Stock Market Crashes
In late October 1929 the stock market crashed, wiping out 40 percent of the paper values of common stock. When the crash hit the economy and stock prices fell sharply, people holding these various views should have interpreted its implications in different ways, and consequently the disagreement among them should have increased. Emerging market currencies are crashing hard, recessions are starting, and equity prices are getting absolutely hammered.
As long as aggregate earnings are expected to increase over the next year, it should be reasonable to expect stock prices to follow suit. On Tuesday, the Dow plunged another 469 points,…