Diagnosing A Bubble Is Hard

Here are three noteworthy pronouncements about bubbles. “Prices have reached what looks like a permanently high plateau.” That was Professor Irving Fisher in 1929, prominently reported barely a week before the most brutal stock market crash of the 20th century. He was a rich man, and the greatest economist of the age. The great crash destroyed both his finances and his reputation. “Those who sound the alarm of an approaching . . . crisis have somewhat exaggerated the danger.” That was a renowned commentator who shall remain nameless for now. “We are currently showing signs of entering the blow-off or melt-up phase of this very long bull market.” That was investor Jeremy Grantham on January 3 this year.