ElePLANATION OF THE RALLY.
The explanation of the somewhat paradoxical movements is to be found in a consideration of speculative as distinct from investment operations. The recovery which began in English Railway stocks nearly two years ago was due to purchases by professional operators who foresaw the turn of the tide so far as gross traffic receipts were concerned, and it was not until a considerable rise had taken place both in Prior Charge Stocks and the Ordinary Stocks that a certain amount of investment buying took place. The Prior Charge Stocks have maintained their rise quite well, the upward movement having been helped by the great rise in trustee securities, thus making the yield on some of the Prior Charge Stocks of English Rails fairly attractive. Early in the present year, however, professional operators began to realize the Ordinary Stocks pretty extensively, with a consequent reaction in prices. This selling was due, first, to the fact that it was recognized that future possibilities had been sufficiently discounted by the high levels touched at one time this year, while a still more potent factor was the apprehension of Labour disputes with regard to wages culminating in some kind of strike. Indeed, a good many professional operators actually opened speculative sales in anticipation of a further fall in values. The settlement reached last week removed, it may be hoped, for some time to come, all apprehensions of Labour troubles, and professional operators were once again busy, some in closing "bear" accounts and some in opening fresh speculative positions for the rise.
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