The Paradox of the Unbearable Lightness of Markets – The World Is Bad, but Finance Is Better.
The investor prefers to enjoy the summer by putting aside the bad news about the world that is piling up.
The world is bad, but finance is better. While the real world is plagued by bad news, the markets seem to have moved on. Who would have bet on a 10% rebound in stocks in the summer of 2022? Probably the same person who would have bet on an interest rate easing of almost 0.5%. Indeed, anything that lowers interest rates raises the rest. Today, rates act as a bridle on stocks, and the decline in rates has loosened the bridle.
However, everything is going wrong:
Uninhibited inflation.
Distressed purchasing power.
Stressed monetary policies.
Geopolitics is on the verge of collapse with tensions over Taiwan added to the war in Ukraine.
All good reasons to see the markets go down. Except that they are going up. Of course, it has been a long time since the incoherence of finance is a sufficient condition to confuse the layman. Everything is going wrong and the markets are going up, so everything is fine.
Still. The contrast between the despondency of the man in the street and the bliss of the finance man is disturbing. The heavy atmosphere of the world is contrasted with the astonishing lightness of the markets. Are these two opposites? Not sure, they could even be as detrimental as each other.
An ambiguity that no other writer better than Milan Kundera was able to illustrate with the character of Sabina in “The Unbearable Lightness of Being”. Ironically, the plot takes place just after the Prague Spring (1968) … already the Russians.
The lightness of the investor is comparable to the suspicious lightness of Sabina
“The drama of life can always be explained by the metaphor of gravity ... But exactly what had happened to Sabina? Nothing happened to her. She had left a man because she wanted to leave him. Had he pursued her after that? Had he sought revenge? No. Her drama was not the drama of heaviness but lightness. What had fallen upon her was not a burden, but the unbearable lightness of being.”
In short, if the heaviness of the things is well afflicted of a weight which burdens it, the lightness is not in rest. The latter would be suspected of missing the essential, unable to be weighed down by the burden of events, as if under the influence of an analgesic. In finance too, we would have to deal with this kind of lightness, except that we would rather call it ignorance, even stupidity. Unless, with the help of summer, we should invoke the carefree attitude of finance on vacation?
Let's listen to the investor daydreaming on his deck chair: “The start of the school year is still so far away... Why panic now? If the world is doing so badly today, it will be just as bad in September. If I'm wrong, I'll find out eventually. Until then, I'm right …”
Is this the only effect of the Mojito? Not sure. Milan Kundera always proposes another explanation being able to justify the lightness of the investor …
The strategy of the ephemeral rather than the eternal return
You can never go too deep in finance. “To think that one day everything will repeat itself as we have already experienced it …,” is the myth of the eternal return, and that is what would be burdensome. “In the world of the eternal return, every gesture carries the weight of an unbearable responsibility.”
In finance, this gives an investor who does not do anything anymore, who does not dare to do anything anymore, stunned by the crises he has caused and those he will cause tomorrow. A kind of Buridan's donkey that hesitates eternally.
Fortunately, we only live once. “If the eternal return is the heaviest burden, our lives, against this backdrop, may appear in all their splendid lightness ... Without it, things appear to us without the mitigating circumstance of their transience ... Can we condemn what is ephemeral?”
Thus, the investor would find in the ephemeral the best argument to justify his lightness … Not as stupid as it sounds.
Indeed, it should be remembered that the strategy of the ephemeral has acquired some credentials since the policy of “Whatever it takes” exists. Since then, you can jump without a parachute, the authorities catch you before you crash. For the investor, this is a particularly convincing argument, sufficient to encourage him to show a certain lightness in a hostile world.
So let's conclude with this timely quote from the French philosopher Raymond Aron:
“Ignorance and stupidity are two considerable factors in history.”
Some reading
Saudi Aramco Profits at an ATH, but Saudi Arabia Continues to Invest Heavily in the Post-oil Era. MBS also uses the Saudi fund as a diplomatic tool in the service of his interests.
As Celsius’ Losses Approach $3B, the Truth About Alex Mashinsky Comes to Light. Celsius would have lost 62,853 BTC out of the 100,669 BTC deposited by investors.
The Twitter Lawsuit Against Elon Musk May Reveal a Truth That No One Is Ready to Hear. 80% of Twitter accounts could be bots …