The Model Millionaire, first published in 1887, is a short story by Oscar Wilde. It tells the tale of Hughie Erskine, “a delightful, ineffectual young man with a perfect profile and no profession” who needs £10,000 before his fiancée’s father will allow him to marry her. One day, Hughie visits an artist friend who is painting a beggar. Moved by the beggar’s apparently shabby condition, Hughie gives him a sovereign (£1) and has to walk home. The next day his friend reveals that the “beggar” was actually a millionaire in disguise, who rewards Hughie’s generosity with a cheque for £10,000, enabling him to get married.
The key moment
Hughie’s income of £200 a year from a maiden aunt isn’t enough for him to accumulate the £10,000 that will satisfy his fiancée’s father. So, before he meets his eventual patron, Hughie attempts to make his fortune by trying his hand at various professions – including tea merchant and sherry salesman – all of which end in failure. His attempt to become a speculator is equally unsuccessful. He went to the stock exchange for six months – “but what was a butterfly to do among bulls and bears”?
Lessons for investors
“Bulls” and “bears” has been financial slang for market sentiment since the early 18th century. “Bulls” expect the stockmarket to rise; “bears” expect it to fall. A bull market is therefore one that is rising; a bear market is one that is falling. One popular rule of thumb is that a market that has declined by 20% or more from its peak is regarded as being in “bear-market territory”. Similarly, when a bear market rises by more than 20% from its trough, it is regarded as a bull market. The definitions are arbitrary.
So what can a butterfly do among the bulls and bears? Examining past price movements to discern trends may provide some guide to market sentiment. However, since they are backward-looking, investors run the risk that, by the time the trends have become apparent, sentiment may have shifted in a different direction.
Other ways to measure market sentiment include surveys of investors, the number of buy and sell recommendations put forward by analysts, and the number of people betting against the market (known as the short interest).