WISE INVESTMENT
FuLt marks for the gilt-edged market, but Gamma minus for commodities and most of the speculative groups of equity shares. It is good to see the Cheap Money flag flying so bravely over Whitehall again, but I cannot help reminding myself that the following wind in the gilt-edged market is the same chilling blast which is inhibiting activity elsewhere. The City picture is indeed becoming curiouser and curiouser, when even wars and rumours of wars send money out of arma- ment shares and war Commodities into gilt-edged securities and the gold scare, which rocked financial markets less than six months ago, gives place to a wild gold scramble. For the moment it is all " gilts and gold " in Throgmorton Street, but this is a phase which cannot last.
Behind the flight from commodities and equities into safety- first stocks is the widespread fear that for a number of reasons the prospecti of trade, in the broadest sense, have become impaired. Most disturbing is the sharp setback in the United State3, and doubts are deepened by the recurrent alarums and excursions of international politics. In these conditions it is natural perhaps that accumulated funds seeking an outlet should be concentrated on safety-first stocks, at any rate on a short-term view of market possibilities. But it is as well to remember that if a serious trade slump should develop and/or if a major international conflict should break out, even the money controllers in Whitehall and Threadneedle Street could not prevent a sharp fall in gilt-edged prices. Only the vague fears of slumps and wars, which effectively limit the scope of enterprising investment, justify a short-term policy of investing in gilt-edged and kindred stocks. If any investor rates either risk highly, let him avail himself of the services of building society or bank.
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