Bull Therapy - Cure for Bubblets & Market Over-optimism


This swill be a post for adding views and data to forewarn a ‘bubblet’ (bubbles within a single sector or stock), and over excitement; or perhaps an impeding downtrend in a sector or stock.

Here’s some context:

Recently I read an excellent analysis on valuations of IT companies by Ishmohit Arora of @Worldlywiseinvestors.

Recently, I also happened to see a video on youtube called " Library of Mistakes : Case Studies & Antidotes by Puneet Khurana, CIO, Stoic Investment Manager, where he shows data on why IT sector is overvalued compared to historical averages.

Furthermore, @KushalKasliwal posted a tweet by Nirag J Shah on Fairchem Organics. When I went into Nirag’s other posts on Twitter, I found a useful chart comparing Prices of Soya Acid Oil yields to Fairchem’s product.

I have also been following other leaders in Valuepickr like @sahil_vi and ohers.

Now the kicker :slight_smile:

Talking about IT valuations or Fairchem results are useful. However, such comparisons could have invaluable, had they been done an year ago. Perhaps they could have saved crores of rupees of wealth of novice investors.

But stock market and human psychology being what they are, such out of whack valuations will recur, if not in IT in some other sector.

This post can focus on some emerging bubblets. For example, currently everyone seems gung ho about Financials and Railway stocks. Good enough. But what are the comparative valuations for these sectors, across companies that we should keep a watch on? When do we know that these are reaching unreasonable peaks? What are the risks looming on horizon?

Please keep sharing ideas and data related to these and other sectors you think are reaching such frenzy.

From the talk on youtube: Library of Mistakes : Case Studies & Antidotes | Puneet Khurana, CIO, Stoic Investment Manager

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From Nirag J Shah’s twitter post on Fairchem Organics


Not sure if I can post Ishomohit’s data a it is not in public forum. @Worldlywiseinvestors maybe you want to add the excellent analysis you made to this thread.