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 91 grade rail bonds averaged about twenty-two times as much as their dollar yield. Relationship between the yields was that of eleven to eight. But unlike the fixed relation of bond prices to bond yields, the price-earnings ratio for stock should reflect not only current earnings but expected earnings. That is why the price-earnings ratios should not be fixed to any standard, but wholly with reference to expected earnings of different stocks. At the average price-earnings ratio of ten to one, which prevailed after the panic, however, it should be noted that while the stock exchange had endured the severest break in history, this did not suffice to shake the price level of stocks off a warrantably new high plateau which had been built up since 1922. Within a month the market rebounded to a level 21 per cent higher than the low of November 13th— and that low was 30 per cent higher than the 1926 level of stock prices. A potent reason for the post-panic rebound of 1929 is found in the record of dividend payments and of corporation earnings for the first nine months of 1929. This, as reported by the New York Times, spelled a gain in real income and sound conditions of business that was reflected in cash dividends amounting to $3,122,000,000 during the first three Quarters of 1929, as against $2,395,000,000 during the like period of 1928. Cash dividends aggregated more than $399,000,000 during September, 1929, as contrasted with $278,000,000 during September, 1928, Moreover, greatly as cash dividends increased

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