Illustration: Jayachandran / Mint

So what does relieve it? The researchers say it’s the price of travelling. Impose congestion charges, raise the price of fuel or increase parking charges and road congestion will improve.

But perhaps increasing the number of highways serves a different purpose. If the researchers are right, that should lead to a rise in the vehicles using those roads. In other words, build the roads and growth will follow.

New Evidence on the First Financial Bubble—by Rik GP Frehen, William N Goetzmann and K Geert Rouwenhorst

Studying bubbles is in vogue these days and what could be a more worthy subject than the South Sea Bubble of 1720, one of the earliest examples of irrational speculative mania? Here’s what Wikipedia has to say about it: “The South Sea Company was a British joint stock company that traded in South America during the 18th century. Founded in 1711, the company was granted a monopoly to trade in Spain’s South American colonies as part of a treaty during the War of Spanish Succession. In return, the company assumed the national debt England had incurred during the war. Speculation in the company’s stock led to a great economic bubble known as the South Sea Bubble in 1720, which caused financial ruin for many."

Illustration: Jayachandran / Mint

That is why, apart from the South Sea Company, the shares of other companies involved in the Atlantic trade and in insurance also rose at the time.

Their conclusion: you need a plausible story to justify investor enthusiasm. That’s rather obvious—what else do all those grand investment themes by analysts do but sell stories.

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