WELLINGTON NEWS

Hokitika Guardian, 24 December 1931, Page 6

WELLINGTON NEWS

STOCK EXCHANGE BUSINESS. (Special Correspondent). WELLINGTON, December 22. So far as the Stock Exchanges of the Dominion are , concerned, sharebrokers have very little 'cause for complaint, for 'there was -a - fair volume of business done, perhaps not sufficient to provide a fair living, for all the licensed sharebrokers, but perhaps ’there are too many sharebrokers. It is quite probable that the investment business will continue to expand for tlie scope for investment in the Dominion is now 1 very restricted. At one time in our history it was 'the fashion to invest in mortgages of real estate, but. the Advances Department of the -State with its low rate of interest and the high limit, has driven the private investor out of the mortgage market, and the mortgage tax and the war time moratorium clinched tlie matter. Now the savings are going into fixed deposits with the banks and some portion is going into Stock Exchange securities.

A feature of the past year has been the, wide •fluctuations in prices, even the fixed interest bearing securities have moved irregularly, but then it must be remembered that the year was one ol kaleidoscopal changes in economic conditions. Gilt-edged securities were fairly steady for some time, but towards the end of September they declined' sharply, due in pa iff to the alarm taken by Australian holders of our stocks. Two years • ago, when Australia’s conditions were looking very promising, a good deal of Australian money was invested in Now Zealand Government securities. When they became aware of the dilfioulties being experienced by our Government in balancing the Budget, they jumped ltd the conclusion that we, like Australia, must venture upon a compulsory conversion loan with tlie view of reducing the interest, and they therefore unloaded their stock on New Zealand buyers who took advantage of the, very low prices demanded 'and bought freely. Those stocks now show very satisfactory profits.

All shares except insurance shares show wide fluotun'tion.s and shrewd speculators had immense scope for profitmaking. Bank shares fell and rose, arid fell again, to rise again, so that the investor,?had two opportunities of turning over'.-the shares at a substantial profit. Bank of New Zealand shares, for instance, dropped to -12 s 6d and subsequently recovered to 48s 6d ; Commercial. Batik of Australia (ordinary) went as low .-.as 12s ’6d and last week were worth 16s 6d ; Union Bank shares dropped to £6 11s and later advanced to £B.

Other shares too offered splendid opportunities for p’rolit making. Dalgety and Go’s -shares were-down to £5 16s and a bout'"'‘''a fortnight ago changed hands at £8 2s 6d. '.Go'ldsbrough, Mort and Go.-, a prominent stock and station -C'O.ncGT’JT in Australia, lind the mortiiicatioii of seeing its £1 share IaII to about 17s, and they have since risen to 23s 6d. Perhaps the opportunity for making a very big profit was lurtiished by the 10s paid-up shares of the New Zealand Refrigerating Company. In .January last, ifor 'some unaccountable reason, 'they led to Is 3d, and a sale was actually made at lod per share in February. Those shares advanced steadily and recently sold at ss. If an investor had bought 2000 shaics at £1 each and sold at 5s each he would have cleaved a cool £4OO oil his £IOO investment.

It is easy to know all about it aftoi the event, for after all it is °nly a few investors who manage to make money in dealing in shares, and then it is a matter of luck. So lew understand the psychology of the share market, and most speculators go with the crowd, and buy when the crowd and sell when the crowd is seding, and generally 'they buy at peak prices and sell when prices are at the bottom. According to the experience of shrewd London brokers and slogan ot the investor should be: ‘Watch the crowd, but go> the opposite way;” in other words do just the reverse of what the crowd is doing.