The work of the Stock Exchange

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Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter V. The dangers and benefits of stock speculation

Collection:: Economics Books

[30 THE WORK OF THE STOCK EXCHANGE clusion can be drawn regarding either the benefits or the dangers of speculation there. Stock Speculation and Trade Depressions.—Concerning the harmful results of stock speculation, we must first disabuse our minds of a few hoary fallacies, for speculation in securities has serious enough faults without attributing to it many others for which in fact it is not responsible. The first of these fallacies is that stock speculation causes trade depressions. Whenever a recession in business occurs, ‘he man in the street at once and quite naturally begins to look around for its cause. Without trying to analyze the basic causes of the trouble, he may recall that a few months before, when the sky was apparently unclouded and serene, the stock market had experienced a decline in prices. At once a hundred myths and legends he has heard about “Wall Street” spring up in his mind. And since the disturbance first became conspicu- ous on the Stock Exchange, he leaps to the conclusion that somehow or other speculation in stocks must have started it all. This is the type of fallacious reasoning which centuries ago the philosophers called post hoc ergo propter hoc. For® the organized securities markets often reflect in advance, like a barometer, future developments in the field of business. Par- ticularly in the highly organized and sensitive Stock Exchange, coming events cast their shadows before, and accordingly stock prices begin their adjustment to the future diminished net earnings and dividend rates which oftentimes general business is not equally quick in foreseeing. Thus it is really business -ecessions which cause serious stock market crises, rather than declines in security prices which bring on trade depressions. It cannot, of course, be maintained that trade depressions are made any better because of preceding stock market troubles. Losses by security speculators to some extent curtail consump- tion, particularly of luxuries, temporarily make new financing more difficult, and spread a pessimistic spirit among business. Te 8ge Lhumer TT 0 56.

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