GAMBLING IN STOCKS

Evening Star, Issue 20321, 1 November 1929, Page 9

GAMBLING IN STOCKS

AMERICAN DEVELOPMENTS BROKERAGE FIRMS IN TROUBLE Press Association—By Telegraph—Copyright. NEW YORK, October 31. As the result of the stock crash four brokerage firms have suspended business. Two of these are small curb exchange firms here, and the others are doing business elsewhere.

THE BOTTOM REACHED MARKET RECOVERING NEW YORK, October 31. (Received November 1, at 9.20 a.m.) After the small traders had been cleared out the bigger and more stable ones, who had watched their departure with considerable satisfaction, began to taste the same medicine. They found that the feeling of anxiety had attacked even some of their own number, and the same process was repeated in exactly the same manner. First several large holdings were thrown in for anything they would bring, then enormous numbers of ivealthy traders lost their heads, throwing vast investments on the market, the selling being accompanied by excesses as great as any previously witnessed in the bull markets. Moreover many, even the bear element, ultimately lost because they themselves never anticipated such a tremendous drop in values. It is now regarded in the best-in-formed circles, however, that the bottom has been reached, that good investments are obtainable at bargain prices, that confidence has been restored, and that the market is recovering after the necessary major operation. PSYCHOLOGY OF FEAR CAUSES OF THE SLUMP NEW YORK, October 31. (Received November 1, at 9.35 a.m.) Opinions regarding the initial incentive to the recent Wall Street collapse differ variously, but it is agreed in practically all quarters that the basic causes were purely technical and psychological. Thus it is assorted by some that the crash of the Hatry interests in London was the first impulse towards the New York decline. They reason that the Hatry failure caused heavy selling of American securities, which paved the way for a general run, not only because many stocks were thrown on the market, but also because the loss of confidence became international in aspect. There are others, however, who assert that the boar elements, which had suffered severely for a long time past in the bull markets, took advantage of the first opportunity of what should have been only a temporary reaction to send the list crashing.

The fact remains, however, that neither the Hatry collapse nor even the most strongly organised bear movement could have affected the market to such an extent had its technical position been strong. But this was not the case, for this break emphasised the importance of the fact that it is not so much a question of the level of the market that determines the stability of the price structure as it is who owns the stocks—on which probably lies the whole answer to the disastrous slump. It is admitted on all sides that for some time past an enormous number of people were dabbling in the market ■who had no right whatever to be there, and who had no substance with which to withstand any severe reverse. During Wall Street’s many prosperous days large numbers of even small traders made considerable profits, after which the speculative fever grow and prices in many individual instances rose to heights unjustified by current or expected earnings. Thus the earliest stage of the decline received its greatest impulse from liquidation by holders of securities whose margins had been uncovered, or who were threatened by a possible increase of recession. Thereafter the remainder of the story was pure psychology of fear. The smallest traders first ran panic stricken, their numbers increasing in snowball fashion as the word spread that the market was falling, in exactly the same manner as runs are caused occasionally on even sound banks.

WAVE OF BUYING. NEW YORK, October 31. (Received November 1, at 11.25 a.m.) The stock market rallied a further 5 to 30 dollars per share in active issues. There was a tremendous buying wave, FRENZIED SCENES ON ’CHANGE. NEW YORK, October 31. (Received November 1, at 12.55 p.m.) The stock market closed with another whirlwind finish, many issues furnishing spectacular rises. Orders poured in from all sections of the country for the short thx*ec-hour session, and the market opened at noon with a spectacular rush of buying. The total sales were over 7,000,000 shares, with prices in many instances up from 1 to 40 points. Some had risen as far as 75 points in the early trading, but met inevitable profit-taking, then started upward again in a more orderly fashion. The leading stocks spurted near the close, which helped the entire list upward. Scenes reminiscent of the late bear drive were enacted on the floor of the exchange. Brokers, fatigued after three days’ heavy business, rushed about to execute orders ranging from 50,000 shares. The confusion was heightened by the scurry of shorts to cover values, which increased some 10,000,000,000 dollars and eased off only a fractional amount thereof,.

HUGE LOSSES. AMSTERDAM STOCK EXCHANGE. AMSTERDAM, October 30. According to the ‘ Telegraf,’ the losses on twelve stocks on the Amsterdam Exchange in two days exceeded £36,000,000. WHEAT PRICES IMPROVE. NEW YORK, October 31. (Received November 1, at 12.10 p.m.) With prices on the Stock Exchange increasing from one to forty points wheat increased, closing—December, 127 J cents per bushel; March, 135 J; May, 138 f. ________ BROKERS’ LOANS. WASHINGTON, October 31. (Received November 1, at 12.5 p.m.) Brokers’ loans from the Federal Reserve Bank, New York district, for the week ending October 30 totalled 5,538,000,000dol, which is an increase of 1,016,000,000d0l from the previous week,; . ,