On this day in economic and business history…
It is a peculiar function of prophecy that often awards greater recognition to those who get it wrong than to those who get it right. The Crash of 1929 produced a number of tragically inaccurate prophecies, most notably that of Irving Fisher, whose claim that stocks had reached a “permanently high plateau” a month after the Dow Jones Industrial Average (INDEXDJX:^DJI) peaked has proven one of the worst calls in market history.
I repeat what I have said at this time last year and the year before, that sooner or later a crash is coming which will take in the leading stocks and cause a decline of from 60 to 80 points in the Dow Jones Industrial Average (INDEXDJX:^DJI) Barometer.
Fair weather cannot always continue. The economic cycle is in progress today, as it was in the past. The Federal Reserve System has put the banks in a strong position, but it has not changed human nature. More people are borrowing and speculating than ever before in our history. …
Some day the time is coming when the market will begin to slide off, sellers will exceed buyers, and paper profits will begin to disappear. Then there will immediately be a stampede to save what paper profits then exist. Investment trusts will first begin to sell. They have so broadly advertised their paper profits that they will be very anxious to cash in on them. … The general public will then follow with a desire to cash in, and then margin accounts will be closed out, and there may be a stampede for selling which will exceed anything that the Stock Exchange has ever witnessed.