The Recent Market – Bull or Bear Part 3

Those who would “talk down” the bull market when the more obvious part of the record is against them have eagerly seized upon the figures of stocks which have declined and of stocks which have gone up. They contend that in reality we have been having a bear market.

On the other hand, they neglect to state that the various statistics on numbers of stocks which have gone up and down fail to differentiate between com-mon stocks and preferred stocks. Preferred stocks, as every one knows, are out of favor, and all except those with convertible privileges have gone down this year, the same as bonds. Preferred stocks make up close to 30 per cent of the daily list of stocks traded in on the New York Stock Exchange.

Much depends on how one defines his terms. If it be remembered that a bull market does not and never has meant advancing prices for all stocks, the matter looks much simpler. Many issues are climbing to higher levels or sinking to greater depths simultaneously.

The only real difference between a bull and a bear market is that the active stocks, usually not more than a score, are forging ahead in the former and are declining in the latter, although, of course, with frequent temporary changes of course in both cases. In spite of the fact that the movements of the leaders have not been followed by all stocks, there is no escaping the conclusion that we have been witnessing the most remarkable bull markets in history.

Expressed by percentages the price advance has been less sensational than the price averages indicate. Computations just published show that at the end of last month representative industrial stocks had risen only 6 1/2 per cent above the early July high levels; utility stocks had risen 8 1/2 per cent, and railroad shares were about 3 per cent. That is a far different picture from the one painted by the “averages.”

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 Saturday, October 18th, 2008 at 7:55 am and is filed under 1920's, Finance. You can follow any responses to this entry through the RSS 2.0 feed. Comments and pings are closed.