Evening Star Newspaper, May 19, 1923, Page 15

‘REAT Short Selling Very Dangerous, Babson Warns Millions Threatened in Present Market, Statistician Declares — Explains Why Losses Are Unlimited—Stocks May Rise. BY ROGER W. BABSON. Special Dispatch to The Star. WELLESLEY HILLS, Mass. May 19.—The recent bear raids in the stock market have led a large num- ber of small speculatnrs to believe that good stock market days are over. Popular faney in this quarter is turning to short selling. Since the technical position of the market is being undermined by this move, Roger W. Babson's warning against this practice issued today is particu- lavly timely. “I do not pretend to be able to forecast the short stock Mr. Babson, “but hort interest de- e has reached a point where it is very erous. This is largely due to the fact that speculators all over the have been carried away by between Washington barn, and 10 acres of Excellent summer to you on inspection. swings of the | Located in that delightiul section north of Chevy Chase, about midway r or vear-round home. Washington and Maryland residential section. JOSEPH C. ZIRKLE 2630 Colorado Bldg. (14th and G Sts. N.W.) Phone Columbia 4516 for Appointment to Inspect Today ~*THE -EVENING STAR, WASHINGTON, wrong direction and ‘you are wiped out. "ESTATEV ., SATURDAY, MAY 19, 1923. PLAN BEACH COLONY 36 MILES FROM CITY Realbor Buys Tract on South River todBe Sold to Summer Home- and went to 724. The New York Stock Exchange then stepped in, but the short interest had to settle at the rate of $650 a share. The same stock may be had today around 20. “More recently the corner in Piggly ‘Wiggly has illustrated once more the extremely weak position of the specu- lator who is short. This stock had been trading between 40 and 64. The majority of the short interest prob- ably sold it around 50. When t: good. Conditions are against the short eellers and thelr chances to win ‘dwindle as the short interest grows. “In fact, general business, as re- flected in the Babsonchart, is still above normal by 4 per cent,” con- cluded Mr.Babson. “and will dovbtless continue into 1924. There is nothing in one fundamental situation to indi- cate “that the stock market has reached its top. Short selling at best “It must also be borne in mind, however, that you borrowed the stock and that you ‘did not borrow it for any given time. The owner can call on you at any time for it and you must return it. If your broker can Lorrow some more for you somewhere else, all right; but if he can't you must buy the stock in the open mar- ket and return it no matter how high Speculators its price nor how much cash you have | stock was called for there was none |1s dangerous—short selling agalnst seekers. to protect your margins. Moreover, | to be had. Prices soared and it was | fundamental conditions is apt to be ¢ if these 100 shares pay a dividend | taken off the exchange. Settlement | suicidal > S which you are short of, then you|was finally made at the rate of $100 —) § must also pay that. a share. (Mr. Babson, the noted statistician, who 15| A tract of land comprising ap- No Limit to Loses. M “Multiply your own short position | by several thousand and the greatest danger of the practice is apparent. ‘The short interest is very soon larger than the number of shares of the given stock that are for sale. Prices advance two or three points and a few of the shorts cannot put up the increased margins. Brokers go Into n Danger Today. “These spectacular cases {llustrate our point, but do not represent the great logses resulting from short selling. Millions of dollars are ca- dangered today on the short side of the present market, a growing ac- cumulation that gets shakier as it piles higher. A rise of three to five points would “start the drive that now regular contributor to The Star will coutlnue hiw special articles on business con- ditions in Dext Saturday’s issue.) —_— 'The Proper Word. From the Winnipeg Tribune. Teacher—James, have you whis- pered today without permission? James—Only wunst. proximately fitty acres, on the south side off South river, just off the