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

Flight From Bonds to Stocks 205 to be won only in case two successive “heads” come up, there is one chance in four and the mathematical value is twenty-five cents. This is so-called “fair” gambling. Any price above the mathematical value is unfair gambling, and none but a real gambler will pay more than the mathematical value, or even so much. The gamblers at Monte Carlo do pay about three per cent more than the mathematical value of their chances; but only conscious gamblers, not investors, participate in rouge et noir. In fact, a sound-minded investor will pay less than the mathematical value for a chance to gain money on a risk. That is, he will trim that price by means of a “caution coefficient,” to use a term which I employed in my book on The Nature of Capital and Income. This “caution coefficient” becomes, in practice, greater and greater as the risk grows. If my chance of getting a dollar is a certainty, there would be no reduction on account of the caution factor. If itis like the chance of betting on “heads” or “tails,” the caution factor may trim the price of the chance down from fifty cents, in mathematical value, to say, forty cents for the chance to win the dollar. That is a reduction on account of caution to 20 per cent. But if one bets on two heads in succession, the reduction on account of caution would be correspondingly greater, so that instead of paying twenty-five cents, the mathematical value, the investor might insist on a reduction of more than 20 per cent to say, fifteen

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