Capeadores in Wall Street
IF a reader would form a conclusion, he must consult his premises carefully.
In 1921 the United States suffered the most severe and most general business depression it had experienced in a quarter of a century. The average of industrial production for that year was 23 per cent below that of 1920, factory pay rolls were 32 per cent below the level of the preceding year, factory employment 20 per cent, building contracts awarded 10 per cent, and freight-car loadings 13 per cent. Stock prices reflected this depression by seeming, for the first half of 1921, to have no bottom whatever. Finally, however, signs of improvement appeared, and in August of that year stock prices began an advance which continued without a really serious setback until March 1926.
The extent of this great stockmarket advance is best realized if one assumes that on August 25, 1921, he had bought one share of each of the stocks used by the New York Times in its daily index of the price of industrial stocks. The total cost would have been about $1675, or an average of $67 a share. Had one sold them on December 31, 1926, he would have received approximately $4425, or an average of $177 a share. Suppose, still further, that the stock had not been sold at the end of 1926, but had been held and sold on May 14, 1928. Under these circumstances these same shares would have brought $6750, or $270 each.
Further analysis of this astonishing advance of stock prices reveals still more interesting facts. The first is that the period of gain should be divided into two parts, the one extending from 1921 to the end of 1926 and the second from the first of 1927 to about the present time. Actually the first might more properly end at the beginning of 1926, because stock prices were about the same then as they were at the end of that year. For case of reference, however, and since it is frequently said that stocks have been advancing since 1921, it is well to include all of 1926 in the first period. This makes it extend over some sixty-four months, as contrasted with the less than seventeen months of the second period.
The second interesting fact is that, although the gain in the two periods was only 17 points different, 110 points in the first period as compared with 93 points in the second period, during the early period the country passed from the depths of depression to the greatest business prosperity it has ever enjoyed, while in the more recent period business activity on the whole declined.
The great business prosperity referred to came in 1926. By comparing the statistics for that year with those of 1921 some justification and explanation is found for the advance of stock prices from an average of $67 to $177 a share. For 1926 the yearly average of industrial production was the highest on record, and over 60 per cent greater than for 1921; factory employment was 17 per cent and factory pay rolls were 30 per cent greater than in 1921; building contracts awarded and freight-car loadings both set new high records for all time, and were 126 and 35 per cent, respectively, above the 1921 figures.
When, on the other hand, one looks for a justification of the advance of stock prices from an average of $177 to $270 a share, the task is not so easy. In 1927 the yearly average of industrial production fell 2 per cent as compared with that of 1926; factory employment, factory pay rolls, and freight-car loadings each fell 4 per cent; and building contracts awarded fell 1 per cent. Obviously, then, the rise in stock prices between January 1927 and the middle of May 1928 was not the result of improved prosperity. Even during the current year, when business conditions were improving somewhat over those of 1927, it was obvious that the market was not moving in anything approaching strict sympathy with the financial and economic conditions of the country. It has been clear to all that a new element has been introduced —whose importance, as ample evidence shows, has been beyond the predicting powers not only of the experts of statistical interpretation, but of professional stockmarket speculators as well.
Explanations of the Bull Market
Various explanations and descriptions of this new element have been advanced. Some have said it is nothing more than that the superabundance of money in this country has automatically increased the demand for investments. Others have maintained that the changed attitude toward common stocks as investments has necessarily resulted in bringing the yield of these securities more in keeping with that of bonds and preferred stocks, and that this could be accomplished only by driving the prices of the common stocks above the level formerly regarded as reasonable. One writer has even put forth the theory that the stock market has now attained a position of such prominence and power that it can break away from other activities and become a business in and by itself, and as such enjoy prosperity or the reverse quite regardless of what others are experiencing. But the most interesting of all the suggestions is probably that of the Commercial and Financial Chronicle. This dignified periodical in its issue of August 6, 1927, intimated that the new element was President Coolidge. It said: —
However much or little Mr. Coolidge individually may have had to do with the prosperity of the past four years, he is credited with having been the backbone of that prosperity. The present bull market is going down in history not only as one of record proportions, but as one labeled with the name of Coolidge.
