The stock market crash - and after

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Monograph

Identifikator:: 1815583320

URN:: urn:nbn:de:zbw-retromon-204544

Document type:: Monograph

Author:: Fisher, Irving http://d-nb.info/gnd/118533541

Title:: The stock market crash - and after

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1930

Scope:: XXVI, 286 S.; graph. Darst

Digitisation:: 2022

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter VI. Changed Ratio of Prices to Earnings

Collection:: Economics Books

Changed Ratio of Prices to Earnings 83 who has read a draft of this book believes that two- thirds of the rise of stocks since 1926 was justified by earnings; that is, a rectified price level should be at 167, on the basis of 100 for 1926. My own picture of the proper level of the plateau is only slightly higher, say 175, on the basis of 1926. It is, of course, impossible to tell to what extent stock split-ups, and inability to earn future dividends at a rate comparable to the increase of savings at com- pound interest, are possible for companies plowing- back their earnings; or to what extent they are un- derstating their earnings. But a rough measure of their average success in increasing the rate of earn- ings is to be found in a comparison of the rate of increase in stock prices during 1929 with the rate of increase in total earnings for that year, as compared with 1928. Inflation Preceding the Crash With respect to the quarter immediately preceding the stock market break, it has been stated that stock prices were rising much more rapidly than earnings. Thus Mr. Laurence H. Sloan testifies con- cerning the calculations of the Standard Statistics Company: “Our index of the market value of 405 leading industrial, utility, and rail issues rose, during the three months immediately preceding mid-September, at the rate of 76 per cent per year. At the same time it was clear that earnings of leading industrial concerns could not, by any stretch of the imagina-

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