MEDFORD MAIL TRIBUNE. MEDFORD. OREGON
FRIDAY. SEPTSMBEH 21. U;2
Dennis the Menace
9;
'If xj're sojma talk like that air, Wilson.
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Ms Your Money's
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By SYLVIA PORTER
Copyrighl, Hall Syndicate, Inc.
WHOSE STOCK SALES CAUSED 'BLACK MONDAY'?
Question: Whose dumping of slocks was responsible for
fhe crash in Wall Street on Black Monday, May 28, and the ,
following Tuesday morning days which witnessed one of
the worst market breaks of history?
Amwer: Dumping by you, as an individual investor or
speculator in stocks. It wasn't selling by the professional
managers of the multi-billion dollar mutual funds; records
have long been available showing the mutual funds bought ,
on balance during that shattering collapse. Nor was it selling
by the multi-billion dollar closed-end funds, the investment
companies which use their own assets to buy securities of
other corporations; records available today show they were
both buying and selling and on balance buying. Nor was it
selling by company insiders; the evidence is in today that
they too were buying on balance. Nor was it heavy liquida
tion by other types of financial institutions; they also were
on the buy side on that Monday and Tuesday. Nor was it a
bear raid by foreigners; there were some selling from Hong
Kong and Switzerland during those days but no "unusual
activity."
You, the individual stockholder - big and small - played
key role in bringing that financial massacre upon yourself.
Before giving tha fascinating facti. let me remind you
that "May 28" didn't come out of nowhere. For weeks
previous to Black Monday, the market had been slumping
under heavy selling and the week before was particularly
rough. Shareholders the nation over watched their profits
shrinking, their losses mounting. The week end before
May 28, margin calls went out on a terrifying scale from
banks and securities houses. The technical position of the
stock market when it opened that Monday was downright
dreadful.
Then came Monday - and since then, there has been con
tinuing talk that institutions and insiders triggered it and
the individual investor was caught in a debacle to which he
contributed nothing.
Today, though, statistical proof to the contrary is finally
available. Today the "Exchange." monthly publication of
the New York Stock, released its exclusive study of the
purchases and sales in the second quarter of 25 closed-end
investment companies holding assets of S3 billion. Today,
the NYSE also disclosed its breakdown of odd-lot transactions
and insider trading in 50 selected stocks, showing what indi
vidual stockholders did during those two chaotic days when
odd-lot transactions reached the highest total ever recorded.
To put the facts simply:
The closed-end funds in April-May-June bought 1,193,000
shares, sold 1,192,000 shares, a net purchase balance of
roughly 1,000. Their purchases of blocks of 10,000 shares or
more totaled 842,000 shares and covered 31 issues, their
major sales totaled 714.000 shares and covered 26 issues.
More specifically, five funds bought Eastman Kodak during
this period while five funds sold U.S. Steel. Clearly, the
funds were as the "Exchange" puts it, making "extensive
and highly selective portfolio adjustments," and that is
hardly dumping.
What about the little fellow, whose odd-lot transactions
on those two days accounted for over 17 per cent of the
entire volume on the NYSE? On May 28 odd-lot deals
totaled almost 2 million shares with sales topping pur
chases by a huge 267,000. On Tuesday, odd-lot deals
totaled over 3 million shares with sales exceeding pur
chases by more than 46,000. The odd-lotters accounted for
over 49 per cent of all trading in International Business
Machines on Monday, over 54 per cent of all trading in
IBM on Tuesday, and on both days they were heavy sellers
on balance. The odd-lotters accounted for over 26 per cent
of all trading in du Pont on Monday, over 37 per cent in
duPont on Tuesday, and again on both days they were
heavy sellers on balance.
What about insiders? The new study shows most of their
Iransactions were heavily on the buy side with Scars Roe
buck's pension fund alone buying 17,065 shares of Scars on
Monday and Tuesday.
Not all the evidence is in, but enough of it to emphasize
that over-all, on those black days of May 28-29, institutions
were a stabilizing force. It was the individual who ran
scared as he saw his ncstegg dwindling - or as one pro
fessional put it, "who fed on his own defeat and by so doing,
added to the defeat of all."
House Votes Curbs
On Farm Surpluses
Washington UTT The
House, by a five-vote margin,
today handed President Ken
nedy a victory in his fight
for one of the three permanent
new control programs design
ed to curb farm surpluses.
The lawmakers on a 202-197
roll call gave their final ap
proval to a compromise farm
bill that would put into per
manent operation in 1964 Ken
nedy's new two-price plan for
controlling wheat production.
This removed the last ma
jor obstacle to enactment of
legislation containing features
which Republicans said would
help Kennedy to "club" Con
gress and farmers into accept
ing production controls on
corn and leed grains next
year.
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