Hemline theory financial definition of hemline theory
A theory that stock
prices move in the same direction as the hemlines of women's dresses. For example, short skirts (1920s and 1960s) are symbolic of bullish markets
and long skirts (1930s and 1940s) are symbolic of bearish markets
A theory of investing
stating that market trends
follow the length of women's skirts. That is, when women wear short skirts, there is or will be a bull market
; when they wear long skirts, there is or will be a bear market
The theory that holds that stock prices tend to move in the same direction as the length of hemlines on dresses. Thus, rising hemlines are a bullish sign and falling hemlines are a bearish sign.
References in periodicals archive
While the hemline theory
has never been considered for serious market analysis, it does seem to have an uncanny way of being prophetic.
Jeremy Batstone of NatWest Stockbrokers says: "The hemline theory shouldn't be the central plank of your investment strategy but it's worth taking into account.
The usefulness of the hemline theory seems to be declining because fashion designers are now sending out mixed messages.
Known as the Hemline Theory
, this idea has been in use for a century.