If the ‘ bull ’ market is to be ' labeled with the name’ of its chief sponsors, it would be more courteous, and quite as much in keeping with the facts, to recognize a second ‘backbone’ and name it the Mellon-Coolidge market. It is the purpose of the following discussion briefly to indicate by what means Messrs. Coolidge and Mellon have been able to make themselves so important in the speculative life of the nation that they deserve to have a period of stockmarket history permanently endowed with their names.
Every six months, and especially at the first of a new year, readers of financial pages are swamped with the prognostications of individuals whose views on future business conditions are perpetuated in print. January of 1927 was no exception, though most of the predictions were a bit less optimistic than a political party in power might desire. The cause of this was that for some little time evidence had been accumulating which unmistakably indicated that business had slumped from the high point reached during the middle of the year. The indexes of December industrial production, factory employment, factory pay rolls, freight-car loadings, and wholesale distribution were all off a few per cent from what they had been three or four months earlier, and all of them, with the exception of freight-car loadings, were below what they had been for December 1925. By the middle of January 1927, conditions had become so bad that the Chronicle, in its issue of the twenty-second, commented as follows:
Of the fact that trade recession is under way, no one can any longer be in serious doubt. The evidence on that point is too strong and the signs too numerous to admit of any skepticism.
The First Slump
The stock market soon began to show the effects of this declining prosperity, and after holding up well through the middle of December began a slight recession after Christmas, when the predictions began to appear. On December 27 the highest average since the preceding February prevailed, the high of the Times index of industrial stocks being 183. From this level the prices gradually began to lose ground. The recession was slow, but the trend was unmistakably downward. Day after day it continued, with few exceptions, and people began to wonder if it was the beginning of a long ‘bear’ market which would slowly eliminate the profits accumulated during the preceding years. Even some business men began to talk for publication in a pessimistic manner. For example, S. W. Straus made public his opinion that the country had ‘reached the saturation point’ as to office buildings, apartment houses, hotels, and apartment hotels. This sentiment was fairly widely discussed in the daily press and met with substantial agreement.
Necessarily this development of publicly expressed pessimism was a very undesirable turn of events for those interested in not having attention called to the slackening of business activity. It was, in fact, a much more unpleasant affair than the publication of unfavorable statistics. Comparatively few people would take the trouble to study statistics, but a great many people would listen to the opinion of the president of a nationally advertised investment house which sold its securities throughout the country. Consequently, when such an individual said in effect that an industry which affects a large proportion of all business was going to suffer more or less of a business depression because its market was glutted, it was a very serious matter, especially since no amount of reasoning could bring it in accord with President Coolidge’s statement a short time before that the year 1927 would ‘be one of continued healthy business activity and prosperity.’
Mr. Mellon Intervenes
Evidence is not at hand to show whether mere chance or an attempt at dignity caused the pronouncement disagreeing with Mr. Straus’s statement to be made by Secretary Mellon, rather than by Mr. Coolidge, from whose opinion it differed so completely. In any event Mr. Mellon immediately gave an answer which, as reported in the Wall Street Journal of January 20, should have left no doubt in the mind of Mr. Straus as to just how highly his statements were appreciated in certain quarters. Three points were made in Secretary Mellon’s statement. In the first place, he said that he did not agree with the opinion of Mr. Straus; secondly, that Mr. Straus did not and could not know what he was talking about, or, as the report politely expressed it, Mr. Mellon ‘doubts if any one man can tell what the situation is over the entire country’; and thirdly, that not only was Mr. Straus wrong about there being an overbuilt situation, but, ‘taking the situation as a whole, the present may be considered a very fair time for building from the standpoint of cost.’
Mr. Mellon’s statement, it should be noted, came after the market had been sagging for some three and a half weeks. Instead of helping the situation, the publication of Mr. Straus’s views naturally ‘had a somewhat depressing effect on the market, and there was considerable selling of stocks as a result.’ The weakness continued for three or four days in spite of Mr. Mellon’s disagreement. Perhaps the investing public needed this time to decide which of the spokesmen it should believe. In the past the pessimism of business leaders had usually deserved considerable thought, but it was possible, so the public may have reasoned, that there had been an error this time. In any event, and regardless of whether or not the three or four days were spent in weighing the relative capacities of Messrs. Straus and Mellon to pass judgment on the building situation in the United States, the market began a definite upward movement within a week after the statement appeared.
