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.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter IV. The distribution of securities

Collection:: Economics Books

THE DISTRIBUTION OF SECURITIES 91 a matter of record only.” This means simply that the syndi- cate, the names of whose members are printed beneath the advertisement, has sold out all its securities. But it does not mean that subsyndicate firms which may have bought them, have as vet resold them all to the public. Distribution Following the Offering.—After the an- nouncement to the public that the security is for sale, the syn- dicate members and subsyndicate firms endeavor to dispose of their respective allotments of the new security as rapidly as possible. The buyers “on the offering” might be divided into three chief classes: (1) pure investors, who subscribe to the security in order to hold it for the sake of the income to be derived from it; (2) speculative investors, who are willing to hold it for income but who hope to be able to sell it out at a profit to themselves sooner or later; and (3) speculators, who plan to resell it as quickly as possible for a slight profit. The proportion of these several classes of buyers in the case of any given security depends primarily upon the nature of the security, as well as the condition of the market at that particular time. In the case of a small but very attractive and gilt-edged bond issue, investors might conceivably purchase the whole issue at once. But under most circumstances and with most securities, particularly if the issue is a large one, probably a considerable part will have to be sold to speculators. This is natural enough, for the conservative investor almost always de- mands “seasoned securities” and is apprehensive of those which are new and yet untried. Since, therefore, in most cases there is not sufficient investment demand to absorb the entire new offering at once, the speculator must be relied upon to absorb the surplus remaining in excess of this demand, at least for the lime being.® Sometimes as much as 90% of a new issue of stock may rest in speculative hands and only 10% with investors, after the public offering has closed. 8 See Chapter II, p. 55.

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