Professor Fisher declared, “Stock prices are not too high, and Wall Street will not experience anything in the nature of a crash.” A noted “student” of the market, he based his assessment on the assumption that the future would be much like the recent past, that profits would continue to grow at over 10 percent as they had done over the previous five years. It was an early example of the pitfalls of placing too much faith in the abilities of mathematicians, with their flawed models, to beat the market. Simple commonsense techniques for valuing equities such as those Babson relied on—for
...more
