Charles Dow, one of the founders of the newspaper "The Wall Street Journal" and creator of the Dow Jones industrial companies shares, representing half of a major partnership with Eddie Jones striking. Dow, who was born in rural areas of Connecticut and whose father died when he was just six years, has spent his entire life in the newspaper business. At age 16 he began working in the local weekly newspaper apprentice typesetter and reporter. His next job at a dailynewspaper in Springfield, pcs. Massachusetts, before he became New York correspondent for Daily-PLA newspaper in Providence, ea. Rhode Island. He rather preferred the research and analysis than the work of freelance journalists. So got a different job, where his task was to light for the shares of mining companies, "New York Express Mail End" (New York Mail and Express). He wrote editorials were financial, reportedly the first in the daily press.
Around 1880 the Dow entered the news agency, which persuaded the management to hire his old friend Eddie Jones, who appeared in New York and told Doe that he had problems with debt and with his wife. He began to cover the work of New York
To track the ebb and flow of
There is a clear difference between a bull market caused by manipulation, and created community. The first represents the efforts of a small number of people, and the second reflects the perceived value of the country. With manipulation, you can create a limited public opinion. But the opinion, stand the test of time and throws away the strongest interests that oppose him, invariably laid at the general conditions sufficiently universal and sufficiently effective to influence the views of almost everyone.
The growth of public opinion in respect of securities inevitably slow. Lower mark the stock market, as a rule, reaches to a time when the price of commodities had fallen to the value of the production costs when manufacturing interests are suppressed, rail profits are small and the overall business unprofitable. People sold their investments, because the proceeds are needed for their various business or personal purposes. All buy to satisfy only the momentary demand, as the experience of previous years has shown that everything is just cheaper.
In this period, some industry begins to recover. Other little by little, it should normally have serious reasons such as unusually high prices for crops that have an impact. People sure to make money instead of losing them, and that the raw materials or semifinished products, which they eat, grow in value. merchants and manufacturers are beginning to increase reserves. People who have money, start investing. During this period of growth all make money and have all the confidence is growing all that no attempt has been made would be successful. The man who in a year, hardly dared to invest in their winter supply of coal, two years later would be quite willing to buy a coal mine in order to meet the needs of the community. Require two to three years to place these changes, because millions of people feel the need to change the conditions on his own success before they will accept them for real.
The effect of changes on the part of the nation, numbering 75,000,000 people, the feeling of gloominess and doubt to a sense of confidence and enterprise, and amazing in its results in all areas, including the stock market. It clearly shows what is becoming an irresistible force such as it is aimed at speculative markets. It also shows why persist bull and bear markets.
When public opinion is clearly a trend - upward (bullish) or downward (bearish), it is not easy to change, Tens or hundreds of people can change their idea, but the mass continues to move in that direction. Public opinion, when, as now, the market favors the long side, is unlikely to change its position until one of multiple events. The public may lose faith in stocks as a result of some kind of national disaster, which attracts attention and creates fear. It may change as the result of such a wave of sales of new shares, which will prevent a rise in prices and will generate so many losses or yield so little profits that an ordinary tire buyer. It can be suppressed in such a depletion of the money supply, which would make the current cost prohibitive for the shares and thus will hinder trade.
Public interest in the market in 1872 is partially constrained by expensive money and partly to concerns that the policy of reducing the money supply will create a huge shortage of funds across the country. This view is well founded, as the panic in 1873 was, in fact, the monetary panic. Bull market in 1879 was reserved mainly the advent of new securities of railway companies, have emerged as a result of expansion during this period roads in the west and southwest. In this case, money was a factor, but not decisive. Bullish period in 1890, restrained the sale of American securities in London, and especially because of panic Baring.
It seems reasonably certain that the current bull market will be restrained, when the time comes, the creation of a larger offering of shares of industrial companies than the public can swallow. Whatever may have been a huge reserve fund, he can not compete with print capacity of the country. However, we believe that while the essence of the end of the bull market quite clear, while it will come at least a year, maybe much longer than a year.
The proof of this point is something that we often refer to. Until this year, creating new securities were not very large. Is not yet time for distribution. The public hardly knows the names of many of the new shares of industrial companies. Before the company will absorb the stock should go through a period during which the shares will become popular and profitable. The audience must see that they are traded, and in some degree to know them before they will buy. Suggest that the bull market will end this spring, so we assume that many of the most competent financiers in the country will remain a large number of new shares on their hands. Sure, "you will stay with a large number of shares than we would like, but the presence of such a fact that bankers and syndicates still want to buy new shares of industrial enterprises, the proof of their belief that the tide of public interest in the securities will continue unabated with force.
June 8, 1901 Year
The human mind is always inclined to believe that current conditions remain unchanged. When the market crashed and lethargic, difficult to get people to believe that this is a prelude to a period of activity and growth. When prices are rising and the country prospers, always says, while above rises in the economy will not end, that there are circumstances connected with a certain enthusiasm, which make it not look like the previous ones and give confidence in the constancy.
The only fact that applies to all of the conditions is that they will change. This change should be modifications to the law of supply and demand. The trade cycle is known well. Starting from the period of depression, small businessman is unable to buy a quantity of goods needed for trade and satisfy immediate demand, so as cheap as it was bought last time. So he buys a little more. The collection of such purchases increases the work of wholesalers, and this increases the output of the producer, who has the ability to hire more workers. The result of this greater number of purchases made by the workers who produce factory-made goods and agricultural products, which completes the circle by the manufacturer.
