hello and welcome back to the note the
love of money or avarice or greed is a
sin that's an ancient church teaching
but God and Mammon have always mixed
awkwardly particularly here in Wall
Street and it turns out that greed can
be bad for your wealth now State
Street's Center for Applied Research
under Susan Duncan conducted research in
more than 20 countries and that showed
that you'll be a much more successful
investor if you don't love money for its
own sake the more that people love money
the more money they actually lose and we
define love of money by asking a series
of questions to test their emotional
attachment to money and that's really
what it's all about
what matters is the modern understanding
of behavioral biases we are all of us
hot wired to want to buy it at the top
and sell at the bottom for example and
it turns out that those biases are
exacerbated if you love money for its
own sake we found through the data that
these hi lovers of money they actually
make worse financial decisions and they
have worse financial outcomes as a
result if you love money you're more
susceptible to three major behavioral
bias categories that we found first is
you're much more susceptible to instant
gratification in case you want a
cocktail party term this is hyperbolic
discounting much more susceptible to
this instant gratification so you want
the money you want the money now and
you're much less willing to set enough
money aside to say comfortably retire
the second category that we found is
looking at this hyperactive sort of
behavior around trading frequency they
trade too often they watch the markets
which leads to the third behavior that
we saw which is very susceptible to
greed in fear-based motives they
tendency to buy high sell low depending
upon what the markets are doing now in
general there's a close link between
avarice and economic development in poor
countries that are growing fast people
tend to care a lot about money for
example in China or India in prosperous
countries that have been stable for a
long time such as the Netherlands or
Switzerland people don't care so much
about money the big outlier to all of
this the u.s. the u.s. is in fact the
one biggest outlier and it is much
higher in the scale of love of money
than what we would have originally
anticipated
found very tight correlations with those
countries that have a low level of human
development and/or prosperity they also
have a high level of of money the u.s.
is clearly the outlier here because we
don't have those those problems with
respect to the infrastructure that's
been built out so we should have come to
the point where we could realize self
actualization but we haven't yet in this
country it's irrational love of money it
creates opportunities for the rest of us
Wall Street has turned into a great
financial center by exploiting the greed
and avarice of others so what should we
do about this focus on the goal the ends
not the means and perhaps listen some
religious advice