• Recently, finance professors Owen Lamont of the University of Chicago

and Paul Schultz of the University of Notre Dame have shown that corporations choose to offer new shares to the public when the stock market is near a peak. For technical discussion of these issues, see Lamont’s “Evaluating Value Weighting: Corporate Events and Market Timing” and Schultz’s “Pseudo Market Timing and the Long Run Performance of IPOs” at papers.ssrn.com.meet the going rate for comparable issues, and high powered salesmanship had little effect on the outcome. As interest rates fell lower and lower the buyers finally came to pay too high a price for these issues, and many of them later declined appreciably in the market. This is one aspect of the general tendency to sell new securities of all types when conditions are most favorable to the issuer; but in the case of first quality issues the ill effects to the purchaser are likely to be unpleasant rather than serious.

The situation proves somewhat different when we study the lower grade bonds and preferred stocks sold during the 1945