How to Handle Envy Here's what Charlie Munger recommends... First, become aware of the role of envy. Accept it as real - and natural. And then put it into perspective. As Munger says, "Someone will always be getting richer faster than you. This is not a tragedy." Munger himself has a net worth of $2.2 billion. But he has been lapped by many younger rivals in the billionaire money race. Yet he genuinely doesn't care. Second, have an investment plan in place and stick with it. This plan gives you a road map to prevent envy from taking control of your decision-making process... and reduces your chances of making knee-jerk investment mistakes. The Salve of Historical Perspective Munger offers some terrific psychological insights in his speech. I strongly urge you to listen to it. That said, I am surprised - perhaps even disappointed - that Munger doesn't draw more on the lessons of financial history. After all, Munger is well aware of the eternal story arc of financial manias that are the source of so much envy. Whether it's Dutch tulip bulbs in the 1630s, shares in the South Sea Company in 1720, the Florida land boom of the 1920s, the Japanese stock market bubble of the 1980s or the dot-com boom of the 1990s... Financial manias start, thrive and collapse in remarkably similar ways. A handful of speculators buy in early. They make paper fortunes investing in a new technology or a previously undiscovered asset class. Popular culture fêtes them as brilliant, cutting-edge thinkers unfettered by convention. Invariably, they herald a "new era" where the object of their obsession can do nothing but go up forever... Then, quietly, the smart money begins to sell. The bullish story begins to fray at the edges. After an extreme spike that hits record highs, prices start to fall. Yes, prices rebound somewhat, giving false hope to this new era's prophets. But, inevitably, the bubble pops. Prices collapse. Yesterday's heroes become today's zeros. A shockingly high number end up bankrupt or in jail. (An excellent short introduction to this perennial narrative is John Kenneth Galbraith's A Short History of Financial Euphoria. Galbraith even mentions then-future President Donald Trump as an example of a billionaire who had gone bust in the 1980s real estate boom.) So what's to be done? The parallels with today's financial markets are clear. Envy of newly minted millionaires is everywhere. But accept that there is zero upside in envy. Stick with your long-term plan that fits your psychology. And take comfort in the knowledge that you know how the story ends. Good investing, Nicholas P.S. I'm looking forward to sharing my thoughts on the boom-and-bust cycles that I mentioned above during The Oxford Club's upcoming Wealth, Wine & Wander Retreat through Paris, Normandy and Amsterdam. I hope you'll join me on this extraordinary adventure, but you need to act quickly - we are down to the last few open spots. Click here to view the itinerary, then contact Maggie Stephens at 800.638.7640, ext. 125, or Maggie@aesu.com to learn more and register. | 
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