Once upon a time, there lived six blind men in a village. One
day the villagers told them, "Hey, there is an elephant in the village
today."
They had no idea what an elephant is. They decided, "Even
though we would not be able to see it, let us go and feel it anyway." All
of them went where the elephant was. Every one of them touched the elephant.
"Hey, the elephant is a pillar," said the first man
who touched his leg.
"Oh, no! it is like a rope," said the second man who
touched the tail.
"Oh, no! it is like a thick branch of a tree," said
the third man who touched the trunk of the elephant.
"It is like a big hand fan" said the fourth man who
touched the ear of the elephant.
"It is like a huge wall," said the fifth man who
touched the belly of the elephant.
"It is like a solid pipe," Said the sixth man who
touched the tusk of the elephant.
They began to argue about the elephant and every one of them
insisted that he was right. A wise man was passing by and he saw this. He
stopped and asked them, "What is the matter?" They said, "We
cannot agree to what the elephant is like." Each one of them told what he
thought the elephant was like. The wise man calmly explained to them, "All
of you are right. The reason every one of you is telling it differently because
each one of you touched the different part of the elephant. So, actually the
elephant has all those features what you all said."
"Oh!" everyone said. There was no more fight. They
felt happy that they were all right.
The moral of the story is that there may be some truth to what
someone says. Sometimes we can see that truth and sometimes not because they
may have different perspective which we may not agree too. So, rather than
arguing like the blind men, we should say, "Maybe you have your reasons."
This way we don’t get in arguments. (Source: Jain World)
A similar situation has arisen in Indian equity markets in past
few months. There is strong disagreement amongst analysts, commentators,
investors and observers with respect to valuations and therefore sustainability
of current price level.
The disagreement, in our view, is a consequence of limited view
each seems to be taking.
In our view, under the present circumstances, it would be more
appropriate to take a holistic macro view of the market. Views based purely on
earnings multiple or assets using extrapolation of near term historical data may
probably not lead to accurate conclusions.
A non-linear view considering wider historical perspective and
socio-political context may be necessary to make a valid argument for
staying invested in Indian equity markets….to be continued
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