Roger Babson was a market prognosticator in the 1920's who partly relied on mysticism for his predictions. he was among other things an accomplished chartist. many didn't lend much credence to his predictions, because he was a jack-of-all-trades and had predicted disaster before, to no avail.
on September 5, 1929,two days after the market top, he held a speech at the Annual National Business Conference, in which he stated among other things: "sooner or later a crash is coming, and it will be terrific...factories will shut down....men will be thrown out of work...the vicious cycle will get in full swing and the result will be a serious business depression"
interestingly, the market, which never had paid attention to him before, suffered a serious setback on the next trading day, known as the "Babson break".
WS wasted no time to roundly denounce the man and his predictions. Barron's, the Wall Street Journal, and various brokerage houses ridiculed him and cited the past inaccuracy of his predictions as proof.
the famous economics professor Irving Fisher also joined the choir...the general attitude was that one shouldn't let a clown like Babson stampede one into selling. it was agreed that there might be a correction, but nothing even remotely like a crash, as "business conditions were extraordinarily sound, and temporary breaks, indentations in the ever ascending curve of American prosperity,should be bought".
the market firmed again in the two trading days following the Babson break, but began to trade erratically thereafter, and began to develop a downward bias.
the rest is history. |
