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

98 The Stock Market Crash—dAnd After In the face of this record, the faults leading to the panic cannot be found in the industrial situation, or in the high activity of business and industry, or in the rate of earnings, or in an unsatisfactory range of ratios of stock prices to earnings. There was undoubtedly overextension of loans. There was a fever of speculation during the months immediately preceding the panic, which bid up prices to a peak that rose faster, for the time, than earnings seemed to warrant, But the precipitous fall in the market went too far, in the light of the sound reasons justifying the long bull market, namely, justifiable expectation of great and increasing earnings, the fact that they were so generously plowed-back, the warranted expecta- tion of safety through diversification of investments, and, finally, a consequent lowered basis of discount- ing the future as apparently reflected in price earnings ratios. Was, then, the high price level of stocks during 1929 completely justified? Or were there also ele- ments of unsoundness which explain the final intem- perate rise of the bull market? As shown in Chapter II, Mr. Carl Snyder of the Federal Reserve Bank of New York finds that stocks had been seriously undervalued during the period of 1919 to 1924, as compared with the higher price level of commodities. The long rise in the com- modity price level had increased the dollar earnings of common shares in terms of a 57-cent dollar. Bonds and preferred securities were precluded from absorbing their share of this increase, and the invest.

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