END-ACCOUNT REACTION ON PROFIT.
Tin, Copper and Diamond Shares Active
By Our City Editor Following the trend of the stock markets a fortnight ago, the second half of the current account, which concludes to-day, has witnessed very much quieter conditions than those reigning in the preceding week. While Monday opened favourably, profit-taking soon appeared, and during the remainder of the week markets have
been irregular. The outstanding features were a moderate continuance of activity in tin, copper and diamond shares, although even these sections Were not immune from the easier tendency.
As I have previously had occasion to remark, the recent strength of markets, especially industrial and commodity shares, is due to speculative rather than to investment buying. Speculation is probably accountable for the fact that markets have recently followed an almost identical course each account — namely, feverish activity in the first week, followed by a pause with profit-taking in the second week. This tendency is produced by demand at the beginning of the account by speculators who wish to " run " shares for the fortnight in the hope of securing a profit. The second week of the account restricts the possibilities for this speculation, and the demand necessarily flags, while, at the same time, there is profittaking and the closing of commitments by those who bought in the previous week. The new account sees a resumption of demand, and the same thing happens again.
Although a fair amount of business has been done during, the 'past week, markets have been much quieter by comparison with the first half of the account. Prices generally were easier for choice, particu
larly in the Home sections, Gilt-edged securities showed little change. Home Rails were less active, but the tone was steady. Great Western Ordinary were a firm spot. Argentine Rails again displayed activity in the case of the Preference stocks, partly on account of an acute shortage of stock. Several leading Industrials have been subjected to profit-taking, notably Triplex. Pinchin Johnsons and British Oxygens improved. D. Smith Were weak among small shares. Stan dards, Leylands and Rolls-Royce gave way among Motors, but Thornycrofts
improved on the profit statement. The Iron and Steel group was generally easier, although there was some good buying of Cammells. Thomas W, Ward have been a strong spot. Aircraft issues inclined dull, particularly Parnalls. The Shipping group kept steady. Breweries attracted attention, and prices showed general improvement.
In other directions, the Eagle issues recovered slightly among Oils on the strike settlement news, but lost ground again later; Transatlantics failed to respond fully to the week-end advance on Wall Street, and have since been steady with no outstanding features; the Rubber section showed no sign of resuming the previous week's activity, although the commodity was strong.
The mining markets claimed rather more attention during the past week, tin, copper and diamond shares being particularly active, although in these sections too there was a good deal of profit-taking. Among gold shares, Kaffirs were dull on Paris selling at the beginning of the week, notably Goldfields and West Wits. AngloAmericans were a firm spot. West Africans and Westralians were little changed. Rhodesian copper issues again experienced a big turnover, but prices showed little change on balance. On Monday Tin shares resumed the previous week's boomlet, but the activity subsided as the week progressed. Diamond shares continued in demand, especially De Beers Deferred.
From the aspect of Stock Exchange investment, it is a sound practice to keep an investment list, not so much as a memorandum of the investments held, but as a statement of the distribution of the capital involved, enabling the investor to see at a glance in what proportion his money is governed by security, rate of income, and opportunity for profit, which, as I explained last week, are the three purposes of investment in stocks and shares.
In its simplest form an investment list should set forth the names and descriptions—viz., Ordinary, Deferred, etc.,—of the shares held, the number, the purchase price, and the cash-up values of the individual holdings taken at the then market values. Finally, the combined value of the investments should be recorded, and the list dated.
By the maintenance of such a list, brought up-to-date from time to time, it is easier to gauge the balance between security, yield, and profit, which are neces sarily liable to alteration in accordar with the fluctuations in the prices of t shares. For one instance, if the value a share, which yielded 5 per cent. at I time of purchase, appreciates to a le' at which the yield is only 3 per cent., follows that it has not only sacrificed sot of its security, but that the increased capi could probably be re-invested to rots more, even if the new rate of yield es only 3+ per cent. It is necessery to wat points like this, and to make occasional s justments. Next week I hope to be able indicate the shape of an investment 1, showing. how a small capital might spread to the best advantage, and with t maximum safety.
Bell Punch Progress
Control Systems, whose Ordinary shares (C) were introduced to the Sto Exchange about ten days ago at emu I ls. 6d., is representative of the well-knos Bell Punch business, which has been existence since 1878. Bell Punch and two subsidiaries, Isaac Warwick and C and Automa ticket, Ltd., are a self-contain group engaged in the manufacture and su ply of ticket issuing machines, tic' punches, tickets, electric totalisato mechanical adding machines, taxic meters, and similar mechanical devic having its own paper mill for the pro& lion of pulp board and paper, and a spec selling organisation.
Control Systems was formed in 1927 acquire 99.9 per cent. of the share capi of Bell Punch, and the entire share capie ofethe two subsidiaries. The issued capi is £406,600, comprising £100,000 in £1 per cent. Cumulative Preference sha.ri and e306.600 in Ordinary. Owing to cou ter-attractions, the latter have so far a vanced only 9d. from the opening price around Ils. 6d., and appear to have sco for moderate appreciation.
The Bell Punch group has progress favourably during the past three financ years ended March 31 last, the combin profits of £41,595 for 1935-36, cornpari
with £25,992 for 1933-34. It is estimat that proEts for the current year shoe amount to not less than £50,000, whit after allowing for the Preference distrib tion (£5,500), would leave a balance £44,500, equivalent to 14+ per cent. on t Ordinary capital.
During the past few weeks, I have d cussed several moderately-priced shad% which have subsequently been in good d mend. Several of these are not quoe prominently in the Press, and thereto the following comparison of prices may interesting to readers who wish to keep touch with their recent course:—
Share Price when Prio Discussed Nov Armstrong, Stevens 12s. 3d. 13s.
Low Temperature 3s. 81d. 4s.
Rhodesia Copper 35, 74d. 5s.
Trojan (Holdings) 9s. 6d. 10s. 9
While these shares appear to have seise for further appreciation, it should I realised that they are suitable only for the who are in a position to utilise capital which they are not actually dependent.