Market fluctuation

“ In the only remaining and by far most comprehensive class of cases, in which the Supply of Commodities and Services and Credits can be readily and indefinitely increased to meet enhanced Demand, and easily withdrawn from market and stored when Demand declines, each rise and fall of market-rate tends to be speedily checked through the mere action of Supply ”

“ A sharper Demand carries up the market-rate, and a higher market-rate commonly [56] acts upon Supply to enlarge it, and an increased Supply too checks the rise of market-rate. Per contra, a slacker Demand lowers market-rates, and lowered rates often lessen the Supply by the action of holders and speculators,—holders withdrawing their stock for a better market, and speculators buying now when the article is cheap to store away until it shall be dearer. ”

“ Prices fall, production is checked, and a period of depression ensues. Gradually, however, the slackened rate of production allows the accumulated stocks to be cleared, perhaps below cost price, perhaps by waiting until demand grows up to supply. When this excess of demand over supply has once again become patent, business recovers. Depression yields to prosperity, competitors again vie with each other to increase their shares in the output, after a few years the market is glutted again, and a new crisis comes, to be followed once more by depression. ”

“ The anomalous state of the Money Market proceeds, we believe, from a redundancy, not of mere paper, but of capital which cannot find investment, superinduced by stagnation of trade, and the want of commercial enterprise, occasioned by the restrictive nature of our duties on imports.—Morning Chronicle.
The accounts from the United States mention that the greatest activity prevails among the manufacturers in their purchases of the raw material for the year's consumption. ”

“ It works the same way when the supply is greater than the demand. There are always some people who will buy at some price below the market. Therefore, when the supply is greater than the demand prices must go down. ”

“ So long as this is the case, it is idle to talk of a depressing effect on enterprise from the fall in prices, or of a strangling of the industrial organism from insufficiency of the circulating medium. In fact, the immediate cause of the fall in prices has been the pushing on the market for sale of larger and larger quantities of commodities, produced with profit at lower and lower cost: a state of things fortunate for the community, and surely not depressing for the business man.... ”

“ If production exceeds, by even a very small percentage, what is required to meet every current demand for consumption, the price which the surplus will command in the open market will govern and control the price of the whole; and if it can not be sold at all, or with difficulty, an intense competition on the part of the owners of accumulated stocks to sell will be engendered, with a great reduction or annihilation of all profit. ”

“ What, then, are the lines of business in which selling prices cannot be raised sufficiently to prevent a reduction of profits? There are certain lines in which selling prices are stereotyped by law, by public commissions, by contracts of long term, by custom, or by business policy, and in which no advance, or but meagre advances can be made. There are other lines in which prices are always subject to the incalculable chances of the harvests, and in which the market value of all accumulated stocks of materials and finished goods wavers with the crop reports. ”

“ Just so in the reverse way, when Demand is slackened, Supply continuing as before, the market-rate is sure to decline; but declining rates tend strongly in turn to increase the demand by bringing the article within the range of a larger number of purchasers ”

“ When stock prices do not rally beyond the prices at which they were before the break occurred, it is a sign that the turning point has been reached and that the bear market has started, although the majority of people do not realize this until a long time afterwards. ”

“ I say farther, that the beneficial trade will last for a time only. For the infallible consequence of the rise of prices at home will be, that those nations which at first consumed your manufactures, perceiving the gradual increase of their price, will begin to work for themselves; or finding out your rivals who can supply them cheaper, will open their doors to them. These again, perceiving the great advantages gained by your traders, will begin to supply the market ”

“ To produce this effect, it is by no means requisite that the prices of all commodities should rise or fall simultaneously. A rise or a fall in the prices of a number of leading articles, is sufficient in the one case to increase, in the other to diminish, the sum of the prices of all commodities, and, therefore, to put more or less money in circulation. Whether the change in the price correspond to an actual change of value in the commodities, or whether it be the result of mere fluctuations in market prices, the effect on the quantity of the medium of circulation remains the same. ”

“ A moderate disturbance caused by one of the above changes, or a combination of them, will produce an immediate effect on the price of the commodity, which again will tend to react on both the supply and the demand by altering the opinions of sellers and buyers. If no further change tending to disturb the market takes place, the market will gradually settle down again to a state of equilibrium. But if the disturbance has been considerable, a relatively long time may elapse before the market becomes quiet ”

“ In the case of all commodities which cannot be bought or sold at a common market place (or exchange) , price fluctuations are usually wide and frequent, because no large group ever has common knowledge of supply, demand and other factors that govern prices—purchases and sales are made direct between individuals, and knowledge of the amount asked or paid is restricted to a limited few. ”

“ There, as here, over-expansion in all directions had over-taxed the money market and glutted the Bourse, the banks, and the speculative capitalists with new issues of securities that were either unsalable, or salable only at a ruinous sacrifice, owing to the heavy shrinkage in prices, and the absence of demand at the low prices. ”

“ Money in the summer months is apt to be low and exchange high, affording a good basis on which to sell exchange. Then, if the expected crops materialize, large amounts of exchange drawn against exports will come into the market, forcing down rates and giving [Pg 341] the operator who has previously sold his long bills an excellent chance to cover them profitably as they come due. ”

