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 XIII. Flight from Bonds to Stocks

Collection:: Economics Books

202 The Stock Market Crash—And After rate realized on a five per cent bond, running twenty years, purchased at par and redeemable at par, will be five per cent. But if purchased at 110, the rate realized will be 4.3 per cent. While if it is pur- chased at go, the rate is 5.9 per cent. The rate of yield when the calculations are in terms of dollars (uncorrected for variations in purchasing power) differs from the rate calculated in the terms of dol- lars corrected to a uniform purchasing power, say pre-war dollars. Speculative Character of Bonds If we apply this yield idea to the various tests which Mr. Smith has made we find results as fol- lows. We see, for instance, that the man who in 1866, under Test 6, invested in bonds and redeemed or sold them in 1885, made 6.8 per cent on his money, reckoning in actual dollars, while reckoning in pre-wars, he made 11.7 per cent. Again, under Test 1, 1901-1922, the bondholder nominally made 4 per cent, but really only 1.1 per cent. This analysis indicates clearly enough that during periods of marked fluctuations in the general price level, bonds have a speculative character. The series of writers on this subject have proved, statistically, that bonds are not, as compared with well-selected and diversified stocks, what they have been cracked up to be; that they are especially deceptive during rising prices, and that even when prices are falling they are not usually superior to stocks. These writings threw a bombshell into the invest-

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