Passage Seventeen
The increase in the margin rate from 50% to 70% was not an attempt to stem any rampant speculation on the part of the publicactually the market seemed technically quite strong, with public participation essentially dignifiedbut rather an attempt by the Federal Reserve Board to preserve the sound underpinnings that existed in the market. Naturally, such a move had a momentarily chilling effect upon prices but if the FRB had been preoccupied with undue speculation, the increase might have been to the 80% or even 90% level. Such an increases in the margin rate is a confirmation of a strong stock market and since 19,such increases have resulted in interim market highs over twelve months later. Obviously, there could be no guarantee that this would once again be the case, but if history is any guidelineand if business and corporate earnings were to continue on the same coursecontinued optimism over the outlook for the stock market would seem more prudent than pessimism.
The margin increase underscored the good rise that stocks had enjoyed for the previous yearand the fact that a 50% rate was maintained as long as it was pointed up the fact that the rise was mainly conservative in that it was concentrated in the blue chips for the most part. In past Investment Letters we have voiced the thought that speciality stocks could outperform the general market from this point. We continue to believe that this could be the case. For example, steel stocks tend to sell at certain fixed price/earnings ratios. Below a certain ratio they are considered good valueabove a certain ratio, overpriced. If a company produces a unique product it is far more difficult for market analysis to place a numerical ratio upon the companys earnings. We have also contended in the past Letters that the stock market reflects mass psychology as well as the business outlook. When investorsboth the public and the institutionsare nervous and pessimistic they definitely hesitate to buy stocks: they seek low price/earnings multiples and high yields. These same investorswhen they are in an optimistic frame of mindbecome for less preoccupied with yields and more wiling to pay a premium for accelerated growth. If the publics attitude towards the auto industry is any measure, then this period seems to have been one of optimism.
【大学英语四六级考试精读(三)】相关文章:
★ 2013年6月英语六级考试备考深度阅读试题模拟与解析(17)
最新
2016-10-18
2016-10-11
2016-10-11
2016-10-08
2016-09-30
2016-09-30