A New Decline
This upward movement continued with more or less regularity for the whole month of February, stocks moving from a low of 171 on January 25 to a new high of 189 on March 1. On the latter day, however, the price movements became, according to the Times, ‘highly irregular, and trading slowed down rather abruptly,’ with the result that many stocks which had ‘ been advancing actively for several days sold off and ended the day with substantial losses.’ The following day, Wednesday, witnessed still further liquidation, with ‘very general unsettlement.’ Thursday again showed weakness, and, while some strength was evident on Friday, prices sagged on Saturday.
Measured in dollars, the total decline in this brief period was not severe, but psychologically the market was in a disturbed mood and was likely to do anything. The Times, for example, made the following interesting comment on Sunday, March 6: —
In some quarters it was predicted at the week-end that, in the present anxious and somewhat nervous condition of the market, it will be entirely subservient to the financial news of the day, and that the tone and tenor of the news will, to a larger extent than has been usual of late, guide its fluctuations.
It was, then, a very opportune time for anyone to make a public statement if he cared to have his expressed views reflected in the stock-market trend. Whether Secretary Mellon took this into consideration in selecting the following day for a public announcement of extreme financial and speculative importance, or whether it was the merest coincidence, one cannot say definitely. It is, nevertheless, interesting in this connection to note that so far as the subject of the announcement was concerned the statement need not have been forthcoming for some weeks.
Again the Secretary Intervenes
On this following day, Monday, March 7, the ‘ market showed extreme nervousness at the opening, a good part of the list reacting upon the first appearance of selling.’ During the day, however, the Secretary of the Treasury announced his expectation of replacing the Second Liberty 4 1/2 per cent bonds with 3 1/2 per cent notes. Since the exchange could not take place for some months, the bonds not being callable until November 15, the statement amounted in effect to the Secretary saying that he considered money rates were going to remain low, and that if the market had been hesitating because of fear of high rates it was, in his opinion, not making the most of its opportunities. When his statement is so interpreted, there is little wonder that an effect was quickly shown in the movement of stock prices. The Chronicle reported that the announcement ‘more than neutralized’ the appearance on the same day of the bad news that brokers’ loans had advanced by a large amount, while the Times stated that ‘Wall Street was disposed to draw highly optimistic inferences.’ The market began to strengthen, and the Times reported two days later that ‘prices rose with vigor’ and ‘it was a frequent comment in Wall Street that the “ main advance” had been resumed.’
The upward swing, however, was short-lived. After moving from a low of 183 on March 8 to a high of 193 on March 17, stock prices again began to show signs of weakness. This downward movement continued for five days, after which more resistance to the ‘bearish’ activities was shown, but still there was no sign of real strength. Evidently a new impetus was needed to cause the market to continue to showsigns of prosperity.
Strangely enough Secretary Mellon, who happened to be leaving for a visit to Europe at just this time, made his departure an occasion for expressing his optimism toward business conditions and stock-market speculation. In this interview he pointed out, as reported in the Times of March 27, that the market seemed ‘to be going along in a very orderly fashion’ and that he saw‘no evidence of overspeculation.’ In fact the country, as pictured by Mr. Mellon, was in about the most perfect condition possible, from the point of view of speculation. Witness his further statements: —
I see nothing to indicate that business will not continue to be good throughout the country.
There is an abundant supply of easy money which should take care of any contingencies that might arise.
I do not look for a change in the Federal Reserve rediscount rate for some time to come, because I can see no occasion for changing it.
Brokers’ loans give a very good insight into the stock-market situation, and they appear in a very healthy state.
The Government will have about $500,000,000 surplus on hand as of June 30, but I cannot say what the next Congress will do toward lowering taxes.
All signs and indications at the moment point to the country enjoying a successful business year.
It is not clear just why the Secretary should have thought it necessary to issue such a statement after the market had been showing weakness for several days, for so unreservedly favorable an opinion was bound to have a considerable influence on speculation. It may be that the blame should be placed upon some inquisitive reporter who insisted on having a popular story, or it may be that the Secretary was sincerely interested in putting an end to the decline. But in any case the statement had what the Chronicle termed a ‘material influence’ on the market and, in the words of the Times, ‘created a cheerful feeling in Wall Street.’ The following day stock prices strengthened and the market was ready to climb to greater heights.
