FINANCE AND INVESTMENT
By CUSTOS
STOCK markets are so thin and so unusually selective that it is impossible to disentangle anything worthy of the name of general trend. I suppose the behaviour of gilt-edged is still the best guide to City sentiment, and the uncertainty of prices in the past few days rather suggests that some at least of the Throgmorton Street optimists are not feeling quite so confident. Nobody doubts, of course, that this is going to be a successful war, but I fancy the appearance of the magnetic mine, plus the rather less hopeful bulletins about Germany's morale, have shortened the odds in favour of a short war. So there is less enthusiasm for the undated gilt- edged stocks, such as War Loan and Old Consols, and a greater willingness to venture modest sums in Argentine railways and South American Government bonds, which at depressed prices are tempting purchasers on the assumption that a long war is ahead.
It is good to see the home rail market advancing so strongly, in spite of generally lull conditions. Buyers have singled out the border-line preferences whose merits I have often emphasised, and even the ordinary stocks have had good rises. Apparently, the basis of this movement is the expectation that the companies will soon be able to come to terms with the Treasury about the financial arrangements during the war. The buyers believe, and I think they will prove to be right, that when the agreement is reached, the railways will be in a position to distribute pretty good divi- dends, and a higher range of values will be justified for the junior stocks. But I doubt whether such an agreement is on the verge of completion, as some of the more hopeful spirits seem to think. I look upon this rise as premature, but one which will be justified later on. Holders should not be in any hurry to sell.
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