market were about 30 per share higher than any levels reached in any previous previous previous pre pre- boom In tho the March l reaction the market broke over twenty six points in October a fall Call It f a little EWe littleover littleover over twenty points occurred since October 1 19 lr this indus industrial list has rallied eleven points As the prices of ot most stocks s arc are still in a very high range the question uppermost In many minds is Js what is the most I advisable polIcy to adopt Three avenues are open 1 To buy now or if it already having haying havIng hav hay ing Invested to 0 o buy more 2 To sell what securities one has or 01 a part of ot them 3 To hold what one has 1 I. If It one is Investing for profit it certainly is Js not a f favorable time Ume to buy even en the best of securities now The time for Cor such action is during a severe depression such as we have had every three or four Cour years yeas and which has occurred after every boom If It buying Income for alone the only securities to select at the He present time are those bonds and ancl stocks whose interest and dividend payments are safely assured an and which fluctuate little 2 2 High-class High bonds and preferred preferred preferred pre pre- stocks should be held unless we get Into a period of oJ inflation and high interest rates There is no indication at present of either of ot these unfavorable fa factors tors occurring during this boom and every indication indica indica- tion points to falling failing In Interest interest In- In terest rates after atter the first of oC the I year ear One of ot the chief sustaining influences in both business and se securities securities se- se during the past year has been the plentiful supply of ot funds This has been partially due to our huge gold supply augmented somewhat somewhat some sonic what by sequestered funds from Europe and the fact that commodity commod commod- ity prices have steadily fallen for fOl over two years jears thus requiring less capital for Cor their financing g and consequently consequently consequently con con- releasing it for other pur pur- poses High High class class Investments whose prices depend on the money situation sound fixed Interest and dividend bearing securities are likely likely like lilt ly to hold and in some cases advance advance ad ad- vance somewhat in price 3 The same factors factors- that make it inadvisable to buy stocks for profit in a boom like this should influence one to dispose of ones one's spec speculative securities at such a favorable time If It a careful study is made of the action of individual common stocks I in n severe depressions one will find that almost without exception even the best of ot these go down with the rest of the market As an example Union at about Jannary January January Jan Jan- uary nary 1 1907 1901 In October it sold for tor still paying dividends of ot 10 per r percent O cent and earning more In Octo October er than it had ten months before So many people who buy spec buy buy e spec lattye common stocks a at ata a time Ine like Uke his this make the statement nt that they iio o not care what the market does that they are buying for Investment Invest Invest- ment The Tha unfortunate part of ot it itis is is- that their work on the basis that present conditions will last Indefinitely ely pi oi or im Improve pr aye an anthey and they do not take Into c consideration how hov their mind will worK when the market market- in their stock breaks breaks and arid the news news becomes unfavorable v rable an and the dividend on oa their stock Is o Q cut ut or passed or perhaps even ru rumored rumored rumored ru- ru mored that it is endangered SHORT SELLING Many Inquiries are received by brokers as to advisability of ot sellIng sellIng selling sell- sell Ing stocks short At a time when speculative stocks seem overvalued on the basis of earnings or past history certain traders may be able to take advantage o 0 of such sueh conditions conditions condi condi- lions but we do not recommend that such a pc policy be toe adopted by investors Most people hi-e hi are t temperamentally tom tem unfitted to to sell stocks short and on the whole we believe that investors will be benefited more by plaCing their the funds In the highest grade securities or putting them out at Interest while waiting for tor a n favorable opportunity ity to re repurchase repurchase repurchase re- re purchase what they have sold Bold or 01 to tomake tomake tomake make new c commitments In the market markeL BOND MARKET I Bond prices have been teen advancing t the e past month and anti there does not seem seem to be any prospect of ot a de decline decline de- de cline during the months Immediate Immediate- President Coolidge's proposal pro pro- poal for Cor a special Income tax re reductIon reduction re- re reduction was a largo large factor In this movement mo Another factor contributing contributing contrib contrib- toward the w wide de investment demand is the present and the anticipated anticipated an an- anticipated condition of ot the ithe money money market Every very ery indication points to toa toa toa a rising trend of bond prices during the year 1927 1921 At present Investors hesitate to buy bonds except at the good yields ields to which they have become become become be be- come accustomed but during the next few years It may become necessary to adopt our Ideas to lower yields The great success of the Belgian 7 per pel cent loan been oan has been an influence and large gains were recorded In many foreign Issues In fact the whole foreign Loreign list continued strong with several issues reaching new high prices for the year The outstanding feature was the sharp advance of ot Japanese 6 s 1954 which broke through par for the first time John Moody of New York says in regard to foreign bonds That the American Investing public pUbic is bt gi nl g to appreciate the remarkable change for the better better better bet bet- ter in Europe's economic financial and political affairs Is perhaps best evidenced e from Crom the steady increase of ot of European Issues s In our market and the ready absorption absorption tion of ot such loans at steadily de declining declining de- de clining dining yields The Impressive growth in the turnover in foreign securities listed and traded In on on our markets is another indication of ot the change which has taken place In the ilie attitude of our investors toward foreign securities the For the first nine months of the current year the aggregate par value of ot foreign issues dealt in on the New NewYork NewYork NewYork York stock exchange approximated as compared with for the corresponding perIod period pe pe- pe- pe dod in 1923 an Increase of ot more than 42 per cent and at annual an-annual rate of about as against f for l 1913 It is 15 of Interest to note not that transactions in United States government bonds amounted for tOl the first three-quarters three of 1926 to as with during duning the su same period in 1923 a decrease of about 67 percent per percent percent cent while the turnover In domestic corporation bo bonds ds increased during the same sanie period by by 25 per cent |
