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An excessive desire for food
or wealth
- Oxford American Dictionary
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It is said that the two most important
factors affecting the state of investing are fear and greed. With respect
to fear, I believe it has a lesser investment impact than greed. For
instance, if an investor is fearful he will normally sell his holding and
probably swear off common stock investing for a few years until the greed
factor reappears. Fear, I contend, is transitory. Greed, in my opinion is
an all-powerful and more destructive force. It consumes the starry-eyed
investor and, as a result, irrational and highly negative investments are
often undertaken. An excellent example was the high tech mania of late
1998 to early 2000.
Over the past few months during the
course of my reading I have come across a number of quotations on
"greed". I have selected a few of the most perceptive thoughts:
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Greed is a bottomless pit
which exhausts the person in an endless effort to satisfy the need
without ever reaching satisfaction
- Erich Fromm
From top to bottom of the
ladder, greed is aroused without knowing where to find ultimate
foothold. Nothing can calm it, since its goal is far beyond all it
can attain. Reality seems valueless by comparison with the dreams of
fevered imaginations; reality is therefore abandoned.
- Emile Durkheim |
But perhaps the most simplistic quote
on greed comes from Donald Trump:
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"The point is that you
can't be too greedy" |
Interestingly we have heard this
statement countless times but on the other hand how often have we heard
the phrase "you can't be too fearful". The answer is
infrequently.
The most pithy comment on greed,
however, comes from the late Malcolm S. Forbes written over 15 years ago.
Bear in mind that his comments, made over a decade and a half ago, were
very perceptive, erudite and express remarkable relevance to our world in
2003.
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The most widespread concern
about Wall Street is over its standards, ethics, morality -
triggered by the multi - $billions made from illegal machinations.
Many are deeply worried about the consuming eagerness of yuppie
young to get rich quick - an eagerness triggered by the number who
have. A desire to get rich quick is new? Greed is new? No. They're
as old as Adam's fondness for Eve's apples. -
Malcolm S. Forbes (1987) |
To conclude, clearly the greed factor
is neither novel nor in short supply. Greed can be self-destructive and a
huge vapourizer of wealth and happiness. With respect to investments it is
a detrimental force that must be dealt intelligently with at all times.
Irwin A. Michael, CFA