At every stage of these actions increase the purchase price increase and increased confidence as long as the retailer will not buy a product without any hesitation many times more than he would dare to buy early in the cycle to improve trade. These actions, multiplied by millions of people who create the demand. At times it seems endless, and provides rail tonnage and its manifestations in creating an investment fund that, at last, looking for a job on Wall Street.
Recession accompanied by a constant, opposite to, the various transactions. When the retail and wholesale traders are convinced that the goods are worth less than before, they reduce purchases. When purchasing, committed before they became necessary, begin to cause damage, and s profits, they also bring a loss of confidence and demand reduction. As it develops the process of reduction affects all aspects of trade. This kind of fire, while burning, it creates fuel.
Experience shows that the commission of each of these cycles takes about five years. It takes about five years to a country devoid of shares has become a country full of shares and required about five years to overflowing stock markets of the country or the world were virtually empty.
As the stock market is always a consequence rather than a cause, it must respond to these conditions. However, as the stock market, although it is an effect, but the result takes into account the fall in stock prices usually anticipate the fall in commodity prices, because the operators because of the recession sell stocks in anticipation of the changes they foresee in economic conditions.
The reason for the fall of next actions will be deterioration in the overall trade, it will be characterized by a reduction in non-cash payments between banks, a decrease in earnings of railway companies, less need for products that are always in demand, smaller volume of payments in the clearing house, the increased number of dead capital and lower growth in the country's wealth.
There are local reasons are likely to have influence. One of them will be the consequences of the existing obligations of corporations. In some cases it is found that future earnings of railway companies have been overstated and that the decrease in net income severely curtail dividendsky fund. The probability of reduction or cessation of payment of dividends will have a direct pressure on the value of the shares of many companies. Loss of profits of industrial companies will lower the cost of certain industrial property objects. Construction of new railway will threaten the stability of some of the existing railway facilities,
Buying an existing road is the main objective lessening of competition due to centralized management. This will be effective until the process is, in many cases he will go far. However, the high price that is assigned to the shares purchased by a majority, a strong incentive to build competing parallel roads. If an existing railway line is quoted at par value in common shares to acquire a controlling stake, a new road in the same area would cost at something much more than the actual cost of construction, therefore, can be financed for the benefit of the contractor and then probably , sold at a substantial profit to owners.
It will certainly become an important issue when it is known that from one point to another are constructed parallel to the railways, this knowledge will have an effect on reducing the existing securities companies, as well as a new way to work and exist. In this case, it will select the economic activity of the old road, or it will be forced to buy, thus burdening the old company need to maintain mileage, not having in the area of ??economic necessity.
The same is true, and an even greater extent, and in relation to the industry. Difficulties with parallel enterprises in industry, compared with the difficulties of parallel railroads, insignificant, except in a few cases. Profit potential in this area will still be so great as to justify such construction. In the next few years in many cases, you can sell short large lot of shares of industrial enterprises, then build a competing business, and so manage to take away profits from another company, thus causing a large drop in shares, which then can be purchased with a profit of short-sellers. Then, when the bust cycle is complete and will begin lifting cycle, the two companies can come together to release a new founder's shares at a nominal price and through business development and payment of dividends to create a solid two or three years the market of these shares, they slit will be sold at high prices.
We do not know exactly when a recession begins or what businesses will be most keenly feel its effects, but the general course of events in the selected areas can be predicted with a degree of certainty with what could be predicted by any of the cycles in the past.
31 August 1901
There is a general similarity of all the "booms" and all periods of depression, The nature of these movements is like a snowball, rolling down an inclined plane and the collecting snow on its way. At the beginning of the slow movement, in the process speeds up and it usually becomes the fastest front end.
If we analyze the nature of this driving force, it becomes obvious why it does. "Booms" are consistent, but a more rapid increase people's confidence. In 1895 and 1896 confidence in the financial and commercial circles in this country was at a low level. Nobody wanted to risk their business especially, and for this reason that no one was planning far ahead. Everyone wanted to get their money back as quickly as possible. This situation reached its climax in the "Brian kampeyn" ("Bryan campaign") in 1896, when for a short period of time, businessmen and financiers in general have done everything possible to stop the business.
The election of that year destroyed the main McKinley fear, so thoroughly shaken the confidence of people in the future. Mr. McKinley was elected in November 1896, but only since the summer and autumn of 1897 increased confidence becomes really noticeable. This growth was very slow and then very disappointing for people on Wall Street. However, during the second half of 1897 and virtually throughout the 1898 confidence grew faster and faster, and in the first three months of 1899 it became especially noticeable. Then came the stopping of this increase due to "industrial failure", and later because of the Anglo-Boer War, and their influence has not ended when it was necessary to meet the presidential campaign of 1900.
However, the re-election of Mr. McKinley for a second term in 1900 brought a resurgence of confidence. In the next six months after the election, if we accept as a fair indicator of the stock market "boom" was more developed than in the preceding three years. It lasted almost without interruption to the "North Pacific Corner" ("Mogaigp Pacific corner") in May. This event led to a slowdown, albeit temporary, but the magnitude and severity of transcending all that is written in the annals of Wall Street.
Some people are seeing that in the present prosperity of the country is growing, people ask why should occur as a result of the reaction of the economic recovery over the past four years. Those who believe that such a reaction should occur, and in fact already begun, in answering this question, they say that people confidence in the future to some extent swayed partly by the events of last May, partly due to poor harvest of grain, partly because
Комментариев нет:
Отправить комментарий