Bear Fox, He Say Plenty

As financial columnist for the Boston Post, Washington Waters often sounds like an irrepressible optimist. "The stock market," says his column, "may truly be a kind of Aladdin's lamp which will produce great riches for those who know how to rub it." But the rub, as Washington Waters is well aware, is knowing how. Waters knows. He is one of the few financial columnists in the world who can write about the stock market that way with real authority. By rubbing the lamp the right way himself, he has amassed a fortune of $20 million plus in stocks, gas and real estate. Last week Washington Waters cheerfully confirmed a suspicion of many brokers: he is John Fox, 46, who bought the ailing Post a year ago for about $3,500,000 (TIME, June 30, 1952) and started a column on the subject he knows best--how to make money.

Bear Fox. But Fox is no optimist now; he is a bear. Nobody who followed the advice of Waters got burned in the big market shake-outs of the past three weeks. Waters had been predicting such a turndown since he started his column last April. Nor did Fox hesitate to tell where he thought the market was headed after both the industrials and rails broke through their previous year's lows last fortnight (TIME, Sept. 7). Wrote Fox last week: "The bear market has been confirmed and will probably go further down. There is no hurry about buying stocks."

Did this mean that Bear Fox, who also believes that the market mirrors the future and that falling stocks mean that business will decline too, thought there were no buys left? Not at all: "Some of the rail stocks are getting so cheap in relation to their basic worth, that whatever may be the extent of further decline in the market, they are sure to show a profit in the long run . . . Some of them will even begin to look like mighty attractive purchases on a further decline."

Blue Chips? Humbug! Along with his predictions--and his digs at bankers and bond salesmen as incompetents--John Fox tries to give his readers a general education on how to play the market. While much of his teaching is sound, he often makes investing appear so easy that those who swallow all his advice could easily lose their shirts. He has only scorn for those who advise buying "safe, sound," dividend-paying blue chips, urges them instead to hunt for the overlooked, undervalued long shot. "Every investment," he sums up, "should be made for the primary purpose of causing capital to grow." Those who measure value by dividends he likens to a man who believed "that a dog could be judged by the size of its tail . . . Many of the mutts which he bought, without looking at anything but their attractive tails, were on their last legs. The first rule of investment should be: never mind what it pays [in dividends]."

Fox likes to jeer at counselors who advise "a widow with $10,000" to put her money in bonds and conservative stocks. Such advice, he adds, "arises principally out of incompetence on the part of those giving it." It is bad, says he, because it will yield her an income so small as to do her little good. If she bought nothing but bonds, her income would be even smaller, and the bonds themselves might drop in value. If she bought blue chips, she would likely be paying a premium price, based on their past performance rather than their future. Instead, Fox recommends a hunt for stocks so depressed that they sell for far less than a company's actual book value and thus should rise (e.g. U.S. Leather, which he bought into and is liquidating, selling the property for a good deal more per share than he and his associates paid for 90% of the stock).

Wrote Fox: "[I] have always thought it was a good deal easier to make money in the stock market than to make it by betting on horses. After all, one need know only what stock to buy and when to buy it, in order to do all right; in the market." But sure-shot Fox has neglected to add that that's all one needs to know to clean up on the horses, too.

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