“CHEER UP”

Poverty Bay Herald, Volume LV, Issue 17099, 4 November 1929, Page 11

“CHEER UP”

PESSIMISM IN AUSTRALIA "NOT WARRANTED" SYDNEY, Oct. 10. "What we need most of all in Australia, is a 'Cheer Up Society,' " said 4 prominent business man, the other lav, and it is generally admitted that no was right.. There has been a tendency of late on the part of a. section of the public—particularly investors—towards extreme pessimism-—a condition that is entirely unwarranted if one is to believe those in a best position to judge Hie actual state of affairs. During the election campaign Mr. Bruce consistently preached optimism, but that has failed to stem the tide of pessimism which is causing alarm in certain quarters. Of course, investors are always more cautious during an election campaign, but on this occasion they seem to have gone to tho extreme, and it has been suggested that this indicates a general belief that. Labor will be returned to power. It is certain that the significance in the fall of wool prices has been exaggerated, tho fact being overlooked that early shorn wools invariably suit the requirements of only a section of th"'trade. Last week there was a distinct improvement in the tone of' tho market, and now that offerings have been curtailed, prices may reasonably bo expected to improve. WEAKNESS IN THE MARKET

It was evident that with conditions unsettled locally, and an increase, of 1 per cent in the Bank of England rale of discount, share prices locally could not be maintained at the, high level that was recently established. Until the last few week's prices of nearly nil the better classes of investment had bfcn advancing .steadily on the market until tho yield of several first-class shares—banks and insurance and the better class industrials—was well below 4J, per cent. To some extent tho recent weakness in the market has merely reflected an adjustment to altered conditions, though 'in some instances prices have been unduly depressed. Mob psychology plays an important part in share market, movements, and investors /frequently buy and sell in groups. It m happened that the increase in the hank rate synchronised with the fall in wool prices and an election campaign locally,'—ai time when intending buyers arc disposed to withhold their hand and await' developments. When wool prices fell many investors gave orders for their stork to bo sold. In the carrying out of -such instructions it was obvious that prices would tend to fall, though tho extent of the collapse of some of the lank shares waS an " ficipated. Brokers were quick to realise that there was no justification for such pronounced falls' in prices. *nd now tho market has recovered slightly, but not sufficient to instil a bclW that confidence has yet been restored. There have been several instances of naniekv selling, but this has given the. bard-headed investors an opportunity to buy first-class s't(*ek at a reasonable nriee. These are the peonle who insist that Australia is hi a sound financial position—and they are unmoral to backup that opinion with their money. Is any better evidence needed?