Jan

29

 Rising Hemlines & Indices is a well discussed story. Now one notices the necklines of bollywood divas have fallen so far as can ever fall, right down to the navel! Nifty is still tottering at highs for over three months now.

One certainly has the least amount of required common-sense to know necklines cant fall below the navel. Beyond that the only people to lose clothing are the men in markets. 
What's holding this market up is a question that has baffled too many already.

This very interesting piece of statistical event study by Ajay Shah & Susan Thomas is simple to interpret that Indian Markets tend to be too charged up emotionally before the Union Budget. Except three occasions in almost last forty budgets, the returns after the budget have been significantly negatively correlated to the returns before the budget.

This year's budget is on Saturday, 1st February. Prior two days are event-intensive days in key markets of the world.

When a Unilver sells at a 19 P/E ratio in Britain but sells at 50 P/E ratio is India & all learned men have been leaning on the liquidity hypothesis for as many as a 100 days I am unable to ignore the fact that necklines cant fall any further.

The Senator has in prior years on the list mentioned an insightful comment that has provided salubrious perspective in looking through the mumbo jumbo graphics that I do, that markets dont top because the smart guys are selling, they top because all the dumb men who could have bought have already bought. The neckline can't fall any further. The last time neckline had fallen so much was in 2000 when Jennifer Lopez came to the Grammys that year. Now Priyanka Chopra, the Indian diva, Mrs. Nick Jonas has done an encore. Twenty years is a good enough time to be a cycle?

Jeff Watson writes: 

Necklines can't fall below the navel? Check out some clubs in New Orleans to quickly dispel that myth.

Which reminds me of absolutes in the markets. Some swear by them, giving them the same gravitas as they would the fundamental theorem of arithmetic, others, test them and try to eliminate falsehoods and ballyhoo.

A couple of examples:

Commodities cannot trade below cost or production, commodities cannot trade below government subsidy levels, grains cannot trade below the cost of carry, the price of onions will never go to zero. All of these have been bandied about from time to time and all have proven to untrue.

What other absolutes (old wives tales) can you think of?


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