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 IV. The distribution of securities

Collection:: Economics Books

108 THE WORK OF THE STOCK EXCHANGE country. It is also this floating supply which lends negotia- bility to the security, since any investor can at any time add to it by sales or subtract from it by purchases. Time Needed to Complete Distribution.—The size as well as the attractiveness of the particular security issue also does much to determine how long its distribution among investors will take. Naturally, other factors being equal, it takes longer to distribute a large issue than a small issue, simply because there is more of it. Distribution, as a rule, is effected most quickly in the case of a small and attractive bond issue, and most slowly in the case of a large issue of new and speculative common stock. Furthermore, the floating supply of the aver- age bond, because of its greater certainty of income to in- vestors, etc., is usually reduced to smaller proportions than that of the average stock. This is one reason why the bond market is as a rule less active than the stock market, and also why many listed bonds are harder to buy or sell quickly than most listed stocks.?? The floating supply of bonds, as well as of stocks, however, will increase when some doubt springs up as to their value or price, and with a larger floating supply their market tends to become more active. The relative size of a security issue’s floating supply changes over long periods principally according to the success of the enterprise, and over short periods mainly according to its price movements. As the stock of a successful company becomes “seasoned” over the course of years, there is a continued “secular” tendency for investors to acquire its shares from the speculating holders of the floating supply. Under such circumstances, and espe- cially when attendant conditions are stable, the stock passes from a speculative into an investment stage as the floating supply decreases. Many years, however, may elapse before this process of distribution approaches relative completion and Tm See Chapter X, p. 255.

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