Yale's Top Economist Said Stocks Had Reached a "Permanently High Plateau." Then the Market Lost 89%.

Irving Fisher wasn't some random guy yelling at clouds. He was considered THE preeminent American economist of his era — a Yale professor whose work on monetary policy and inflation is still studied today. When he spoke, Wall Street listened.

So when Fisher declared stocks had reached a "permanently high plateau" in mid-October 1929, investors felt reassured. The Dow had just hit a record 381 points after an eight-year bull run. What could possibly go wrong?

Eight days later: Black Thursday. The market dropped 11%.

Four days after that: Black Monday. Another 13% gone.

The next day: Black Tuesday. 12% more vanished.

But Fisher, stubborn as only an economist can be, called the collapse "temporary."

It wasn't.

By July 1932, the Dow bottomed at 41.22 — an 89% collapse from its peak. It wouldn't return to pre-crash levels until 1954, a full 25 years later.

Fisher didn't just lose his reputation. He lost his personal fortune too, going broke from margin debt on stocks he was sure would keep climbing. Milton Friedman would later call him "the greatest economist the United States has ever produced." Just not, apparently, the greatest stock picker.