The Recent Market – Bull or Bear Part 1

WHETHER HE HAD ever bought or sold a share of stock in his life, Mr. Average Man was aware that the stock market conducted on the New York Stock Exchange slumped rather badly last spring. If he owned stocks he needed no other evidence than that which came to him in computing the apparent value of his assets on the basis of the lower prices. If he was a margin trader he may have been reminded of the real meaning of a market break by a request for more money to protect his account. If his margin was still ample, his debit balance likely rose, his interest charges increased, and certainly the paper profits which he had come to regard as real either vanished or shrank alarmingly.

People who have taken it for granted that we have been having a dull market this summer probably would be surprised to learn that up to a month or so ago a larger number of stocks which are bought and sold daily on the New York Stock Exchange declined than advanced since the first of the year. Moreover, the total number of points gained was less than the total number of points lost. The record for the summer months alone is somewhat better, but on its face it gives some justification for the assertions that the stock market has in reality been going through a bear movement for the past three months.

Had any one bought one share each of the 1200 odd stocks listed on the New York Stock Exchange around the first of the year he would find himself a loser, if some recently published figures of statistical services are to be believed. One statistician points out that 614 stocks on the Exchange list have declined from their early year levels, although the 40 active “leaders” show an average gain of 80 points, or 42 per cent.

Another statistician estimates that between May 27, when the spring recession touched bottom, and the last week in July, the stock market as measured by a weighted “average” of prices for 90 stocks selected as representative of virtually every industrial, commercial, trade, transportation and amusement activity of the entire country and nearly every part of the world, advanced 36 points (dollars per share), or around 18 per cent. On the two days chosen for the comparison 619 shares were traded in on the New York Stock Exchange, but in the two months period only 150 reached new high levels for the year. In the same period 178 lost ground, while 277 made some progress and 14 showed no change in price.

Source: Outlook and Independent, 18 September 1929

Visit the 1920-30.com Web-site for detailed coverage of the 1920's

This entry was posted on Thursday, October 16th, 2008 at 5:26 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. Comments and pings are closed.