WELLINGTON NEWS

Hokitika Guardian, 7 January 1932, Page 3

WELLINGTON NEWS

CONFIDENCE W A NT’KD

Special Correspondent,

WELLINGTON, January 5,

It is a trite and a true saying, that confidence is a plane of slow growth, and once it is destroyed it takes a long time to revive and recover. To-day the world is suffering from this lack ol confidence, and how to get the slowgrowing plant to revive is one ot the big problems of the present time. One often hears it seated that it those who could spend a little more freely business ml trade would soon revive. But why ijlo those table to spend normally refuse to do sop 1-s it, not from want of confidence in the present situation? Speculation and investment are essential to material progress, and when these are curtailed there is a tendency towards stagnation. It is not correct to say that there is no scope for investment or speculation, for New Zealand is still in course of development, and there is much development work that would yield a good return for wise and reasonable expenditure. But the man or men to set the pace are yet to be found. Such men are scarce,, because it requires foresight and courage to break away from >the crowd. A man with a couple of thousand pounds available for investment 01 speculation will tell his lellows, with a plaintive note in his voice, that lie can see.no scope for investment. Just now investment in mortgage of freehold property, whither cit-y, -suburban .or broad acres, is out of favour, and one cannot wonder at that, bearing in mind the trend of recent legislation with the Mortgage Relief Act, reduetkm of interest, etc. Notwithstanding this- scope for investment in mortgage will again present itself, and that will come when land values return/to a commercial as opposed to a ,sentimental and fanciful basis.

We are experiencing the transition period from absurdly high to reasonable valttbs. That the change-over must be 'effected cannot be denied, but it 's very irksome generally ancl ruinous to many. When butter was selling in London at 180 s to 185 s per cwt. we viewed high land values without a bat of the eyelids, because -we assumed that high prices had come 'to stay, but now with butter at 100 s or less the high va.u's of yesterday cannot hold. It would, however, be a mistake to suppose that low prices will become a chrome feature of our industrial life.

Considering that mortgage investment is barred to them, many possessing idle capital are speculating in Stock Exchange securities. When dealing with the share market it is well to maintain a mental distinction between speculation and investment. The investor buys -stocks and shares for income purposes. He locks up his scrip and looks' to Uhe interostoi for the dividend -to provide him with his income. Such investors frequently sell the securities they hold, which is not a wise procedure. •Securities change in'character and a shrewd investor will always suojeov his securities to a review every yeaif il not more frequently, selling those that show any weakness. The speculator buys stocks and shares to sell. He looks for a profit on turnover, but he docs not always make a profit, too many imum lossts, and that has been the experience of 'the pas-t two years. ,Speculators in stocks and shares too often show the characteristic ol merino sheep, in that they follow the crowd ; they buy when they see others buying, and si'll when they -see others selling, they follow the bell wether, and lose. Without such speculators there would be very little scope' for profit-making on the Stock Exchange. Manv of the losers learn from experience, and because very successful ■Stock Exchange operators earn a decent income. Such operators, however, abjure the tactics of the merino sheep. They never follow the crowd. I hey ke f p a dose watch on the crowd of speculators but do just the opposite to what the speculators do. When everyone is selling they buy because when there is mass "selling prices are pushed down to below value, and they sell whm the crowd is buying, m-cause massed buying pushes up prices beyond real value. Dining the past year shrewd speculators could have, on two separate occasions, made money on the turnover of bank shares. Those opportunities will occur again, and those with sound judgment, I courage and confidence should do well.