The 'Thermidor' Financial Market

The word for the month of July, in French, is 'Thermidor.'

And, it is from this word that the dish 'Lobster Thermidor' gets its name.

Lobster Thermidor

Well, in fact, it is a specific July that the name is derived from – the one in 1794, during which Robespierre was overthrown.

Maximilien Robespierre was a truly abominable person, who made much of his integrity and honesty, and yet who could not resist manipulating and exploiting the clamor of the crowd, for his own power-hungry ends. His time at the top of power in France was known as the Reign of Terror, a period during which almost anyone might have been executed on the strength of a trifle because of the self-serving zealotry of Robespierre in particular.

And it is with this little item of history in mind, that I wish to address the matter of taking financial risk today. Risk is of course, as you no doubt know, not about the potential of loss, but about the degree of volatility, over the expected course of any investment. When the word 'risk' is used by the less learned, and is meant by them to apply to things like race horse gambling and so on, they are actually talking about the relative 'odds' for any outcome occurring, and not about professional investment risk as such. These people are generally looking at some very very quick event, in which money might be made on an immediate expected outcome. Professional investors want to have some ultimate result averaged out over a long period, say, ten years, for example.

We might well inquire into the consequence for our definition of risk (which is the standard economics textbook one, by the way), of a Central Bank and their political accomplices manufacturing a 'zero risk' climate for interest costs and share prices.

Revenues and profits by companies ought to have the most significant bearing on share prices, but, if they don't because of Central Banking policy to support equity price levels regardless of all other factors besides the government and bank determination to ensure liquidity (by which, they really mean, 'to preserve the remuneration levels of executives at unprecedented and unjustifiable heights') – then we are being faced with a similar form of hypocrisy that Miximilien Robespierre indulged in.

Will there ever be a 'Thermidor Reaction' – which is what the overthrowing of Robespierre was called at the time – against contemporary Central Banks and hypocritical and self-servingly hypocritical, zealot-driven, governments?

On the surface, since there is no volatility, it seems that there is no risk entailed in investing in stockmarkets. But there are also no standard ways of understanding profit opportunity either, because of the artificiality of the price of money... And many people also complain about the hidebound nature of the rules and bureaucratic red tape involved in launching productive capital of any kind.

Thus, one thing is clearly rising – public dissatisfaction. And this, like the recipe for Lobster Thermidor, is also a recipe full of mustard powder, if only metaphorically.

Holy Grail?
(...why am I always posting Maserati pics?!)

If there are any of you still out there who cherish the idea of being an individual – and individualistic - money-making private investor, then you must look at non-standard ways of perceiving profit opportunity. You must abandon the standard route, go into the deep silence similar to that of a Benedictine cloister, and hope that you will gain a vision of the investor's equivalent of the Holy Grail! There are many knights on this Quest for the 'holy grail;' but like the myth, only one or two out of many will ever see it I fear. This I certainly know – no major name in investing is even close to seeing it. No. Not even one of them. Not Buffett, not Gross, not any of them. These times have found ALL of them wanting.

 

In the next post, I shall outline some non-standard profit opportunities.

 

Best

 

Calvin J. Bear