Wash- ington-Annapolls state road, with about a half mile of water frontage, is to be developed under the name of Edgewater Beach. This property has | been acquired by William F. Matte- {| | son, it was announced yesterday, and || | i the prevalling bearish propaganda (| and have gone ‘short’ just as they | buy stocks when surface conditions look optimistic. It looks as easy to sell 2s to buy and it is my guess that the majority of these speculators do | the market to buy the stock, to return | WOUld proctically wipe this interest| eacher—Laroy, should James have | Wa8 foymerly a part of the Lee estate. {not understand the position that|it. The demand raises prices a bit, | Ut Moreover. 'fundamental condi- |gaid “wunst?" The 'property i3 now being survey- | short selling places them in. then there aro more shorts that are | 1ions do not Indicate that business| ~ Leroy—No'm; he should have said | ed, and after streets aro laid out, will Hew Plan Opcsaten forced to cover. The market strength- | N8 _8one to pot. Business is still twict. be divided into lots of a slze appro- ens and brokers rush in to ket the securities they must return—behold, | there are no more for sale. Prices | skyrocket and the speculators who : were short are wiped out. It is in-; teresting to note here that there is no 1imit to your losses on a short sale: If you buy a stock at 50 you cannot possibly lose more than 50 points, but if You sell it short at 50 it may g0 to 100 or 500 or even to 1,000 and You must cover and stand the loss. Stutz and Piggly “Corners.” “The short interests, for insta were caught in Stutz in April, 192 The stock had been selling betwee: 100 and 145. The moment the short sales exceeded the floating or avail- able supply prices started to climb “Let us see what happens. If you gave your broker an order to sell 100 shares of some stock short, he actu- ally borrows the stock from one of his other customers who owns it, or from some other broker. He actually sells this borrowed stock for you. You put up the cash to guarantee its ! present value or a margin deposit to | protect your brokgr. If the stock happens to go up, You are called on | for more margin. if you can’t cover | it the broker buys the stock in at { the market and returns it to the original owner. You stand the loss. So far short selling presents only | the dangers attending ordinary mar- ginal ing—a few points in the et England Colonial Home On a corner lot containing about 15,000 square feet of ground, rumming the entire block on 38th St., from Jocelyn St. to Kanawha St. The grounds are ‘set artistically with shrubbery. It should appeal to the most exacting homeseeker. 1 block from Connecti- cut Avenue; 25 minutes from the Treasury. 3757 Jocelpn Street, Chevp Chase, D. C. (Just West of Connecticut Avenue) First floor—Wide center-entrance hall, enormous living room and sun parlor to right, spacious dining room and breakfast room to left; large kitchen and porch to rear. Second floor—4 big bedrooms, 2 tiled baths (1 shower), large sleeping porch. Third floor—2 nice bedrooms and bath. This home also has a fine big 2-car garage that matches the house, Open All Day Sunday . C & 4 D Miller Realtors i Exclusive Agents and Rockville. Ten rooms, two baths, 2-car garage, ground. It is attractive and will appeal A beautiful 30-minute drive through most exclus For Further Particulars Call . Main 4985 1119 17th St. M. 1790 Above Is pictured Bradley Davidson's Drive, “the most ex- clusve street In Chevy Chase Terrace and running through the heart of the prop- erty to the magnifi- clent home of H. Bradley Davidson. Showing to the right the entrance, looking out from the property—this will glvo you an lea of the beauty of this residential park—note the 75.ft. wide similar ones, no other residential pari can boast of, and overiook- Ing the goif links of the Chevy Chase terrace. Teams and work- men at work in- stailing as fast as pos. sible all of the mod- ern improvements possible — this park , will_be the last word in _modern equipment —IT IS _AND WILL ALWAYS BE THE MOST EXCLUSIVE WASHINGTON. SR S e S S T e e e T S DIVISION. e i