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

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

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

Collection:: Economics Books

84 The Stock Market Crash—dAnd After tion, increase more than 2§ per cent this year as compared with 1928. Stock prices, therefore, were rising three times more rapidly than earnings. The future was being mortgaged further and further ahead. There was no statistical precedent by which to judge to what degree prices were entitled to out- run earnings, but when stock quotations get to step- ping thrice as high and handsomely as the intrinsic values behind them, it should be time for careful people to stop, look, and listen.” It was apparently during this three-month period prior to the break’ that speculation became feverish and unhealthy and stock prices mounted to a danger- ous peak. It remains, however, that for the first nine months of 1929 the Standard Statistics compu- tations show that prices of industrial stocks, in their relation to total earnings, distributed and undis- tributed, averaged lower during 1929, up to the panic of October and November, than during all of 1928. {See Chart 10.) Had there been inflation in the stock price level from the standpoint of earnings due to fundamentally unsound conditions of business and earnings during 1929, it would presumably be reflected in a higher and not a lower ratio of stock prices to earnings. Instead, earnings of stocks on the average went up during 1929 slightly faster than prices on the New York Stock Exchange. It is nevertheless true that the averages fail to give a complete picture. A correspondent notes that the “actual danger lay in an excessive inflation of the

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