INVESTMENT MARKET.

Auckland Star, Volume LXI, Issue 230, 29 September 1930, Page 4

INVESTMENT MARKET.

WHAT OF THE FUTURE? IS IT TIME TO BUY? The investment market continues to decline, and many would-be investors are wondering whether the time is ripe to step in and take advantage of the low [prices ruling. Answering this query "Jobson's Investment Digest" of September 15, says:— "That time has not yet arrived, and no recovery of any consequence can be expected for some time to come. Indeed, business conditions are likely to be depressed for many months, and the question to which investors should give their attention is whether the companies in which they are interested are sufficiently strong to weather the storm. "It is essential in the first place that a company should be financially strong in that it should have-a substantial surplus of liquid assets (excluding stocks) over its current liabilities, which slfbuld be considerably less than its shareholders' funds. "Its visible reserves should bear a reasonably good proportion, atf least onethird of the ordinary capital. Moreover, there should be reasonable grounds that the assets are not over-valued and that the reserves are not accordingly subject to reduction on that account. "A company whose position is satisfactory as regards both these conditions, should be able to carry on through any reasonable depression, while at the same time companies not fulfilling these tests, cannot be considered as being satisfactory investments, though they may of course be able to pull through. "The low share prices now ruling are ; necessarily giving interested grave concern. Still, though it is Certainly unsettling to see prices so low, shareholders in -companies strong financially and with substantial reserves, should not be anxious as to the future of such companies. They should carry on, though probably with reduced profits, and eventually their shares should recover to satisfactory prices when the depression is over."