Warren Buffett has apparently said in jest that out of the seven deadly sins, envy is the worst….because at least we enjoy while committing the other six sins. In case of envy it is only pain and no pleasure.
Despite this, I notice that envy is widespread in our society. Here are a two instances:
- A client of mine met me last week. I noticed that he was not his usual chirpy self. When I inquired about the reason for his despondency, he explained that he was perturbed to note that while his Portfolio Management Scheme (PMS) Account with our firm had given him a return of 12% over the past year (no mean feat, considering the the broad indices were actually down by 17%). It perplexed me that instead of being ecstatic he was downcast but I soon knew why. Apparently, his friend had invested in another PMS account which also invested in Gold Exchange Traded Funds. Hence his friend had earned a return of 21% on his investment, which apparently gave him bragging rights over my client.
- Every year once the annual bonus is distributed among colleagues at my company, I always notice a few glum faces. In most cases, they are not glum because they feel shortchanged, but are dejected because a few of their colleagues have received slightly more than them.
How do we deal with this debilitating feeling? While I do not profess to be a psychologist or psychiatrist, here are a few options that work for me.
Benchmark investments with inflation: In the case of investing, I always pay attention to one metric…Has my return beaten inflation? As long as my portfolio has achieved that, I am least bothered by how other investment avenues have performed. After all, one of the main aims of investment is to maintain and enhance one’s standard of living. I can achieve that if I beat inflation, irrespective of whether I beat the other investors or not.
Do not be obsessed with relative performance: I notice that mutual fund managers constantly worry about outperforming their peers. In the process they often tread into uncharted waters by deviating from their investment mandate (For instance a large-cap fund may begin investing in mid-caps). Such capriciousness may actually rub investors the wrong way and make the manager lose some goodwill. After all if I have given money to a large-cap fund I would be mortified to see it morph into a multi-cap fund without warning. Also, as nothing is permanent, today’s underperformer may well emerge as an outperformer next year.
Count your blessings: I know this sounds philosophical but it does help me. In a sense, this is the mirror image of envy. If I have earned ‘x’% returns or earned ‘y’ amount of profit, I know that there are hundreds of investors and traders who are not as fortunate as me. I feel blessed to having earned what I have earned.
I also accept that paper losses are part and parcel of this endeavour. As long as my investing process is above reproach I do not worry unduly about short-term volatility. It is only permanent loss of capital that I fear and not whether the others have lost or gained more than me.
I know my limitations: I have come to terms with the fact that I am not a seer. Hence I cannot predict in advance as to which asset class or which stock will outperform over the next one year. I can only do what is within my control and that is to invest based on time-tested investment principles and maintain a semblance of balance in my asset allocation. Beyond that I leave everything to God.
I have extended the belief system mentioned above, to encompass all facets of my life. I know that I can never be the richest man or the most powerful man in the world but I also know that I can aspire to be a happy man.
Of course in being so I may risk becoming an object of envy myself, but I think I can live with that…