#7: What fund managers can teach us about what really matters

2nd November, 2020

Welcome to the Idiot Money newsletter. The newsletter that prefers companionship to caviar. This week: becoming wiser with money by understanding that no matter how often and how subtly we act otherwise, costliness is never a substitute for connection.

Things that cost a lot are crappy substitutes for things that mean a lot. But as long as we see external prices more clearly than internal benefits, the con will continue to consume resources for no reward.

I’m dining in a private room in one of the swankiest restaurants in London. Around me, the thick scent of leather and mahogany. In front of me, food both delicate and demanding of reverence; each of the seven courses dances on the tastebuds with a commanding balletic grace.

The same cannot be said of my dining companions. At least they’re paying. And at least I get to claim two hours of Continuing Professional Development points, which’ll save me pretending to have learnt about investments some other way later on.

The food’s not really free, of course. Nor is it really being paid for by the designated driver of the company card. It’s sponsored by the investors in the fund whose managers are trying to sell said fund to my firm. And of course the vampiric ability of fund managers to suck the time out of me and the life out of that time ensures I’m paying in other ways, foolishly unaccounted for when accepting the invitation to a ‘free’ feed.

The empty suits the fund-management firm has plucked off the conveyor belt are talking about the size of the fund, the manager’s track record, and other stuff with zero bearing on the likely future performance of the investments. Past performance is no guarantee of future performance, and the quality of a chap’s tailor and public-school debate coach are no guarantee of the quality of his ability to guess what’s going to happen to a company’s share price relative to what the rest of the world thinks is going to happen to it. They know this. They know I know this. They also know that I can’t just add their funds to our portfolios even if I wanted to.

The empty suits don’t care. They’re zombies: 'both insatiable and insubstantial, everything they eat seems to go straight through them'. A living metaphor for how our desperate search for security is continually crushed by the batshit belief that psychological needs can be met by material consumption. They’re here because they can be and because one of their KPIs is meetings with advisers, however pointless. Their investors are wasting money paying them; there’s little harm in wasting it in return.

Not that the food isn’t great. I love a bit of Michelin-graded grub as much as the next man. Actually, the next man is Steve, a colleague with a penchant for Pizza Express and a mystifying tendency to order his steaks well-done. I love it more than him.

But nothing you consume is a substitute for anything you connect with. Where the human connection you are ultimately seeking exists, costly consumables are irrelevant to your enjoyment of an experience.

To be inside the heads and bank statements of the rich is to confirm beyond doubt that just because you can, it doesn't mean you should.

One of the best evenings I ever had involved dining in a truly terrible restaurant. The company was good, so it didn’t matter. Crucially, the evening wouldn’t’ve been any better – it wouldn’t’ve added anything more to the Goodness of my life – if it had been somewhere ten times the price. Good meals with terrible company are better than bad meals with terrible company, but when the company is good enough, as long as you’re not being poisoned, the only thing that correlates with the price of whatever you’re consuming is your inability to do other stuff with it.

Standard of living does not equal cost of living; quality of life does not equal access to comfort. [A main theme of the book, e.g. here]

There are people who spend fortunes every year on eating out, without it adding anything to their quality of life. We know this just as we know polo isn’t ‘better’ than pool – and yet most of us forget it the second someone dangles a ‘free’ £100-a-head meal in front of our maladjusted maws.

We clutch at social performance as a substitute for something more meaningful, because we are too distracted and deceived to understand what it is we’re subbing it in for. [Continued...]

As the School of Life put it:

We choose the wrong things because we don’t know ourselves well enough to select what will best work for us. […] Even apparently modest things like what we put in the trolley in the supermarket or what shoes we wear are distillations of large, nebulous notions: who we think we are, how we wish to live and what we think will contribute to our well-being.

Selling ourselves to crappy substitutes is a recurring consequence of our self-deceptive tendencies. We blindly rush to meet needs with stuff we’re promised will work, but never does… but because we’re deceiving ourselves, we fail to connect our blindness to our failure to find fulfilment, and so don’t do the work required to bugger it up a bit less next time.

The process of finding fulfilment can feel frustrating, flummoxing, and just too damn fluctuating. But the flux is inevitable, so it’s a crap excuse for grabbing at substitutes that promise solidity, while delivering only decay:

So desperate are we to find it, that we attach the label ‘peace’ to anything offering a hint of temporary external calm. We substitute peace of blind for peace of mind; yet the peace we seek can come only from within.