10 MARCH 1939, Page 34


THIS is Recovery with a capital R in the stock markets. A week ago I was just sufficiently impressed by the political signs and portents—and their economic implications—to give investors a buying signal, but the rise has been so steep that one wonders whether many have been able to get in at any- thing like reasonable prices. Part of the trouble, if one is entitled to apply the word to what is really a very welcome movement in markets, has been the virtual absence of sellers. Technically, the Stock Exchange was short of stock in the sense that dealers had little floating supply on their books at depressed prices, and so far the rise has not had the effect of tempting out stock from the general body of investors. Rather the reverse ; as prices have risen, the investor who has seen things through last year's crises has been merely confirmed in his intention to hold on. At last, he feels, a kind Providence is rewarding his fortitude, and he hopes, not without reason, that the reward has not yet been paid in full. So, until short-term operators decide that the time has come to take their profits, it is difficult to see how fresh buying will be matched by sufficient selling to prevent a further rise in prices.

Without wishing to crab the rise, I must record my opinion that in some groups current prices already discount business recovery a long way ahead. It seems to me, for example, that shares like Triplex, Turner and Newall, and Dunlop are quite high enough for the present. I should also be chary of following an improvement in commodity shares, especially coppers and lead-zinc issues, until American business news is rather more convincing than it has been since January. That there is scope, however, over a wide front if the market is right in assuming that politics are going to give business recovery a reasonable chance, is beyond doubt. My own choice, in spite of the rise since I examined the position a few weeks ago, still settles on home railway prior stocks and motor-makers' shares.