WALL STREET: How to Lose a Buck

Nothing sends a stock up faster than the news that a company has a glamorous new electronic device—especially if the news is exaggerated. Example: two little-known, money-losing companies. TelAutograph and Comptometer Corp., last week set off a speculative binge that resulted in some of the wildest trading the New York Stock Exchange has seen since 1929. In eight trading days TelAutograph zipped from 9½to a high of 24½, and Comptometer soared from 15½to 30.

The moneymaking, money-losing frenzy was started by a statement from Tel-Autograph's President Raymond E. Lee that his company had been told by American Telephone & Telegraph Co.: "For the first time message-rate telewriter service will be permitted over telephone lines on a local and long-range basis." "This means," stated Lee, "it is now possible to send a handwritten message instantaneously by telephone."

Ray Lee also expansively predicted that the use of telescribing equipment would increase a hundredfold. In one day Tel-Autograph soared 5f points. Lee had—carefully or carelessly—created the impression that TelAutegraph had an exclusive deal with A.T.&T.

At the opening of the market on the next trading day, the flood of orders to buy was so great and sellers so few that longtime Specialist John Coleman of Adler. Coleman & Co. (TIME, July n), the man responsible for keeping the market orderly in TelAutograph, did not open the stock all day. Coleman and Stock Exchange officials thought the demand was based on questionable information, wanted more time to get all the facts. Next day Coleman finally opened the stock one minute before the close at 24, up 5/½ over the previous close.

The stock of Comptometer, which had also been rising, soared after Vice President Peter G. Mero announced that the company is the only one that produces a telewriting device that has been tested and found suitable for use over the tele phone. The specialists could not open trading in it the next day because of a preponderance of buy orders. When it opened the day after, it jumped 6 points to 30.

The Securities and Exchange Commission began investigating; the Stock Exchange demanded a complete explanation from both companies. TelAutograph President Lee, 50, who owns 42,000 shares of stock, gave an explanation that was a lot different from his earlier statement. He said his statement was not meant to con vey the idea that TelAutograph was the only company with equipment suitable for A.T.& T., added that the company had merely set a date to talk with A.T.& T. about testing telewriting equipment. Furthermore, for this year TelAutograph will show a small loss.

This brought a rush to sell. Comptometer was also prodded by the SEC to give a fuller explanation. It said its revenues from its Electrowriter now are not enough to cover the cost of servicing and sales and are "unlikely to make any contribution to the corporation's profits in the near future." It closed off 7 for the day, and TelAutograph fell $$.