“Life is not fair. Get used to it.” – My dad
The world brims over with people who seek to make things fair. And there’s an investment implication, of course – which I’ll get to in a bit.
But this very human (and very childish) yearning for fairness goes much deeper than profit and loss in your stock holdings.
Whether it’s our dear leader President Obama boldly telling us that successful small business people deserve neither the accolades for their success, and therefore the fruit of their labor – that these fruits need to be equitably divvied up among Obama’s constituents…
Or it’s a madman in a movie theater, grasping for some form of meaning in the form of mass-murder destruction as revenge for some form of unfairness he’s experienced…
Or it’s something as petty as cutting off a bad driver on the highway…
We’re all guilty of trying to make things “fair.”
There’s even a powerful human capacity to make things fair in a good way. If a neighbor shovels your driveway, you feel a strong need to get even with them – to bake them a pie or give them a hand with groceries.
Psychologists call this phenomenon “reciprocation,” and it’s quite powerful.
So powerful that people like Obama have been motivated to hold up the mantle of “making things right” for people he perceives to be unfortunate.
So powerful that men go mad and slaughter innocent people because they can’t handle whatever unfair hand they believe they’ve been dealt.
So powerful that you may find yourself digging out a neighbor’s car next winter even if you don’t particularly like them.
And the thing is, most people invest with their sense of fairness first and foremost.
People think they can punish their losing positions into winning ones. Or that they’re “due” for a winner.
It’s not true. Abandon all hope for fairness in the market. The best you can hope for is that you will deserve to succeed.
And look to take advantage of the very idea that people seek fairness and reciprocity.
Well I’d suggest for one that you should avoid any stock that comes into your inbox as an advertisement. No one is going to give you a free stock tip in your inbox out of the kindness of their heart.
But more importantly, look for investment trends that benefit from folks who want to make things fair.
Ben Bernanke, under the subtle tutelage of the Federal Reserve mandate and President Obama’s goals, is trying to juice stock prices with easy money policy. Stocks will likely benefit in the short term.
But long term, real scarce assets will persevere through fairness and unfairness. There’s no scarcity of stocks or shares out there. But there’s definitely a scarcity of commodities. And where our hopes for fairness butt up against the reality of scarce commodities, the commodities will win every time.