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

Usage license:: Get license information via the feedback formular.

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter VII. Credit transactions in securities

Collection:: Economics Books

CREDIT TRANSACTIONS IN SECURITIES 181 create about our stock markets largely explains why it is that certain newspapers and magazines which year in and year out accept the yearly subscription price for their journals in ex- change for their promise to complete the deferred delivery of them to the subscribers a whole year afterwards, will so often express horror at “short sales” on the Stock Exchange, be- cause, forsooth, they involve “selling what one doesn’t own.” Purchasing Securities on Credit.—In actual fact, then, “buying on margin” is simply the financial phrase for purchas- ing securities by employing credit to defer a payment of money ; the same basic operation is known as “purchasing on credit” in some branches of commercial business. “Selling short,” on the other hand, is simply the phrase used in finance to designate a sale of securities in which credit is used to defer their delivery; in its economic essentials this operation corre- sponds to what merchants and manufacturers often call selling for “forward” or “future delivery.” An investor or speculator who has bought stocks on margin is said to be “long” of stocks; whereas if he has sold them but has not yet delivered them, he is said to be “short” of stocks. Furthermore, the speculator who buys stock on margin in the expectation of seeing a rise in its price which will subsequently enable him to sell it at a profit, is called a “bull,” while the name of “bear” is given to anyone who sells a stock short in the anticipation that its price will shortly decline so that he can buy it to “cover” his sale (i.e., make his deferred delivery of the stock) at a lower price and obtain a profit. Thus Stock Exchange transactions, when stripped of the hectic and unfamiliar verbiage with which the financial scribe so often invests them, resolve themselves into a few common- place and immemorial practices of trade which exist just as extensively, although unhonored and unsung, in every grocery store and newsstand in the nation. Margin Purchase of 100 Steel—That the principles in- volved in purchasing securities on credit are fundamentally

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