COMMERCIAL

Evening Star, Issue 19773, 25 January 1928, Page 12

COMMERCIAL

UNSOUND STOCKS. WHO BUYS THEM?—AND WHY? This is the title of a report issued by the New York University Bureau of Business'Research'(says the official record of the Melbourne Stock Exchange), based on data collected over a period of three years. By means of questionnaires and personal interviews conducted by “skilled field men” of the university, the information gathered covered an area wide enough to satisfy tho bureau that the data secured is representative and constitutes a sufficient “ sample ” to yield approximately accurate results, in tho foreword it is pointed out that tho survey is the result of diligent search and enquiry, and is not an analysis of unsolicited complaints from unwise investors. In fact, it is stated, the majority of the persons who responded aro not of the complainant type, but rather of those disinclined to raise an outcry. Though the definition of “ unsound ” is not given, we gather from tho report that all securities were considered unsound that did not pay dividends, or that wore regarded as worthless by the holders, or that were not as represented by the sellers. The report contains more detail than can possibly be given in this review. Only the main conclusions aro therefore reprinted. These can be arranged under two headings, as suggested by the title ‘ Who Buys Them and Why?’ First, what did the investigation show as regards those who buy unsound securities? The answer is given in these words “it might be supposed that those who bay unsound securities are persons of little intelligence, or standing in their communities. Surely business men, lawyers, accountants, etc., would not become victims of stock salesmen. It is the common impression that such purchases arc made by unintelligent persons of small means—laborers, clerks, widows, etc. As a matter of fact, this study shows that the largest number of those who purchased unsound securities (among the men) ranked as ‘business men,’ shopkeepers, and the like. Forty per cent, were ‘ business men.’ At least 23 per cent, were professional men.” An analysis of “female” purchasers reveals a, similar conclusion—the biggest percentage consisted_ of “highsalaried women ” of the business type. Secondly, what are the factors inducing the purchase of unsound securities? These are arranged below in order of importance:—Hope of extraordinary gain, salesman’s persuasion, confidence fn tho management of the company, own judgment, “ tip ” on the market, a stock bonus, offer of trade, hope of recovering past losses. ... But more important still is the fnet that the majority of purchasers were talked into the “ bargain ” by share snlcsmcn. Tho next most common source of trouble was the “ friend.” Analvsis of the securities purchased shows(a) That few of the securities were listed on any exchange; (b) that the largest number of unsound securities consisted ot the unlisted common stocks of oil, automobile, and mining companies. In this connection tho report proceeds; —“In view of the importance attached to stock exchanges and organised speculations, it should bo ol interest to note that the great majority of cases concerned unlisted stocks, and there is some presumption that if those buying securities without adequate menmTof investigation would limit their purchases to securities listed on the host-known exchanges they would be less a.pt to suffer loss.” That the purchasing of unsound stocks induced by the arguments of share salesmen is not confined to the United States of America may be seen from the following letter;— “ Tho secretary, the Stock Exchange of Melbourne.—Dear sir: I am writing to ask you whether you could do me the favor of advising mo as to what action you consider I could take regarding the following matter:—ln July ot last year I was induced by a company promoter, of New Zealand, residing in Melbourne, to take up 200 contributing shares in the blank (correct name given by correspondent Gold Co., Ltd., New Zealand, at the price of 10s per share, being os shares paid to 3s 6d, and the receipt is signed , representative. At tho time he showed me an authority to sell shares given by , broker, of Dunedin. I was given to understand, amongst other things, that this was the market price for these shares. I have now heard from a Dunedin broker as follows;—‘ There were no Blank Gold Co. shares sold in July, of 1926, at 10s; in fact, there were no buying quotations for the who!© of that month on the Dunedin Exchange. On one occasion there was a seller at Is 6d discount, with no response from buyers.’ I realise 1 am in a bad case through having dealt with an unofficial person (T now do business through Messrs 1 sharebrokers, of tho Stock Exchange of Melbourne), but as the sale was in Melbourne I wondered if yon would possibly he able to advise me as to any possibility of getting the difference betwen the market and sale price of flic shares? U you cannot see your way clear to do this, I thought, perhaps, you have a solicitor who would be acquainted with the method of procedure in such a case ns this, and to whom yon could recommend me. I can assure yon that anything yon can let mo know as to my position will he very greatly appreciated, and should yon need any further details I shall be glad to furnish them.”

METAL MARKET

Press Association—By Telegraph—Copyright

LONDON. January 23. Copper.—Spot, £62 4s 4Jd; forward, £6l IBs 41d.

Electrolytic.—Spot, £66 10s; forward, £67. Wire bars, £67. Lead.—Spot, £2l 16s 3d; forward, £22 3s 9d. Spelter.— Spot, £26 ss; forward, £26 2s Gd. Tin. —Spot, £254; forward, £252 8s 9d. , „ Silver. —Standard, 26 3-16 d; fine, 28id per or,.

WHEAT MARKET. LONDON, January 24. Wheat.—Cargoes are featureless and. unchanged, buyers holding off. Parcels’ buyers are not attracted even by the slightly reduced prices. Liverpool futures; March-May, 10s 2!d; July, 10s 3Jd. LONDON. MARKETS. The Rank of New Zealand has received the following advice from its London office as at close of business last week:—Butter: There is n> little more inquiry; 151 s to 154 s per cwt. Cheese: Slow; 90s to 91s per cwt. Frozen meat: Wethers are in poor demand. The market is short of ewes, and prices are nominal. The reduction in the price of lambs has improved the demand. Australian are selling at 6d to 9Jd, Argentine 6d to B£d. The beef market is quiet, but firm. Wethers — light, 6d to 7Jd; heavy, 4Jd to sid. Ewes, 4RI to s|d. Lambs—twos, 10|d to Hid: eights, 10id to Hid; fours, IOJd to Hid; seconds, lOd to 10Jd. Ox—hinds, 4Jd to 4|d; fores, Bid to 4a to 4id; fores, 31 d to 3id. BUTTER AND CHEESE. Messrs A. S. Paterson and Co., Ltd., have received the following cable From London, dated the 23rd inst.: —Butter: Slow, uncertain; 1525, 1545. Cheese: Dull, downward tendency; 89s, 90s.