VERYWHERE in the City of London, and in most parts of Great Britain today, investors and their advisers are anxiously trying to frame a policy for the future. The course of Stock Exchange values is an equation with two unknowns. The first is the probable trend of industrial activity under the influence of the trade cycle, and the second is the extent to which politics— rearmament, European developments and British Government action—will cut across more normal developments. the last few weeks, have been discussed ad nauseam.
Politics, in In default of an early answer to the problem they pose—which we are not likely to get—it may be worth while to concentrate attention for a time on the other unknowns.
What is the Trade Cycle, and where do we stand in relation to it now? says "Ilex" in the "Financial News."
As with a toothache, it is easier to describe the trade cycle than to define it. Its causes may be obscure, but its effects are only too obvious. The apocryphal old lady who declared that trade cycles should be abolished, because she had been nearly knocked down by the butcher's boy, has few descendants today. An investor who expended £10,000 on the. purchase of a representative portfolio of Ordinary shares in January, 1920, would have found that less than two years later (in October, 1921) his capital was worth only £4830. Had he held on until April, 1929, its value would have risen to £11,480. By May, 1932, it would have fallen again to £5,510, to rise again to £14,020 in January, 1932, and to fall, yet once more, to £9,200 at the present time.
Text read from the printed page and cleaned; old type leaves the occasional error.