Stock price

“ 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. ”

“ and with this reminder other things came to her—how strange it was that, with all allowance for their merit, it should befall some people to be so inordinately valued, quoted, as they said in the stock-market, so high, and how still stranger, perhaps, that there should be cases in which, for some reason, one didn't mind the so frequently marked absence in them of the purpose really to represent their price. ”

“ Were a railroad to double in money value, the result would be, since the money value of the bonds could not increase appreciably, that the money value of the stock would more than double. Stocks are shares in physical wealth the value of which, in money, can fluctuate. Since the money price of bonds is relatively inflexible, that of stocks will fluctuate more than the price of the physical wealth as a whole. ”

“ If the supply, or present stock in hand, be entirely in the possession of one person, he will naturally endeavour to put such a price upon it as shall produce by its sale the greatest quantity of money; but he will be guided in this estimate of the price at which he will sell, both by the knowledge that increased price will cause a diminished consumption, and by the desire to realize his profit before a new supply shall reach the market from some other quarter. ”

“ Since most of the country’s wealth and commerce is controlled by corporations whose securities are listed on the various stock exchanges, the price fluctuations, which often reach the daily aggregate of hundreds of millions of dollars, either in loss or enhancement of value, are necessarily a matter of general concern. ”

“ You know, Monsieur, that, in the stock-market especially, and more or less in every other kind of speculation, the greater part of the transactions are fictitious, to a certain extent. Par exemple: you buy or you sell so many barrels of flour, at such a price, on time, as it is called,—that is, you engage to receive, or to deliver, so many barrels, at the prices and in the times agreed upon, in the hope, that, before the period of your contract comes round, prices will have so varied as to enable you to buy, or sell, the quantity bargained for, upon terms that will give you a profit. ”

“ That is to say, if ten thousand purchasers throughout the country should buy even small amounts of a certain stock on a given day, the combined effect of all these purchases would undoubtedly lift its price on the Stock Exchange, and thus we see that each buyer’s action carries with it a privilege of no inconsiderable proportions. ”

“ The phenomena of the stock-market, where such things are most actively bought and sold, and where they appear as differential portions of the capital values of securities, doubtless first called attention to them—though the item of "good will" as a business asset, for which a money-price is paid when businesses change hands, is doubtless older and wider than modern corporation finance. The capitalization theory applies to them most readily and obviously, as compared with other elements in the static theory of prices. ”

“ The public funds, shares in joint-stock companies, and all descriptions of securities, are at a high price in proportion as the rate of interest is low. They are sold at the price which will give the market rate of interest on the purchase money, with allowance for all differences in the risk incurred, or in any circumstance of convenience. Exchequer bills, for example, usually sell at a higher price than consols, proportionally to the interest which they yield ”

“ There are always some people who are willing to sell at some price above the market who will not sell at the market; and when the demand for stock is greater than the supply, it goes up until it is supplied by some of these people who are holding it at a higher price. ”

“ One man, or two, or a hundred cannot make a market, because the immense volume and variety of these securities make it impossible for any unorganized handful of brokers and dealers to determine a fair market price.41 What is required, and what the man whose capital is wanted insists upon, is an organized body of brokers, speculators, and investors competing keenly, seeking to buy cheap and sell dear, gathering and disseminating all the news, and so sharpening the judgment and stimulating the higgling of buyers and sellers as to bring prices to their legitimate level and give them stability. ”

“ If more is paid, it can only be done by anticipating the period of its payment, and going into the public market to purchase the stock. Can it be doubted that, if you do so, the vigilant holder of the stock, taking advantage of your anxiety, will demand a greater price than its value? ”

“ It must be remembered that it is the stock of gold and not the annual production which influences the price level; and that the stock will probably continue to increase for many years after the production has begun to decline,—as long, in fact, as production keeps above consumption. ”

“ Then the cunning jobber had another set of men employed on purpose to buy, but with privacy and caution, all the stock they could lay their hands on; till, by selling ten thousand pounds at four or five per cent. loss, he would buy a hundred thousand pounds stock at ten or twelve per cent. under price; and, in a few weeks, by just the contrary method, set them all buying, and then sell them their own stock again at ten or twelve per cent. profit. ”

“ When general business conditions are bad, trading on the stock exchanges very light, and everybody you meet appears to be pessimistic, then we advise you to look for bargains in stocks. The last six months of 1921 was an unusually good time for buying stocks.
It is well known that the large interests accumulate stocks at such times. They buy only when the stocks are offered at a low price and try not to buy enough at any one time to give an appearance of activity in the market, but they buy continually when the market is very dull. ”

“ If the market price of any stock is far below its intrinsic value and there is no reason why the future should bring about a change in this value that will decrease it, then you may be certain that important influences are working against the market price of the stock for the time being. In the course of time the market price will go up towards the real value. ”

“ Most people who trade in stocks buy on margin. The ordinary minimum margin is about 20% of the purchase price, because banks usually lend about 80% of the market value of stocks.
If you put up 20% of the purchase price of your stocks with your broker, he has to pay the other 80%, but he can do that by borrowing that amount from his bank, and putting up the stock as security. In this way brokers are able to handle all the margin business that comes to them, as long as money can be borrowed. ”

