Where Has Our Money Gone?

Press, Volume LXV, Issue 19814, 30 December 1929, Page 8

Where Has Our Money Gone?

One of the heroie resolutions (till the next time) that eome to many people the year runs out is that they will never again leap before they look. In politics, finance, morals, social affairs, the lesson has been learnt, they tell themselves, and the future is going to see them as wise as the serpent and twice as cautious. A very good prescription for those who have burnt their fingers financially is to sit down calmly and ask where their money has gone. Following on the recent slump in Wall Street the Economist said that many people in England were still wondering where the money had gone that had been lost to them on the Stock Exchange. Their bewilderment, it said, took forms like this:

We held, six months ago, many shares in such and such a company. They were then worth £x. The shares are still there. The company stands where it did, functioning as before, but the shares that were worth £x when the primroses flowered are worth £\s or £*ix in the time of the falling leaf. If my Chocolate shares were worth £6 early this year, why, with chocolate still being eaten with undiminished zest, are they worth but £-4 to-dayf The loss is certainly mine, but how does it arise, and, whose is the gain? To this sad enquiry the Economist made a sad reply—though its editorial writer rejoiced for once that he was able to "feel that he really had his " finger on his readers' pulse and knew " exactly what words from his poor pen " were most desired." He introduced the analogy of pictures, and showed that values depend on taste and fashion, which are liable to change, and said that what is true of pictures is equally true of stocks and shares. " Let the picture buying public begin " to suspect that Leighton has had his " day, or the investing public suspect " that the profits' of Coektail Shakers " may not in future rise to the heights " that they were expected to reach,"' and the man who has plunged in that direction is undone. The organisation of Cocktail Shakers Incorporated may be as good, and its sales a< large, today as before the slump, and the art of Leighton is exactly what it was when he was alive and painting. All that has altered i- " the view that ■' people in general take of tin m and of " their future." There are, of con rue, awt where holders quit at u nnirifice. Ml fcMMie tfcey have lost faitb in the vorta of their pictures or shares, but bnww paternity compels them to sett, aad foned tale* an invariably un-

profitable to the seller. But we are concerned now with the risks involved in buying on speculation as to prospects, and the Economist points out that what has come otit of the pocket of A, who mistook fashion's future, has gone into the pocket of B, who foresaw it correctly, and that transfer of a cash balanee, at whatever stage it is effected, is the sum of the whole transaction. There is, however, a safe rule for those who will follow it, and it is a very simple one.

"In general the professional whose life is devoted to forming proper judgments of the future is more likely to he right in his view than the amateur who does this kind of thing in his spare time, and the odds are strongly in favour of the cash being transferred from the amateur to the professional."

In a word, the "bookmaker in the long "' run alwavs beats the backer."'