SHARE-HAWKING.

Auckland Star, Volume LX, Issue 11, 14 January 1929, Page 3

SHARE-HAWKING.

SUPPORT FOR EXCHANGE CHAIRMAN. AX INVESTORS EXPERIENCE.

A correspondent who signs himself "Mcdiens ß " sends us the following letter: In view of certain correspondence to the contrary, might I say something in support of the remarks made recently by Mr. C'reagh? It is apparent that tiu , quotin? of isolated cases give* no index as to the respective merits of two classes of sharps. It is only by taking a general average that two classes can be estimated. In the last seven years I ha\e been favoured with visits from men who have unsuccessfully attempted to persuade me to buy shares in twenty-throe different ventures. In the matter -'f plowilift prospects, high profits and absolute security these persuasive gentlemen all spoke a similar language, which purported to indicate that any man who was satisfied with a mere six. seven, eight or even ten per cent was obviously the'victim of mental aberration. Furthermore, the prospect uses verified every statement and left not a loophole for any suspicion of possible failure, even on the "most conservative estimates by prominent experts."

The proof of the pudding is in the eating. It seems deplorable that nine of these 23 "golden-opportunity" proposed issues should have failed to go to allotment. It also seems unaccountable that, had £100 been invested in each of the remaining 14 issues, the total dividends to date would have been lc>« than £75 and the realisable value of the shares at the present time wou'd seem to be something less than the magic "ground level" by some £800. It is incomprehensible. On the other side of the picture, let it suffice to say that during the same period of seven years (the parable of the fat and leaii years is suggested), the sum of approximately £2000 invested in different securities at different times on the advice of a regular member of the Stock Exchange now yields an annual dividend of approximately £130, and the market value of these shares to-day is £2632 at Stock Exchange quotations. In these transactions there has been no changing from one investment to another, nor have dividends been invested.

The reasons for this striking difference are not at once clear to the uninitiated: (1) Shares in really sound and promi&ins ventures are quickly taken up by promoters' friends and'those well iiiforme-I concerninjr the particular businesses. Despite the plausible protestations to the contrary, such shares do not require to be hawked round to the public. (2) Sharps which are not listed by the Stock Exchange are, as a rule, notoriously difficult to dispose of except at a figure considerably below their intrinsic value. (31 The correct interpretation and valuation of prospectuses is an art acquired by only a few pifted geniuses after many years of remorse. To the innocent investor like myself all prospectuses read alike in their promises of easy wealth, at the same time creating in the readers mind the subtle impression that the reader is a cominpr master of finance.

Human nature beinp what it is, it is unlikely that this letter will have much influence on any misguided individual contemplating the purchase of hawked shares. For his protection it seems desirable that legislation similar to that recently enacted in England should l>e introduced to restrict undesirable activities on the part of outside brokers and share hawkers. It seems that at present the evils associated with outside share trading in Xew Zealand do not approach in degree the deplorable state of affairs which existed in the Old Country before it was checked, but it would ftiirelv be profitable to the community if the* development of such abuses" were prevented.