This time it was no mere ten-day spurt that the market was to enjoy. Rather it began, in its ‘cheerful’ mood, a movement which was ultimately to carry it to levels hitherto unknown. From a low of 186 on March 23, prices gradually climbed to 196 on April 5 and to 200 a week later. Over this new record of all time the market stumbled for the rest of the month, getting as high as 204 for a couple of days, but always slipping backward, although during this period the high of the day never fell below 200. Considering, however, that such unfavorable news as the Mississippi flood, increases in brokers’ loans, and the Japanese financial crisis had to be offset, it must be conceded that the market amply justified the confidence which had been placed in it by its departed friend.
By the first of May the market had gotten its second wind and was in a position to break away from its monotonous record of 200. Within a week it advanced six points, and on June 2 the average was 217, a gain of approximately thirty points in ten weeks. Then, however, a recession set in which lasted through June. The loss was not severe, the total for the month being only about nine points, but its long continuance made it evident that once again new strength must be injected if the upward climb were to continue.
Enter the President
A basis for a return of optimism, if one preferred so to interpret it, was not long in forthcoming. President Coolidge, vacationing in the Black Hills, expressed what the dispatch to the Times, under the date of July 1, stated to be ‘an optimistic view of business conditions.’ According to this report, the President believed business in general to be ‘satisfactory.’ The Department of Labor, so it was stated, reported a ‘satisfactory’ condition of employment, the Post Office Department reported an increased sale of stamps, and, although ‘freight handling’ showed variations, a generally ‘satisfactory’ condition was indicated. The President explained that the decline of net earnings of some of the railroads was due to an increase in railroad wages which had been put in effect about a year earlier. Perhaps also the increased sale of stamps was due to the mailing of circulars advertising summer sales.
To say that business conditions are ‘satisfactory’ of course means little or nothing. For the statement to have any particular significance it is necessary to indicate what ‘satisfactory’ means in relation to some recognized base. Unfortunately, or perhaps fortunately, Mr. Coolidge did not do this, and consequently his statement should be interpreted, although it very probably was not, with the same vagueness that characterized its expression. The following résumé will give some indication of the trend of business conditions as either the stock-market investor or the President might have followed them in the latter part of June 1927.
Industrial production in May was equal to that of March, 3 per cent higher than for April, and 5 per cent higher than for May 1926.
Factory employment in May showed no change from the preceding month, was 1 per cent lower than for March, and 3 per cent lower than for May 1926.
Factory pay rolls for May were the same as for the preceding month, 2 per cent lower than for March, and 1 per cent lower than for May 1926.
Building contracts awarded for May were 2 per cent lower than for the preceding month, 5 per cent lower than for March, and 1 per cent higher than for May 1926.
Freight-car loadings for May were 1 per cent lower than for April, 2 per cent lower than for March, and 1 per cent lower than for May 1926. Commercial failures in May were greater than for the same month since 1922, and every month since the preceding July had been greater than for the same month of the preceding year.
Other business statistics would have indicated about the same thing — that business during the past few months had been slowing up appreciably and was on the whole a little worse than it had been a year earlier. Still it was unquestionably accurate to say it was ‘satisfactory,’especially if 1921 were being used as a basis of comparison.
Whether it was such statistical evidence as the above, revealing a decline in business activity, that changed the attitude of the public, or whether the change was due to a favorable interpretation of the optimism of Mr. Coolidge, or whether still another factor brought it about, we can never know. The fact remains that stock prices at once started upward with an earnestness seldom paralleled in the history of the market. From a low of 207 on July 1, the day the President’s statement was issued, prices moved to a high of 233 on August 2, a gain of 26 points in one month!
The Effect of a Famous Choice
It was on that August 2 that Mr. Coolidge announced he did not ’choose to run’ for another term, but since the announcement came after the close of the market its first effect was not felt until the following day. The Times of August 3 anticipated the influence of the statement in the following words:
It was generally conceded that the decision will probably have an important effect on the immediate price trend, not because of the fear that there will be any less prosperity in the country with another President, but because of the fact that the market itself has been a ‘ Coolidge market,’ and that, at the moment, it is set on a hair trigger.
Some days later, August 6, the Chronicle described the actual reception of the announcement as follows: —
The present bull market is going down in history not only as one of record proportions, but as one labeled with the name of Coolidge. His announcement, therefore, came as a genuine shock and, undoubtedly, at first was considered by many as the ringing of the bell announcing the closing of an epoch in stock-market history.
