A classic study by scientist Francis de Waal saw him train monkeys to use stones as a form of currency, exchanging them for slices of cucumber.
De Waal’s monkeys were perfectly happy with this arrangement until, one day, he started randomly giving some of the monkeys lovely, juicy grapes instead of cucumber slices in exchange for the stones.
This injustice did not go down well. The monkeys who continued to receive cucumber slices began to notice that their mates were getting a better deal, and rebelled by throwing the cucumber slice back in de Waal’s face. Some refused to “pay” for cucumber at all anymore.
As social psychologists Adam Galinsky and Maurice Schewitzer wrote in their book “Friend and Foe: When to Cooperate, When to Compete and How to Succeed at Both” – the de Waal experiment “demonstrates that our evolutionary ancestors did not evaluate their outcomes in isolation; rather, they evaluated outcomes in a comparative process”.
So, while Roosevelt may have been completely right when he said that comparison is the thief of joy - knowing this doesn’t necessarily make it any easier to stop comparing our own fortunes to others. It’s inherent within our nature.
This compulsion for comparison extends to our fortunes as investors as well. Specifically, and to use a totally made up example that definitely hasn’t happened in real life, an investor might write off his own perfectly acceptable returns in light of how his mate down the golf club says that they have got on.
Technological development has meant that information has never been more easily accessible to investors. There has been a bull market in transparency.
Online portals for investment platforms become more and more sophisticated on the assumption that what clients want is more. More granularity, more detail, more snazzy charts.
This creates lots of work (and money) for consultants, but I’m not entirely convinced that any of it actually helps the end investor.
Entire industries are devoted to providing benchmarking for investment performance. You can compare the performance of your portfolio to almost any index known to man should you want to.
But when it comes to investing for your future, the only thing that actually matters is whether you are able to do the things that you want to do, when you want to do them.
No actual human being ever invests because they want to outperform the FTSE 100. Well, no one that you would want to go for a pint with anyway.
Actual people invest because they have hopes and dreams, goals and aspirations. They invest because they want to have a dignified retirement. Because they enjoy the security that wealth brings.
And guess what? Your playing partner at the golf club will have different aspirations to you. Good for them.
They will have a different plan, with different objectives, and potentially a wholly different investment strategy that might fit them like a TaylorMade glove, but may be totally unsuitable for you.
Our outside perception of someone else’s situation can also differ very much from the reality as well. The person who claims to have a juicy grape behind their back, might just have a boring old slice of cucumber instead.
The ultimate arbiter of your investment performance is whether you are still on track to meet your financial plan. Full stop.
Who cares whether you are a couple of percentage points behind some arbitrary benchmark in a given year, if you are on track to live the life that you want then surely that is enough?
But here is the rub. By establishing a plan and sticking to it, I promise you that you will get a much better outcome than the vast majority of the population.
This is because you will have a process. A process that you can tie yourself to, come hell, high water or the next shiny investment object.
While comparison is undoubtedly the thief of joy, it is also often the thief of returns as well.
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