EQUITIES AS INVESTMENTS For the first indications of the probable
trend of trade investors will continue to watch the United States and the commodity markets. So far, the Washington Administration has been content to throw certain crumbs of consolation to Big Business from its high table, but it has placed the burden of promoting a revival in constructional activity squarely on the shoulders of private enterprise and labour. The President's housing plans will take time, probably several months, to get under way, but when they do they should provide a strong prop to a number of key commodities. Meanwhile, there are signs that the decline in American steel production and in most of the leading commodities is flattening out. I am still hopeful, therefore, that recovery in the United States will develop quickly enough to prevent a really serious contraction in international trade and, more especially, in Britain's export markets.
With this hope as the main factor in the investment equation, the appropriate policy is to hold good prior charges for income purposes, to buy equities only if they satisfy the rigorous tests described in recent notes and, wherever practicable, to maintain a balance of cash available for use as opportunities occur during the next two or three months. Among the equities which I would include as suitable from the long-term standpoint are Shell Transport, Harrods, J. & P. Coats, Stanton Iron, and County of London Electric, although this is not an exhaustive list. The ordinary shares of all these companies are now offering yields of 4 per cent. or more in relation to the average dividends of the past five years and should prove satisfactory investments on any but the most pessimistic view of the trade outlook. Investors need not be in any hurry to buy, however, while tension persists in the Far East, as prices are not likely to run away.
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