The day after the announcement, stock prices broke badly, and although the Federal Reserve rediscount rate was reduced, after which prices stiffened a little for a couple of days, the trend remained downward until the thirteenth, the total loss being about ten points. Then the ‘main advance’ again began and prices were carried, almost without interruption, to a new high level of 247 on September 16. From this there was enough recession to carry prices down some seven points within the next two weeks. Again, however, they recovered, and on October 4 once more reached their previous high of 247. But once again liquidation set in, and this time a downward movement of substantial proportions occurred.
For a few days the recession was slow and orderly. Then on Monday, October 17, it became precipitous, prices dropping to a low of 236 as compared with a high on the preceding Saturday of 242. For the remainder of the week, with the exception of Tuesday, when they held firm, prices dropped two or three points a day, until on Saturday they closed at 227, some fifteen points below what they had been a week earlier. This severe decline wiped out all the gain of the preceding two months and brought prices to their lowest level since the preceding August 18. For the present purpose, however, the slump is more interesting for other reasons.
Intervention Grows Bolder
From October 4 to 17 the decline, as we have seen, took place in a very orderly manner, the total loss being only three or four points. On the latter date there was a severe break, the market even opening below the level at which it had closed on the preceding day of trading. Then on the following day the President issued a thoroughly optimistic statement, with a result that the Times described as follows: —
Brief dispatches giving the President’s
views were printed on the financial news
tickers soon after noon.
Up to that time the market had been subjected to aggressive attacks by speculative interests bent upon continuing Monday’s decline. Many of the active issues were moving heavily. Sentiment in the stockmarket community was distinctly bearish.
The response to the President’s utterances was immediate. The selling pressure was lifted and a determined buying movement got under way, causing a brisk rally in the main body of stocks that continued without interruption until the close at three o’clock.
The same report went on to point out that ‘the President’s statements had a tonic effect on the financial community, dispelling much of the pessimism that recent reports of industrial and commercial activity had created.’
The second point of interest in this statement of Mr. Coolidge is the reason why it should have had only a temporary restraining power on the liquidation. A positive answer to this can, of course, never be given, but it is at least possible that his optimism went too far and that his statements were not sufficiently in accord with the known facts of industrial activity to create a buoyant speculative attitude after anyone had thought them over for a night. Or perhaps the ‘puzzling lifting of eyebrows,’ which, according to the Times, some of the statements caused, developed overnight into feelings of genuine distrust. In any event the market again turned downward, and it is an interesting speculation whether or not it was disagreement with the President’s views, as shown by the following account from the Times, that was a prime motivating element.
The statement that the decrease in railway net receipts ‘is not great’ was contrasted with the latest monthly decrease of 11 per cent from 1926 and 5 1/4 per cent from 1925, and the statement that the railways ‘are doing about the same amount of business as they did a year ago’ brought references to the 4 1/2 per cent decrease in freightcar loadings. That ‘exports are on the increase’ was admitted, so far as concerned comparison between September and the summer months, although attention was called to the fact that September exports decreased $22,000,000 from 1926.
The Times also announced that some ‘criticism was made that description of the business outlook as “better than it ever had been” might possibly induce the uninformed to suppose that the country was surpassing the record of 1926.’ It pointed out, however, that the general view was ‘that the President had done his best to prevent undue discouragement over such reaction as is known to have occurred.’
The decline in the market, which continued in spite of the President’s statement, was finally broken at the end of the following week. The upward swing, nevertheless, proved very short, and the end of the next week saw prices at still lower levels. From this latter point, however, they again moved upward with considerable steadiness until the end of the year.
Further Statements from Washington
In the meantime the White House and the Treasury continued to issue statements at irregular intervals, but no further purpose would be served by discussing them in detail. Perhaps by this time the market had become so accustomed to being told about the country s’ prosperity that these frequent injections of optimism were essential to its ‘bullish’ movements. In any event the market came to anticipate them, as the following passage from the New York Times of November 16 indicates: —
Washington having become the source of most of the ‘bullish news’ of late, Wall Street interests with a hand in the stock market seemed to feel justified yesterday in predicting encouraging developments in that quarter. ‘Keep your eyes on Washington for news that will influence the market,’ one commentator told his following. He offered no explanation. The impression that Washington may be depended upon to furnish a fresh impetus for the stock market seemed rather general.
