AMERICAN SPECULATORS

Hokitika Guardian, 9 January 1929, Page 2

AMERICAN SPECULATORS

l MANY TRADERS BANKRUPT. SAN FRANCISCO, December 12. A three-day reaction on the New York Stock Exchange, the inmien.sity of which has no parellel in American history, wiped out billions of dollars in values in listed stocks and sent many traders ink) bankruptcy. These traders appeared to be frightened and ordered accounts closed out by staggering paper lasses and some lasses more real. A large number who did not close out voluntarily wore thrown overboard when they could not obtain funds to bolster up their margins. AY'ith a larger participation by the public in this sensational market than ever before in American stock gambling hi.si.ory the half-week of sinking values found echo in almost every town and village of the country and in many cities in Canada, Europe and South America. To the great bulk of the small traders who have been making easy money in the prolonged “bull” market this was their first experience with the long, sharp claws of the ‘f bears.”

Stock prices were sent tobogganing more dizzily on the second day of the slump of the so-called “Hoover Prosperity” market and many margin accounts which had weathered the storm of the past day or two were wiped out and stocks were dumped overboard “at the market” losses in many of the volatile specialities and ran from 20 points to a loss of 72 points in Radio. It should be understood that each point signified a dollar each share or 100 dollars for each usual 100 shares held by small traders.

The rush to unload piled up total sales of 3,744.900 shares, the largest Saturday total in history, and again threw the trading machinery into turmoil, the ticker running for 74 minutes after the close of the market, and this after only two hours’ business on the Exchange. The previous high record for Saturday was made in election week, last November, when 3.207,000 shares changed bands. Statistics issued showed the average price of twenty industrials was depressed nearly 10 points, the most acute drop since the record of averages has been kept and completely wiping out the advance that was made in the “Hoover market” which began with the session following the election of the new President. The average had fallen more than 26 points in three days, and was nearly 30 points under the peak of November 30th. last. The 72-point loss in Radio brought the stock to 296, which was 124 points

under its high of 420 recorded only the J same week. International Harvester j was another which “bit the dust,” losing (il points in one day, National Tea receded 61 points, Federal Mining 50 and Case Threshing 33. YYrigbt Aero sold down 33 points, and closed 26 lower, while Russia Insurance lost 20 points. j ANALYSING THE SLUMP. j The financial editor ol the “New York Times” said that the comment w.iich most men of experience would j make on the stock market was that the j • weeping reaction was long overdue. ( Warnings had multiplied; all signs which ordinarily indicated a very pro- | carious stage had been present for j many weeks. They 'luul been disrc-; garded by an excited public; the wealthy ringleaders of the speculation had apparently grown increasingly cold and reckless on their own account. “Rut what had in all probability happened was that the Wall Street group, which was supposed to be buying everything for the rise, had itself been selling its own stocks to the trustful outside public. What they and the public will do next, whether snicks will rise again or continue their decline, is as yet a matter of conjecture. Apparently something of the spell is broken. The outside speculator may still he subject to the happy illusion that money stringency is a signal for higher prices and that a break in the market means immediate subsequent advance to heights previously undreamed of. Yet a state of mind, like this is often subject to sudden and complete reversal. “The truth is that Wall Street, and its constituency have been living, and they are apt to do at times of abnormal speculation in a fool’s paradise of | economic notions. Whether they have ! yet waked up, or whether last week’s ] violent readjustment only the uneasy stirring of the sleeper in his nightmare,” said the “Times” financial editor, “is still to he determined. It used to he said that the situation created w hen the machinery oT credit has been recklessly tampered with was hound to he perplexing. More steam forced in the already overcharged boilers, desperate efforts to patch up the cogs that wore showing signs of slipping, would sometimes prolong the performance of the wheels and postpone breakdown. But these expedients usually resulted in sudden stoppage of motive power, with results that •\ere most unpleasant.” SAVINGS OF LIFETIME LOvST.

“Most unpleasant” lias been the experience of the thousands of lambs who have been shorn on this market, attracted to it with their savings by the fairy stories of friends who had dabbled in the rising “Hoover Prosperity” market and made hundreds of thousands of dollars profit. Now that they have learned a most expensive lesson, after parting with their savings of a

lifetime. they Imvc* gone liac-k to legi-

timate work to again aecnie some savings. 'l’lieso new savings, undoubtedly will again .find their way into wildly .speculative stocks, with the same inevitable result, tor it is hard to repress the gambler in stocks once he has started in that speculative, business of trying to find a winner in the hundreds of varied stocks listed on the Aew York Stock Exchange.