Chapter 4 from 10 Disasters That Ruined Smart People
Irving Fisher: The Permanent Plateau
On October 15, 1929, Irving Fisher told an audience that stock prices had “reached what looks like a permanently high plateau.” The New York Times reported the remark the next day under the headline “Fisher Sees Stocks Permanently High.”33
Nine days later, the market began to crash.
Fisher was not a promoter or a stock tipster. He was a professor at Yale and one of the most respected economists in the United States. His work on interest rates, money, and price levels is still taught today. He was also a successful inventor. In 1913 he patented an index card filing system, and in 1925 he sold the company built around it to the firm that became Remington Rand.34 The sale, and the stock investments that followed, made him wealthy. His holdings were reported at around $10 million before the crash.35
Fisher’s forecast is often quoted as a joke about experts. The more instructive part of his story is how he was invested when he made it. He had borrowed heavily to buy stocks on margin.36
The rest of this chapter is in the complete book.
It continues with the mechanism behind the loss and ends with The Pattern, plus the sources for every claim.
Notes and sources
- “Fisher Sees Stocks Permanently High,” New York Times, October 16, 1929, p. 8, as cited in “Irving Fisher,” Wikipedia. ↩
- “Irving Fisher,” Wikipedia. ↩
- Lawrence H. White, “The Roaring Twenties and Austrian Business Cycle Theory,” chap. 3 in The Clash of Economic Ideas (Cambridge University Press, 2012). ↩
- White, The Clash of Economic Ideas, chap. 3. ↩
Read the whole story.
The complete digital edition: all ten chapters, The Seven Patterns, 97 endnotes and every source. 64 pages, PDF, $19.