Two days later the same paper carried a story which stated that the President had ‘declared that America was entering upon a new era of prosperity.’ Obviously Wall Street was not to be disappointed.
The President on Brokers’ Loans
One further example should be mentioned of what the market came to think it might depend upon and what many people think has been a deliberate attempt to continue a bull market. Friends of the administration might justify in one way or another the statements that have so far been discussed. It might be maintained that the President should review business conditions, because the public will read what he says, whereas if the Department of Commerce issued such a review most people would pay little or no attention to it. Of course any such reasoning would have to be stretched considerably to explain some of the statements or to justify the selection of the times when they have been issued, or to make clear why their degree of accuracy has not been greater in some instances. But, even allowing for all reasonable elasticity in the explanations so far given, it is still impossible to justify the utterance made by the President on January 6, 1928, in regard to brokers’ loans.
The essential events leading up to this unprecedented error of the President’s may be set forth very briefly. After the market had closed on January 4, the announcement was made that brokers’ loans had increased during December by $341,071,018. This made a grand total of $4,432,907,321, which was the highest on record and over a billion dollars above what it had been a year earlier. The following day there was, according to the Chronicle, ‘a violent break in prices’ on the stock exchange which was ‘attributed to the large volume of loans,’ and there was a great deal of unfavorable comment about such a volume. The next day, however, the Associated Press dispatches from Washington stated that ‘President Coolidge is of the opinion that the record-breaking increase in brokers’ loans is not large enough to cause unfavorable comment.’
Never before had a statement of such importance to speculation been issued by an occupant of the White House. Economists and students of financial affairs throughout the country were dumbfounded. Even Wall Street was amazed, for none of the ‘oldtimers,’ so the Times reported, ‘could remember an instance in which the country’s Chief Executive had made a public declaration on a controversy of just that character.’ According to them, ‘the Chief Executive has traditionally avoided expressing opinions on subjects purely technical or which are surrounded with problems of speculative activities.’
The effect of the President’s statement on the market trend is scarcely worthy of comment. Of course it caused many people to feel more confident of the situation, with the result that there ‘were sharp advances in many parts of the market.’ On the whole, however, the market refused to budge. Apparently the President had again gone too far, and the market decided it would rather reach its own conclusions as to whether or not four and one-half billions of brokers’ loans were too much.
It is needless to continue the list of public statements made by President Coolidge and Secretary Mellon. Enough has been said to indicate that they have had a profound effect on the recent bull market, though of course this does not mean that they have been wholly responsible for it. On the contrary, had there not been a great abundance of capital available for investment and speculation, and a condition of business which superficially could be interpreted as prosperity and actually was not bad, it would have been impossible for these statements to have had such effect. Nevertheless, it is unquestionably true that prices are higher to-day than they would have been otherwise.
It is still another question as to whether or not the influence of these two men has been deliberate. They alone can give a definite answer. It w ill be clear from what has gone before that time after time their statements followed a period of weakness or actual recession of the market. It is true, on the other hand, that they have not given out statements every time the market has receded. Yet, on the whole, the correlation between their publicly expressed optimism and stock-market declines has been high. If the interference has not been deliberate, the times chosen for their public utterances have been astonishingly coincidental.
There is still the question of what harm has been done, even granting that the interference has been deliberate. To this the answer is obvious. If the present stock prices are materially above what the conditions of the country justify, it means that in due time there must be substantial declines in the prices of the securities which the public has purchased, just as there had to be drastic downward revisions in the prices of Florida real estate a year or so ago. If Messrs. Coolidge and Mellon have been guilty of bringing about the same type of inflation in the stock market that occurred in Florida, although necessarily to a lesser extent because there have always been too many ‘bearish’ interests to let prices reach any such relative heights as they did there, then the public may well remember the Mellon-Coolidge market.
‘Coolidge prosperity’ during the past eighteen months has been stock-market prosperity to a much larger extent than many of us realize. When people make profits they talk about them, and there are no greater talkers than successful small stock-market speculators, who give a false idea of the whole situation. It is this verbosity which has befuddled the thinking of a large portion of the American public. So far, of course, the great stock-market advance has been pleasant. Practically everyone has made money. So it was in the Florida inflation before the break. We are still told that stock prices will always remain high; that present prices merely anticipate future earnings. The same arguments and reasoning became hackneyed in Florida.