Forecasting Major Swings in Business

In the July issue of "Looking Ahead", Alvan T. Simonds, President of Simonds Saw & Steel Co., Fitchburg, Mass., says in part:

"Charting the relation between major (i.e., short cvcle swings) of business activity and swings of industrial siock prices shows at a glance that they move together very closely in t!me. Twenty-three swings (not including the swings in 1892) are com- BustNEss Acrtvlw- emphasize the fact that regular warning was given by the movements of money rates. Perhaps in this way we may help prevent the warning being disregarded in the future or, better still, we may arouse business men to the fact that money rates should not be allowed to move up step by step in mgjor swings tg a point so high that a serious reaction becomes inevitable. We hope that some day financiers and business men will be aroused to this end and will cui d;; or abort the booms in order to avoid the depressions. We fear, however, that such hope is not likely to be realized in the near future, if at all; for when boom develops. iudsment flees. It begins to look as if we should have to insiitute clinical examinations of financial and business brains to discover the "boom bug" which like the rabies in the mad dog causes the business man infected with it to run wildly frothing at the mouth to certain destruction. p.erhaps when we have tagged the bug, we can inoculate and thus protect troth the biter and the bitten and mitigate or prevent the boom with its serious consequence"-i.pre_ sion, red ink, business failures and unemplbyment." ments in money rates forecast serious depressions, by moving to progr.essively higher rates for the two or thret cycli- cal swings in succession preceding the turn down. Since 1884 at least we have been thus warned of the coming of eve_ry ^serious depression. The overlooking of the warning tn L9D is very strange and difficult to exphin. We are re-ferring to this oversight, not to criticize the failure but to pared. Stock prices fluctuate in these major swings with business. If business is now in a maior upswing, then stoik prices are now in a bull market or will be very soon, if the record of the past is a reliable guide for the immediate future. A forecast of a major swing up or down in business is a forecast of a similar swing in stock prices. This is very gener- ally believed in theory but not so generally acted upon. These statements do not mean that business activity and stock prices have in the past and will in the future turn up or down at just the same time. A study of the chart will show that in sixteen of the twenty-three turning points (not including I89? or 1931) stbck prices turned before business activity and in seven turned at the same time or after business activity. An investor who purchased securities at or about the time busi ness turned up in a short cycle swing and sold them at or about the time business turned down in a short cycle swing would have made consistent gains. He could have added to his gains by selling short for the downswings. For the investor, the speculator and the business executive, the ability to forecast major business swings means the power to make money which in the final analysis is their aim. "Looking Ahead" has forecast these major business swings correctly months in advance. It is trying to teach its readers how to do it. When they can, then they can also forecast major swings in security prices, if we can rely on past experience.tt

Data for the above chart is from the Annifisl.

"In the May 15 issue of 'Looking Ahead' we explained how we had been able to predict the present depression months before the turn down. We pointed out how move-

L. G. STERETT IN NORTHERN CALIFORNIA

Lester G. Sterett, secretary of the Millwork Institute of California, is spending six weeks in Northern California territory on the business of the Institute, making his headquarters in San Francisco. He left Los Angeles Iulv 1 and traveled north by way of the San Joaq.uin Valley.

Homer Derr On Vacation

Homer Derr, J. M. Derr Lumber Co., Elk Grove, Calif., is spending his vacation in the High Sierras where he is building a summer cabin.

.Begi.nning with the issue of October 15, 1931, .,Looking Ahead" will be published monthly instead of 'bi-monthli and the annual subscription charge will be increased frorir $2_ to $5. Tfre g2 s'r.bscription witt 6e effective up to Oc_ tober 15. Mail checks or bills to ,,Looking Aheid,,' Box 486, Fitchburg, Mass. "Looking Ahead,, innounces that they will not acknowledge receipt of checks for the return of the cancelled check proves iCwas received and cashed; also_ they wish to be informed if for any reason copies sub_ scribed for are not regularly_ received.'Be sure to'give the name and the address legibly written or typed t5 which "Looking Ahead" is to be sent.

Returns From Business Trip

Edric Brown, of The Pacific Lumber Co., has returned from a trip to the Mountain States in the interests ;t ih; sale of the company's ReCivood Bark insulation.

Joe Holmes On Northwest Trip

Joe Holmes, Woodland _Lumber Co., Woodland, Calif., and family are motoring through the l'lorthwest and wiii go as far as Vancouv"Il B:. C. -He plans to ,risit many oi the mills while in the Northwest.

Coast Lumber Co. Completes New Demand for Home Construction Bulletin Offtce Buildins Necessitates New lssue

The Coast Lumber Company is now located in their attractive new office building at 3O35 East Anaheim street, East Long Beach, which was completed around the middle of July. The Coast Lumber Co. were formerly located at Wilmington where they operated a yard for the past eight years, and moved to their present site about a month ago. Robert P. Holmes is the owner of the company and in addition to lumber they carry a complete line of building materials. Robert P. Holmes, Jr., has charge of the outside sales for the firm.

Dry Kilns Exported to Tasmania

Two dry kilns of the Reversible Cross Circulation Internal Fan design have recently been shipped to Tasmania by the Moore Dry Kiln Company of North Portland, Oregon. This kiln equipment was exported on the "S.S. Golden Harvest" which sailed from Seattle on July 27th.

These two kilns are being installed by the Ideal Casewoods, Ltd., who are building a new plant for the manufacture of boxes at Launceston, Tasmania. The kilns are of the single track type employing fans mounted on a longitudinal shaft underneath the loads of edge-to-edge flat stacked lumber and will be used for seasoning of Australian hardwoods.

The Moore Dry Kiln Company also recently shipped dry kiln materials from their Jacksonville, Florida, plant for installation of three kilns in Russia. These kilns were sold through the Amtorg Trading Corporation of New York City.

A revised edition of "Light Frame House Construction," a bulletin issued jointly by the Federal Board for Vocational Education, and the National Committee on Wood Utilization of the Department of Commerce, has j'"i'bee;r released from the Government Printing Offices.

While this bulletin, as announcements carrying the first edition distributed last Fall have stated, is intended primarily for carpenters interested in the technical phases of dwelling construction, it answers many questions with rvhich the prospective home owner is confronted and contains usable information constantly needed by the contractor and builder. Many thousands of copies of the first edition of this bulletin have been sold to the home owning and house building groups.

The second edition of this publication contains additional information concerning the allowable leads for wooden girders and beams in dwelling houses ; the treatment of porch joists, posts, and columns to prevent decay; the construction of roof collar beams, as well .as information on all other structural features of a frame house.

Framing methods ; foundation sills and girders; columns, joists, and bridging; walls, partitions, and roofs; floors, sheathing, siding, and shingles; interior trim ; and miscellaneous structural items such as chimneys, porches, and furring are all discussecl in detail. In addition the physical characteristics of wood and the grading of lumber receive brie{ treatment in this bulletin.