Listed stocks are decidedly at a disadvantage with nervous security holders, for any extreme fluctuations in their prices might prompt them on the spur of the moment and without thinking, to sell when they should not, or buy when they ought to let them alone.

There are also many securities listed on the stock exchange, which, so far as commanding a ready market is concerned, might as well never have been there, so inactive are they. Nor is this to their discredit. It may be, as it often proves, that the shares are so closely held by investors that very little stock comes into the market. The position of the shares of the Eastman Kodak Company of Rochester, N. Y., is an example of this. The stock has paid such good dividends for years that those who own it are reluctant to part with it. The shares of the express companies, although also listed, have been inactive much of the time for the very same reason. There are some listed stocks in which sometimes days will pass without as much as a hundred shares changing hands.

I mention this only to prove that all the advantages are not always with listed stocks. There are a great many equally good securities not on the exchange which it would be the height of folly for investors to ignore because of their absence from the listing department.

When a person buys a security he is prompted to do so because of its value and prospects. That is the cardinal principle in making profitable investments and no one will dispute the argument. While I am not decrying the advantages of securities that are listed, I at least cannot see that it is a mistake when a corporation fails to place its securities on the exchange.

I have been told by directors of corporations that they have refrained from listing their stocks because of a fear that if they did so the stocks would be in danger of being manipulated, whereas it is their desire to keep the stocks free from all stock-juggling and have them sell strictly upon their merits. In taking this view they are quite right, for nothing will prejudice a security in the opinion of the public more quickly than a suspicion that the fluctuations in its market prices are artificial. There is no way to prevent this being done on the exchange should some of the brokers conclude they could make a good profit by buying quietly a block of stock and then, by a display of strength in the quotations, distributing their stock on a scale of rising prices. After they are through with their maneuvering, the stock may decline rapidly in price to the great impairment of its market position, although nothing has happened to depreciate its intrinsic merits. This is what makes some corporations hesitate to list their securities.

When the Governors of the New York Stock Exchange devise means to make manipulations extremely difficult, I am inclined to think the hesitancy shown by directors of the smaller corporations to list their stocks will be very largely removed. Toward this end it has been suggested that brokers be prevented from buying stocks for their own account. Whether or not this is practicable is a debatable question.

As long as a stock has intrinsic merit behind it, returns good dividends, and has borne a good reputation, it is immaterial from the investor's viewpoint whether it is listed or not. It is well to remember that anything that has value may be sold and money borrowed on it.

Operations On Other Exchanges. Test Questions

1. How do produce exchanges differ from stock exchanges?

2. Explain the methods of operation on produce exchanges.

3. What sources of information as to crop conditions have the speculators in grains?

4. What are the two leading cotton exchanges?

5. How does the Consolidated Stock Exchange differ in character and operations from the New York Stock Exchange?

6. Why is it difficult to operate exchanges successfully in smaller cities?

7. Describe the New York Curb Market.

8. What are some of the most important foreign exchanges from the standpoint of American securities?

9. Distinguish between listed and unlisted stock.

10. Is an unlisted stock less desirable than a listed stock? Why? Explain fully.