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Caleb Richardson
Caleb Richardson

The Big Bull



While it's impossible to pinpoint when exactly it will begin, the next bull phase for growth stocks is somewhere on the horizon, and investors who build positions in top stocks that are currently down big from their highs could see stellar returns. With that in mind, read on for a look at two category-leading companies that look poised to deliver huge wins over the long term.




The Big Bull


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Airbnb stands as a clear category leader in its corner of the travel and hospitality industry, and the business is in a great position to continue capitalizing on a massive long-term market opportunity. While the company's valuation has been caught up in the broader pullback for growth stocks, the rental specialist's many strengths have shares primed to soar when the market's next bull phase hits.


The brainchild of a Wauchope dairy farmer, John Eggert, to draw more tourists to the area and increase revenues from outsiders, the Big Bull served its purpose. Even after the gift shop inside of the bull closed to the public, tourists were still stopping by the Eggert dairy farm in Wauchope to take pictures of the bull, according to a report from ABC Rural.


ONE DAY IN FEBRUARY, 1928, an investor asked an astute banker about thewisdom of buying common stocks. The banker shook his head. "Stockslook dangerously high to me," he said. "This bull market has been going onfor a long time, and although prices have slipped a bit recently, they mighteasily slip a good deal more. Business is none too good. Of course if youbuy the right stock you'll probably be all right in the long run and you mayeven make a profit. But if I were you I'd wait awhile and see what happens."


The speculative fever had been intensified by the action of the FederalReserve System in lowering the rediscount rate from 4 per cent to 3'/2 percent in August, 1927, and purchasing Government securities in the openmarket. This action had been taken from the most laudable motives: severalof the European nations were having difficulty in stabilizing theircurrencies, European exchanges were weak, and it seemed to theReserve authorities that the easing of American money rates mightprevent the further accumulation of gold in the United States and thusaid in the recovery of Europe and benefit foreign trade. Furthermore,American business was beginning to lose headway; the lowering ofmoney rates might stimulate it. But the lowering of money rates alsostimulated the stock market. The bull party in Wall Street had been stillfurther encouraged by the remarkable solicitude of President Coolidgeand Secretary Mellon, who whenever confidence showed signs of waningcame out with opportunely reassuring statements which at once sentprices upward again. In January 1928, the President had actually takenthe altogether unprecedented step of publicly stating that he did notconsider brokers' loans too high, thus apparently giving White Housesponsorship to the very inflation which was worrying the sober mindsof the financial community.


Anybody who had chosen this moment to predict that the bull marketwas on the verge of a wild advance which would make all that had gonebefore seem trifling would have been quite mad-or else inspired witha genius for mass psychology. The banker who advised caution wasquite right about financial conditions, and so were the forecasters. Butthey had not taken account of the boundless commercial romanticismof the American people, inflamed by year after plentiful year of CoolidgeProsperity. For on March 3, 1928-the very day when the Harvardprophets were talking about intermediate declines and the Times wastalking about hesitation--the stock market entered upon its sensational phase.


What was actually happening was that a group of powerful speculators withfortunes made in the automobile business and in the grain markets and in theearlier days of the bull market in stocks-men like W. C. Durant and ArthurCutten and the Fisher Brothers and John J. Raskobwere buying in unparalleledvolume. They thought that business was due to come out of its doldrums. Theyknew that with Ford production delayed, the General Motors Corporation waslikely to have a big year. They knew that the Radio Corporation had beenconsolidating its positionand was now ready to make more money than it had ever made before,and that as scientific discovery followed discovery, the future possibilities of the biggest radio company were exciting. Automobiles andradios-these were the two most characteristic products of the decadeof confident mass production, the brightest flowers of Coolidge Prosper-ity: they held a ready-made appeal to the speculative imagination. Thebig bull operators knew, too, that thousands of speculators had beenselling stocks short in the expectation of a collapse in the market, wouldcontinue to sell short, and could be forced to repurchase if prices weredriven relentlessly up. And finally, they knew their American public. Itcould not resist the appeal of a surging market. It had an altogethernormal desire to get rich quick, and it was ready to believe anythingabout the golden future of American business. If stocks started upwardthe public would buy, no matter what the forecasters said, no matterhow obscure was the business prospect.They were right. The public bought.