“ After a time this begins to be perceived, the price ceases to rise, and the holders, thinking it time to realize their gains, are anxious to sell. Then the price begins to decline, the holders rush into the market to avoid a still greater loss, and, [pg 338] few being willing to buy in a falling market, the price falls much more suddenly than it rose. ”

“ I think that if you look at the news of the week I think the market probably prices in not just -- probably prices in a lot of information whether it's price increases, whether it's I think a lot of news throughout the globe about a deteriorating economy. I think it's more likely that what you're seeing is what the President continues to talk about, some of our greatest challenges, but certainly not just a reaction to what we're doing. ”

“ Buying for future delivery causes advances in prices; selling short tends to restrain inordinate advances. In each case there must be a buyer and a seller, and the interaction of their trading steadies prices. Speculation thus brings into the market a distinct class of people possessing capital and special training who assume the risks of holding and distributing the proceeds of the crops from one season to another with the minimum of cost to producer and consumer. ”

“ In large cities the brokers naturally unite for convenience of business in the so-called stock exchange, in which the market price of all current forms of indebtedness or deferred payments is fixed from day to day, or from hour to hour, by the higgling of the market, just as the price of produce is fixed in the produce exchange. Naturally, as in the case of produce, a fictitious business, purely speculative, grows up around the legitimate dealing [pg 163] in stocks and bonds. ”

“ Whenever the demand for their wares increases, each competitor tries to engross a larger portion of the market. "Inevitably, therefore, all the producers together tend to overshoot the demand and to glut the market for a time. This is a result not of wild speculation nor of miscalculation [Pg 646] of the total demand; it must be a normal incident wherever competition has a place at all." Such activity among producers constitutes the period of prosperity. But sooner or later the glutting of the market becomes apparent, and then the crisis comes, because the goods cannot all be sold at a profit. ”

“ I concede, sir, that, in the ordinary mutations of business and commerce in all seasons, and daily, stock markets rise and fall; but behold this country as it stands as to honest material of just speculation on exchange! ”

“ The fluctuations of the stock market represent the views, the judgment and the conditions of thousands of people all over the country, and indeed, in normal times, all over the world.
The current which sends market prices up or down is far stronger than any man or combination of men. It would sweep any man or men aside like driftwood if they stood in its way or attempted to deflect it.
True, men at times discern the approach of that current from afar offDo "big men" put the market up or down? ”

“ The continually growing productivity of industry makes necessary a corresponding growth of the market, if disaster is to be avoided. But to enable producers to sell their growing output promptly prices must be reduced and wages must be raised in proportion as the supply of goods increases. For it is only by combining an increase in the money income of the mass of the population with a decrease in the cost of commodities that a country's home markets can be kept expanding with the progress of industrial methods. ”

“ By rapid degrees the American fluctuations become generally circulated; the market seems to be full of the little pink slips that come flying in at the hands of boys and clerks stationed in a line that stretches from the offices of the cable companies outside the House to the very heart of the Yankee Market in the Stock Exchange. ”

“ On the other hand, occasional extraordinary industrial activity, coupled with the annually recurring demands for money during the crop-moving season, causes money stringency, and the calling of loans made to the stock market; an abnormally high interest rate results, attended by violent reaction in speculation and abrupt fall in prices. The pressure to retain funds in the speculative field at these excessively high interest rates tends to a curtailment of reasonable accommodation to commercial and manufacturing interests, frequently causing embarrassment and at times menacing a crisis. ”

“ Following a period of prosperity comes a period of decline. The first sign of it usually is a severe break in the stock market. At that time general business is running along at top speed and there is no sign of a let-up, but this break in the stock market should be a warning. Most people think the break [45] is merely a temporary reaction—they may refer to it as a HEALTHY reaction—and they start buying stocks again, and put the market up, but it does not go up as high as it was before the break occurred. ”

“ The high rates of interest not only check the current demand for wares of various kinds, but also clog the effort to maintain prices by keeping large stocks of goods off the market until they can be sold to better advantage. Finally, the very success of other enterprises in raising selling prices fast enough to defend their profits aggravates the difficulties of the men who are in trouble. ”

“ If, instead of considering only the daily fluctuations, you analyze the movement of market prices for longer periods... you will find that the fluctuations of market prices, their deviations from values, their ups and downs, paralyze and compensate each other; so that, apart from the effect of monopolies and some other modifications I must now pass by, all descriptions of commodities are, on the average, sold at their respective values or natural prices... ”

“ While the price level is often sagging slowly when a revival begins, the cumulative expansion in the physical volume of trade presently stops the fall and starts a rise. For, when enterprises have in sight as much business as they can handle with their existing facilities of standard efficiency, they stand out for higher prices on additional orders. ”

“ If our plans succeed, we sell one hundred and fifty millions of our own holdings at present prices. In order to bear the market fifty per cent below present prices, we must continue to sell down, diminishing the quantity we sell as prices recede, and when we begin to cover, we must buy all we can at the lowest point, diminishing our purchases as prices advance. Those not familiar with such things would be surprised to know that the ebb and flow of values in the stock market is almost as regular, and can be almost as certainly predicted, as the movement of the tides. ”

“ As a consequence, when interest rates go up, bond prices go down. During this period, speculative stocks are selling at their highest prices; and under the influence of this movement, many stocks that have no actual value sell up at high prices. ”