Envy goes before a fall

We often try our best to dissociate ourselves from feelings such as envy and jealousy. Yet these very emotions are so innate to human nature that it is almost impossible to get rid of them.

Charlie Munger gives a very interesting evolutionary perspective to these feelings. “A member of a species designed through evolutionary process to want often-scarce food is going to be driven strongly toward getting food when it first sees it. This tends to create some conflict when the food is seen in the possession of another member of the same species. This is probably the evolutionary origin of the envy/jealousy tendency that lies so deep in human nature.”

Greed in markets It is often said that stock markets are driven by greed and fear. But legendary investor and Charlie Munger’s ‘Siamese twin’, Warren Buffett, points out, “It is not greed that drives the world, but envy.” While ‘greed’ refers to an excessive desire to possess something, ‘envy’ is a desire to possess what the other person is possessing. And more often than not, greed is fuelled by envy. Such human tendency of envy and jealousy is well orchestrated in the stock markets. Everyone is here not just to make money, but to make more money than the other person. Comparison and competition is intense, creating a perfect recipe for jealousy.

The important point to take home is not to let such negative emotions affect your investment decisions. But it is indeed difficult to practise it. So the best antidote in such a case is to avoid discussions that would trigger feelings of jealousy. In fact, some of the best investors in the world keep extremely low profile and keep their discussions limited to stock ideas and business fundamentals. In the absence of such external disturbances, they are able to make more rational investment decisions.

This article is authored by Equitymaster.com, India’s leading independent equity research initiative

COMMENT NOW