August 23, 2009

Favorites of the week August 18-August 23, 1930

No Journal was published Sunday, August 24, 1930. Once again, a collection of my favorite items of the week. These aren't a representative selection but just the ones that made me smile or take notice.

August 23:

[Note: Behavioral finance before its time dept.] New book Why You Win or Lose, by F. Kelly, columnist, speculator, and “amateur psychologist.” Practical approach to psychology of stock market. An important principle is to be contrary (do opposite of what most are). Says most common mistake is vanity, leading to taking small profits and large losses. Next is greed; next is “will to believe.” Also believes it necessary for traders to be illogical, since everyone else is usually being logical. Finally, recommends being cautious.

[Note: Strangely unfamiliar dept.] Editorial: A bright spot in the depression is California, now in a strong financial situation by a number of measures. Bank deposits and life insurance are up; commercial and agricultural real estate is more active; securities issued are almost back up to first half 1929 level; department store sales are down, but Wells Fargo points out they're doing better than rest of the US. All in all, California “is carving out for itself a future prosperity that must in time rival that of the eastern seaboard.”

[Note: Insert joke about lotsa dough here.] Attorney General charges price of bread in New York controlled by racketeer ring with enormous profits.

[Note: Don't go long ... check ... don't go short ... check ... stand quietly in corner ... check.] Conservative observers still advise staying out of market until “next important move has been demonstrated by the action of leading stocks.” Also counsel against taking short positions due to range-bound market.

August 22:

[Note: Strangely familiar dept.] T. Thatcher, Solicitor General and selected by Pres. Hoover to investigate bankruptcy reform, says thousands of wage earners taking advantage of lax Bankruptcy Act to live above means, cheat creditors, and “pay their debts with postcards.” Estimated loss from bankruptcies $750M annually.

[Note: I'm pretty sure Da Vinci invented the sectional bookcase.] O. Wernicke, inventor of the sectional bookcase, dead in Florida.

August 21:

[Note: Yikes!] Actuarial Society of America survey reports death rate for passengers travelling on scheduled airlines is 1 in 5,000, or 200 times railroad death rate; safety increases by 63% after pilot has had 400 flight hours.

[Note: Sign this guy up dept.] E. Woollen, Pres. Fletcher Savings & Trust, catalogs some of the follies recently committed by businessmen: thinking rate of business in early 1929 could last; thinking the depression was caused by the market crash (the crash came 4 months after the depression had inexorably started); thinking the depression was caused by bad psychology; thinking our economy independent of the rest of the worlds'; “mortgaging future income for luxuries.”

[Note: Strangely familiar dept.] J. Barringer, National Cash Register GM, optimistic on foreign sales, and on general business outlook in Europe. “Germany, in my belief, is recovering from the world-wide depression, and France seems to be entirely over it.” Believes US depression has hit bottom and “we are slowly but surely on the upward trend.”

August 20:

[Note: Perils of trying to predict history dept.] Editorial: Gandhi's reported peace terms are due to his recognition of the inevitable collapse of his campaign for complete independence. “He has accomplished nothing for India, but has caused considerable bloodshed, much suffering, and has disrupted trade with Britain which has had a direct influence upon our business.” England is pledged to help prepare India for self-governing dominion status, but India too must do its part; movements like Gandhi's set back this goal.

August 19:

[Note: Perils of trying to make two good calls in a row dept.] R. Babson (economist, made good bearish call in fall 1929) calls drought damage overestimated, says Midwest farm and general business situation will improve markedly in final quarter. Also notes commodity production has declined about 30% vs. 10% decline in consumption; predicts shortages soon, restarting of production to supply demand. Doesn't yet recommend buying stocks, but feels “time is approaching when buying opportunities may appear.”

August 18:

[Note: Strangely familiar dept.] Financiers and economists “somewhat befuddled” by current business situation; economy has descended from “the heights of the greatest business prosperity the world has seen,” and it's difficult to “get their bearings in the new scheme of things.” Most are “watching and waiting rather than predicting.” Of course, things will eventually turn around, “and when the upturn does come it will be based on the most solid foundations in many years.” In the meantime, the market is marking time.

[Note: Strangely familiar dept.] External trade of foreign countries generally declines vs. 1929; Canada July trade down about 25%; Argentina exports first 7 months down 35.4%; France first half trade down about 10%, Italy July trade down about 30%,

[Note: Now testing doors that reopen slightly, then slam shut again twice as hard, then repeat until obstacle eliminated] NY City testing new subway cars with doors that just stop when something gets in the way instead of completely reopening.

[Note: The Zeppelin scene really is unforgettable - can anyone find it on online so I can link to it?] Howard Hughes presents Hell's Angels. “More spectacular scenes of fighting in the air probably have never been photographed, but the story around which these scenes are built is stupidly improbable. ... views of the huge Zeppelin plowing through the clouds toward London have been photographed with striking beauty. ... to escape the pursuing British planes, the captain of the airship ... commands about a dozen members of the crew to step off into the void - without parachutes - 'for Kaiser and for Fatherland.' Then ... the big Zeppelin is finally set aflame by a British plane ... [that] dives directly down upon it, crashing it in twain.”