Season Investments

facebook-logo.pngtwitter.pnglinkedin-logo.png

Monkey See, Monkey…

Posted on June 11, 2019

“Yet we always envy others, comparing our shadows to their sunlit sides.” – Margaret George

2019-06-11_monkey_looking_in_mirror.jpgThe age of the internet has ushered in numerous modern conveniences that many would have thought impossible just a few decades ago. It wasn’t that long ago that phones were tethered to the wall, knowledge was stored in books called encyclopedias, and a travel agent was a viable profession. Technology and the internet have become so ubiquitous in our daily lives that anyone born in this century has a hard time comprehending what life was like without it.

But along with all the benefits technology and the internet have brought into our lives, it has also ushered in some drawbacks including what we now call FOMO (fear of missing out) or what has always been known as just plain old jealousy. The internet through social media has given us the ability to “put our best foot forward” and broadcast it to the world. This in turn has created a tremendous amount of jealousy and envy as we “compare our shadows to [our friend’s] sunlit sides.

Jealousy is part of human nature and as studies have shown, it isn’t isolated to just humans. The embedded video is an excerpt from a TED Talk by Frans de Waal where he talks about an experiment he oversaw with two Capuchin monkeys to test their sensitivity to fairness.  In the experiment each monkey was asked to do a simple task (take and return a rock) and were given a reward in return. After the first monkey completes the task they are given a piece of cucumber as their reward. The monkey appears satisfied with the reward and eats it. But then the second monkey does the same task and is given a grape as their reward. Apparently grapes are much more sought after than cucumbers in the Capuchin monkey world because when the first monkey is again given a cucumber for completing the same task a second and third time, they vehemently reject the reward and throw a fit over the lack of fairness in the experiment.

If you take the three minutes to watch the video, you will hear the speaker at the very end joke “this is basically the Wall Street protest that you see here.” As with most good humor, it’s funny because there is an element of truth to it.

From another TED Talk which I’ve referenced in the past, Richard Wilkinson equates these feelings of inequality with insecurity about being judged by others and why we have become so consumer driven in trying to “keep up with the Joneses.”

Those feelings of the status competition…drives the consumerism in our society. It also leads to status insecurity. We worry more about how we are judged and seen by others.

Consumerism is the antithesis of financial independence and is the number one reason that half of all Americans have nothing saved for retirement. Now obviously consumerism and the “willingness to save” are not the only explanation for the lack of retirement savings as low wage growth for the working class and exponential increases in certain living expenses (e.g. healthcare and education) have hampered people’s “ability to save” as well. But for those of us who are fortunate enough to earn a good living, there is no excuse for letting jealousy and FOMO steal your future by owning your income today.

Income and spending are positively correlated. The more a person makes the more they spend and not typically because they have to, but because they want to. In the financial planning world this is known as “lifestyle creep” where former luxuries become new necessities as people move up the income ladder. Today with the internet, smart phones, and various social networks, there is a strong drive to lean into consumerism and lifestyle creep in an attempt to feel better about ourselves and how we measure up to those around us. But in the end, this is nothing more than a fool’s errand as the temporary high we get from engaging in consumerism quickly fades away.

So does this mean we should all take a vow of poverty or try to reach a state of nirvana to eliminate all desire from our lives? Maybe if that is your thing, but for most of us that might be a bit extreme. Instead, try to find balance and the happy medium between delayed gratification (e.g. saving for the future) and enjoying life in the present.

One simple strategy that we like to recommend and many of you have probably heard at least once before is the idea of “paying yourself first.” What this means is that before you spend any money on luxuries or non-necessities, you should pay yourself first by putting money away into a retirement or savings account. If that seems too daunting of a task, then start small and work your way up. For example, for someone who isn’t saving at all, rather than setting the bar at maxing out your 401k and IRA contributions every year, maybe just start with a small percentage of your paycheck into your company 401k (in the case of a plan with a company match, might we suggest starting at maxing out the match) and then every year ratchet up your savings percentage until you are not only maxing out your 401k and your IRA but you also have other savings to invest into opportunities which may not be available inside of a qualified retirement account.

Now more than ever, people are struggling with jealousy and FOMO, but don’t go chasing the white rabbit of keeping up with the Joneses by becoming a slave to consumerism. In the end, it won’t make you happier and it will destroy your path to financial independence. Life shouldn’t be about “monkey see, monkey do” or in the case of the experiment, “monkey see, monkey get really angry and jealous.” We all need to find contentment in our cucumbers and not worry about other people’s grapes. Once we can find contentment, we can embrace the idea of paying ourselves first and strike a balance between present and future enjoyment.


elliott_headshot_bw.jpgAuthor Elliott Orsillo, CFA is a founding member of Season Investments and serves on the investment committee overseeing the management of client assets. He spent nearly ten years as a financial analyst and portfolio manager working primarily with institutional clients prior to co-founding Season Investments. Elliott earned a bachelor's degree in Engineering from Oral Roberts University and a master's degree from Stanford University in Management Science & Engineering with an emphasis in Finance. Elliott and his wife Gigi have three children and like to spend their time outdoors enjoying everything the great state of Colorado has to offer.


Subscribe to our Weekly Insight via email!

 


Transparency is one of the defining characteristics of our firm. As such, it is our goal to communicate with our clients frequently and in a straightforward way about what we are doing in their portfolios and why. This information is not to be construed as an offer to sell or the solicitation of an offer to buy any securities. It represents only the opinions of Season Investments. Any views expressed are provided for informational purposes only and should not be construed as an offer, an endorsement, or inducement to invest.