WISE INVESTMENT
WITHOUT stretching a point in favour of the season of good cheer I feel that markets may fairly be said to be on the mend. The change in Throgmorton Street is not so much a matter of prices, which have rallied only very triflingly compared with recent falls, as of dealing conditions. There has been an improvement in those numerous influences that go to make up the undertone of stock markets and in consequence jobbers are able and willing to quote more closely. I do not suggest that we are about to witness a substantial or sustained upward movement but it does seem probable that, given a respite from fresh political shocks, markets will be able to consolidate around present levels. That, for the moment, is as much as one can reasonably expect.
What is behind this steadying of prices ? Does it mean that the bottom has been reached, or that the " bears," in their anxiety to enjoy their Christmas with a clear conscience, have been covering their short sales ? Or merely that traditional end- of-year optimism is having its annual run? Bear covering operations, plus Christmas cheerfulness, are undoubtedly responsible for part of the firmness of markets, but I feel that there has been a genuine swing-over in investment psychology from something not far removed from despondency to cautious hopefulness. Fresh official assurances about trade, and especially the Defence Minister's references to the schedule of rearmament, have helped to dissipate the exaggerated fears of trade recession which had begun to grip Throgmorton Street; and Wall Street's rallying power, reflecting the growing hopes of business recovery in the United States, brings relief from the quarter whence it is most needed. Altogether, without any risk of raising false hopes, I should say there is more than an even chance that conditions may shortly justify a more enterprising investment policy than has been prescribed in these notes in recent months.
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