R, “it” 351-foot elevation—at any point from this property you are afforded a com- plete view over all other sections—this the most exclusive center). feature will appeal to any one who has any idea of property-resource value! THINK OF IT! details of restriction to you in person tomorrow. Most reasonable priced property in Washington. Lots, $600.00 to $1,500.00. INCORPORATED 'NATIONAL BANK-PHONE MAIN 272 SN SSIIIR SIS S SRS priate for summer cottages and bun- galows. Plans include wharf for fishing, crabbing and bath- ing. and a community bathing beach will be maintained. prepared for a cottage for Dr. Ed- ward Comstock Wilson, local physi- clan and a member of the staff of Georgetown Medical College. ber of other Washingtonians are re- ported to have bought lots. livery of ice, among the conveniences planned. The site is thirty-six miles from NOWHERE IN OR AROUND WASHINGTON Are There Residential Sites With the Resources of Washington’s Most Exclusive Residential Park "% EVERY WASHINGTONIAN WHO IS INTERESTED IN BEAUTIFUL SITES—EVERY MAN OR WOMAN WHO IS SEEKING A HOME SITE (where there will be the highest degree of quality atmosphere)—and EVERY WASHINGTONIAN WHO IS ALIVE TO THE ADVANTAGES OF A MOST UNUSUAL “INVESTMENT”—should be on hand to- morrow, when we have the formal SPRING SALES OPENING of this remarkable SUB- You can’t really appreciate how wonderful is until you see “it” with your “own eyes” - and compare it with others. You will be surprised to know that you can pur- chase land in Chevy Chase reasonable—QUALITY CONSIDERED— (for this is not the cheapest, but The neighboring sub- divisions, which cannot boast of near the resources, are selling at almost twice the amount at which you can buy NOW in Chevy Chase Terrace. Homes Started—Over $200,000.00 Sold! This project was started last fall, a very unseason- able time for the sale of suburban property—AND THE PUBLIC RESPONDED—in the amount of $200,000.00 worth of purchases —THE PROPERTY SELLS ITSELF—we would like to explain the WASHINGTON OFFICE, 702-704 DISTRICT Salesman Always on Hand at Tract Office, 6400 Wisconsin Avenue. Phone Cleveland 2401 REXL ESTATE. Dathing Beach Planned. the building of a Plans are b¥ing A num- Daily de- milk and groceries is ghreds. 1308 Floral Street N.W. Drive Out Sixteenth Street and Alaska Avenue to Floral Street Open for Inspection All Day Sunday and attractive features. and kitchen. extending across the entire lights, gas range, etc. The Price and Terms Will Surprise You BOSS & PHELPS REALTORS 1417 K Street N.W. The salesmen will greet vou and courteously explain, more in de- tail to you, on the premises. If you desire a private appointment later during the week, we will be pleased to arrange it for you. YOU WILL BE UNDER NO OBLIG A- TION TO PURCHASE. —or RS ‘Washington, and can be reached 3 an hour and a quarter by automob, from the District line, and fn an h:? and a half on the Washington, Baili. more and Annapolis line, via Parole d. From Life. z Mother—Jimmie! you've ot a blach eye and your clothing is A most_attractive Dutch Colonial home of brick and frame construction, having a number of unusual ¥ 2 First floor has large recep- ) tion. hall, large living room and dining room, large open porch off dining room, inclosed breakfast porch, pantry b4 Second floor has four large Be bath with seperate shower, and large sleeping porch rear of the house; porch faces south and has extensive view of surrounding ter- ritory. There is a large floored attic and a splendid cellar having laundry trays and servants’ toilet. Also a fine open fireplace, oak floors, hot-water heat, electric How to Reach Property Drive out Con- necticut to Bradley lane, out Bradley Lane to Wisconsin, turn to left, 150 feet to property—or drive out Massachusetts Avenue to Wisconsin and out Wisconsin to property * take Connecticut Avenue or Rockville cars and get off at Bradley Lane and walk over. SRS e Her Error. torn 14 How often have I told yox not to play with those bad bovat Jimmie—Do T look like 1'd bees playing, mother? EXCEPTIONAL. VALUES! Beautiful Sixteenth Street Heights ledrooms, Main 4340 Avenue BN