Mathematician, our Readers

A Century of Stock Market History 75Such were our efforts to evaluate former stock market levels. Is there anything we and our readers can learn from them? We considered the market level favorable for investment in 1948 and (but too cautiously in the latter year), “dangerous” in 1959 (at for DJIA), and “too high” (at 892) in 1964. All of these judgments could be defended even today by adroit arguments. But it is doubtful if they have been as useful as our more pedestrian counsels-in favor of a consistent and controlled common stock policy on the one hand, and discouraging endeavors to “beat the market” or to “pick the winners” on the other.

Nonetheless we think our readers may derive some benefit from a renewed consideration of the level of the stock market-this time as of late 1971-even if what we have to say will prove more interesting than practically useful, or more indicative than conclusive.

There is a fine passage near the beginning of Aristotle’s Ethics that goes: “It is the mark of an educated mind to expect that amount of exactness which the nature of the particular subject admits. It is equally unreasonable to accept merely probable conclusions from a mathematician and to demand strict demonstration from an orator.” The work of a financial analyst falls somewhere in the middle between that of a mathematician and of an orator.