Last week my quarterly investment statement arrived. I flipped to the last page and there in italicized mouse-type was the tally. Given the recent performance of the markets, I was not surprised by the soggy number.
It’s foolish to expect investments to only go up. Pundits say that for accumulators, a down market is a boon. Your favourite mango now sell for 75-cents instead of a dollar. But emotionally it’s a downer. And, like fighting a bout of melancholy, a sluggish stock market invites introspection, not only about mundane things like asset allocation, but also about the hazards of tying one’s personal worth, or at least daily mood, to the volatility of global finance.
I have an unproved theory that people who are prone to melancholia may be better equipped to withstand the ups-and-downs of the market. Maybe it’s because melancholics don’t expect the world to always be filled with unicorns and cotton candy. Thus, while down market days are not exactly welcomed they’re tolerated like old friends bringing sad news.
Some people, like the French, embrace melancholy in films, music and, even perfume. In an essay in The New York Times, Laren Stover writes about melancholy perfumes and how “rainy” scents can be matched to our moods. Given our society’s current fascination with happiness, (judging by the raft of books on the subject), it’s not easy to find one of these gems. One has to reach back to some of the Guerlain classics from the early 20th century like L’Heure Bleue, Jicky, and Mitsouko (my favourite), as well as some new-ish ones from niche “noses” Serge Lutens (Iris Silver Mist) and Frédérick Malle (En Passant). Stover neglects to mention Guerlain’s Après L’Ondée, literally, “After the rain shower”, a green fragrance with top notes of aniseed and rose and heart notes of violet and hawthorn.
Some years ago, I took a perfumery workshop in Grasse, the heart of France’s fragrance industry. I already knew the fragrance I wanted to create: the olfactory expression of looking out a window on a rainy day in London, a good book and a mug of strong black tea on the side table. It was to be a wisp of a scent composed of bergamot, chypre, licorice, lavender, lemony rose de mai, and a dash of iris root for that powdery, flinty touch.
As we were all novices, the instructor constantly praised us. Until he came to me. He took one sniff and immediately reached for the aldehydes to “brighten” the scent. It was the equivalent of a burst of fluorescent bulbs where previously there had only been soft candlelight. I’m sure he meant well but I believe he couldn’t tolerate that I was intentionally creating a “downer” scent.
This is like a lot of investors. We imagine that the market can only go up, up, up. When it pauses or reverses, panic sets in. You could say that quantitative easing, the US government’s program of printing money to buy bonds, was the financial equivalent of dosing perfumes with aldehydes, synthetic compounds that juice a scent giving it sparkle and fizz like popped Champagne. (It’s no surprise that the 1980s blockbuster, Giorgio Beverly Hills, was the Frankenstein of aldehydes.)
But there’s a season for everything. Much of the recent market froth was related to abnormally low interest rates, highly-leveraged trades and speculation. (Hello Bitcoin!) When the bubble bursts—and it will—say ‘Ciao, Giorgio Beverly Hills’ and ‘Bonjour, L’Heure Bleu’.