The next day, June 12th, this Western tornado struck Wall Street infull force. As selling orders poured in, the prophecy that the Exchangewould some day see a five-million-share day was quickly fulfilled. Theticker slipped almost two hours behind in recording prices on the floor.Radio, which had marched well beyond the 200 mark in May, lost 23'/2points. The day's losses for the general run of securities were not, to besure, very large by subsequent standards; the New York Times averages forfifty leading stocks dropped only a little over three points. But after thelosses of the preceding days, it seemed to many observers as if the end hadcome at last, and one of the most conservative New York papers beganits front-page account of the break with the unqualified sentence, "WallStreet's bull market collapsed yesterday with a detonation heard roundthe world."


But had the bull market collapsed? On June 13th it appeared to haveregained its balance. On June 14th, the day of Hoover's nomination, itextended its recovery. The promised reckoning had been only partial.Prices still stood well above their February levels. A few thousand tradershad been shaken out, a few big fortunes had been lost, a great many prettypaper profits had vanished; but the Big Bull Market was still young.


It was a curious campaign. One great issue divided the candidates.As already recorded in Chapter Ten, A1 Smith made no secret of hisdistaste for prohibition; Hoover, on the other hand, called it "a greatsocial and economic experiment, noble in motive and far-reaching inpurpose," which "must be worked out constructively." Although Republican spellbinders in the damply urban East seemed to be under theimpression that what Hoover really meant was "worked out of constructively," and Democratic spellbinders in the South and rural Westexplained that Smith's wetness was just an odd personal notion whichhe would be powerless to impose upon his party, the division betweenthe two candidates remained: prohibition had forced its way at last intoa presidential campaign. There was also the ostensible issue of farm-relief, but on this point there was little real disagreement; instead therewas a competition to see which candidate could most eloquently offerlargesse to the unhappy Northwest. There was Smith's cherished water-power issue, but this aroused no flaming enthusiasm in the electorate,possibly because too many influential citizens had rosy hopes for thefuture of Electric Bond & Share or Cities Service. There were also, ofcourse, many less freely advertised issues: millions of men and womenturned to Hoover because they thought Smith would make the WhiteHouse a branch office of the Vatican, or turned to Smith because theywished to strike at religious intolerance, or opposed Hoover becausethey thought he would prove to be a stubborn doctrinaire, or wereactivated chiefly by dislike of Smith's hats or Mrs. Smith's jewelry. Butno aspect of the campaign was more interesting than the extent towhich it reflected the obsession of the American people with bull-market prosperity.


This they now did with painful earnestness. For the chairmanship of theDemocratic National Committee, Al Smith chose no wild-eyed Congressmanfrom the great open spaces; he chose John J. Raskob, vice-president andchairman of the finance committee of the General Motors Corporation, vice-president of the General Motors Acceptance Corporation, vice-president andmember of the finance committee of the E. I. duPont de Nemours &Company, director of the Bankers Trust Company, the American SuretyCompany, and the County Trust Company of New York-and reputed inspirerof the bull forces behind General Motors. Mr. Raskob was new to politics; inWho's Who he not only gave his occupation as "capitalist," but was listed as aRepublican; but what matter? All the more credit to Al Smith, thought manyDemocrats, for having brought him at the eleventh hour to labor in thevineyard. With John J. Raskob on the Democratic side, who could claim that aDemocratic victory would prevent common stocks from selling at twentytimes earnings?


Mr. Raskob moved the Democratic headquarters to the General MotorsBuilding in New York-than which there was no more bullish address. Heproudly announced the fact that Mr. Harkness, "a Standard Oil financier," andMr. Spreckels, "a banker and sugar refiner," and Mr. James, "a New Yorkfinancier whose interests embrace railroads, securities companies, realestate, and merchandising," did not consider that their interests were "in theslightest degree imperiled by the prospect of Smith's election." (Shades of athousand Democratic orators who had once extolled the New Freedom andspoken harsh words about Standard Oil magnates and New York financiers!)And Mr. Raskob and Governor Smith both applied a careful soft pedal to theancient Democratic low tariff doctrine-being quite unaware that within twoyears many of their opponents would be wishing that the Republican high-tariff plank had fallen entirely out of the platform and been carted away. 041b061a72


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