“ The earnings of some roads are so large as to make the investment a profitable one; so that the holder of shares is enabled to sell them at an advance. When shares in the stock of any institution are sold at their nominal value, the price named in the certificates, the stock is said to be at par. ”

“ A, who believes that there will be no further rise in the price, but that the same will decline, offers B $10,000 of this stock at ninety-one cents, to be delivered in three days. He has no stock, but believing it will decline to ninety cents or less, within the time fixed for delivery, he expects to buy at a still lower rate than he has agreed to sell, or to borrow it for a consideration if the decline does not meet his anticipations. ”

“ Every day we hear of combinations, Farmers’ Alliances, rural co-operative movements, etc., each designed to regulate the market for eggs, butter, potatoes, and such things, and each having for its purpose the very functions which govern a Stock Exchange in its own field—namely, the establishment of a fair price under the nearest possible approach to ideal conditions. ”

“ Taking the different prices of the stock at different times in the year, and the average price thereof, and otherwise following the provisions of the statute, simply makes a way of finding the value of the stock between the 1st and 15th of November in each year. ”

“ A bull speculator should know that his great opportunity occurs after securities generally have been driven down in price by a severe commercial crisis, which has compelled holders of stocks upon a large scale to realize. ”

“ The common practice is for a number of persons to band together, and put the price of a certain article or stock up by buying a large quantity and making it scarce. When the higher price has been maintained for some little time, so that it meets the public eye in price currents, the process of putting the public in is commenced. ”

“ The price of a firm's stock represents investors' consensus estimate of the value of the shares under current and anticipated conditions. Stock is worth the present value of anticipated future returns -- dividends and other distributions. Tender offers succeed when bidders offer more. ”

“ The price at the stock exchange of shares of stock in corporations which are there offered for sale or dealt in is some evidence of the value of such shares. So evidence of prices current among dealers in those commodities which are the subject of frequent sales by them would also be proper to show value. ”

“ The United States will not yet supply us with this perfect demonstration, but the progress towards the same point has been as rapid as was the progress of England, from the commencement of her stock career. In debt and bank stock we only pay about ten millions of dollars annually, to obtain the enhancement of price or value, which we are taught to expect from stock, on about forty millions worth of exported labour. ”

“ It is a common thing to read about the short interests in certain stocks. All stocks that are sold short must be bought sooner or later, and when that buying takes place, it may affect the market very much. Therefore, if it is known that there is a big short interest in a certain stock, we should expect the stock to sell at a higher price; but sometimes the short interests break the market and force the price down, especially when general conditions are in their favor. ”

“ Then again, the very fact of high-class stocks remaining at a uniformly high level of price, causes a certain class of investors to buy them for simply absolute security’s sake. There are numbers of people who hold Consols because they are perfectly certain their £3 odd per cent. per annum will always be paid. ”

“ In every instance, when you make a selection, you should consider the company's assets, present earnings, and prospective future earnings, and then take into consideration all the influences that affect price movements, as explained in subsequent chapters. ”

“ The number of persons who deal in the 3 per cent stock being large, any one desirous of selling can always dispose of his stock at one-eighth per cent under the market price; but those who wish to dispose of bank stock, or of any other securities of more limited circulation, are obliged to make a sacrifice of eight or ten times this amount upon each hundred pounds value. ”

“ He may enter the market under a variety of influences. He may know from private sources, for certain, that a stock is about to improve much, and he may intend to buy as much as he can get at a fixed limit as regards price. If he is anxious to operate largely, and possess but a poor control over his countenance, the [44] probabilities are that he will be read at once, and the market be immediately raised above his limit if he attempt to buy any considerable sum. ”

“ THE MONEY MARKET AND STOCK PRICES
Perhaps no other one thing influences the movement of stock prices so much, in a large way, as money conditions. It is impossible to have a big bull market without plenty of money. During a bull market nearly all stocks are bought on margin, which is explained in Chapter XVI. This makes it necessary for brokers to borrow large sums of money. When money is tight, it is impossible to get enough to carry on a large movement in stocks. ”

“ It is more likely to be true when a stock is listed during a very active market, when prices are more easily influenced by publicity. The high price of it is usually due to the fact that publicity is given to it, and as soon as the effect of this publicity wears off, the market price of the stock declines. ”

“ Short sellings endeavor to select times when prices seem high in order to sell, and times when prices seem low in order to buy, their action in both cases serving to lessen advances and diminish declines of price. ”

“ They never trouble themselves about the price of the stock, and continue entirely apathetic whether the price rises to 120 or falls to 50. It stands to reason that, as the country grows in wealth, so do the holders of these high-class stocks increase in number, and as such securities are purchased largely for permanent holding, and purely as a means of providing income, so is steadiness imparted to the price, which tends consequently to be less and less disturbed in the absence of exceptionally adverse influences. ”

“ Then, the stocks listed on the New York Stock Exchange may be divided into classes, such as railroad stocks, public utility stocks, motor stocks, tire stocks, oil stocks, copper stocks, gold stocks, and so forth. At certain times certain stocks are in a much more favorable condition than at other times. In 1919, when the industrial stocks were selling at a very high price, the public utility stocks and gold stocks were selling low, because it was impossible to increase incomes in proportion to the increase in operating costs. ”