By Charles Payne, CEO & Principal Analyst
Over the weekend Charlie Munger, Vice Chairman at Berkshire Hathaway (BRK), mentioned that envy was more of a risk to the economy than greed.
There were shockwaves around the country but this isn’t the first time that Charlie has made such an observation. In fact, Mr. Munger has on several occasions credited Warren Buffett with saying “it’s not greed that drives the world, but envy.” From his point of view, Munger says that the origin of envy is desire for man to acquire scarce resources. The combination of failure to attain those resources and seeing someone else get them really stokes envy. I guess in some ways it means that you’re lucky if someone envies you although it’s not so flattering when they try to take what you have attained.
“Eat your heart out son, you never was a friend to me” – Fat Joe “Envy”
From Jesse James (the gunfighter) to Martha Stewart, envious friends have taken down the mightiest of all time. And, I mean the mightiest! The question is can envy take down an entire nation. I think that the answer is an empathic yes. Politics of envy put President Obama in office where I hoped, and even thought, he would change the tone of harsh criticism and anger.
Instead, finger-pointing and the blame game are pitting American against American to a degree probably not seen since the eve of the Civil War. That’s scary stuff. One of the Seven Deadly Sins, envy is already such a beast that it doesn’t need to be fed, especially fed red meat and hot sauce. Yet we are told each day that someone or some entity has something we should have.
Moreover, we are being told that we can get it, just by taking it. While I’m inclined to agree with Buffett, Munger, and Fat Joe I know when it comes to envy, resources don’t have to be redistributed as long as they are taken from those that have them. This is also known as crabs in a barrel syndrome where crabs would deny freedom to one of their own even though pulling a fellow crab from the lip of a pail does nothing to ensure their survival. My cousin who works for Verizon (VZ) told me over the weekend that the company is going to cut college reimbursement and free dental procedures because of a lack of takers. I went to college while in the Air Force, none of my friends did. If those things weren’t offered at Verizon people would gripe and unions would scream bloody murder.
Trying to keep up with the Joneses probably does drive the world, and that’s a good thing. When we are told we are supposed to have what the Joneses have without applying the same elbow grease things become dangerous. Still, even with gentle nudging from powerful people Americans know it’s wrong to take what they haven’t earned. To that end, it has become necessary to portray those with the resources as being more than fortunate and hard working but as evil. When that happens, darker parts of our soul are given the green light to assuage our envious impulses by taking rather than working harder and smarter. Munger has long wondered why there isn’t more research on this topic. He notes how scantly covered the topic is even in psychology books and studies.
One of his theories is the subject of jealousy is seen as taboo. It is highly offensive to label someone jealous so people rather not discuss or study it. Yet, it’s so obvious, and according to Munger, is fiercest among siblings at younger ages (you’re not alone if you’re thinking “Marsha, Marsha, Marsha”) we need to confront it and understand it. But, mostly we shouldn’t allow it to destroy the nation. A popular saying goes: “don’t hate/envy the player hate the game.” But I say don’t hate the game either. Sure, we can tweak the game and the rules of the road but this nation is great because the envious have routes to get their own resources. If you really want it then go out and get it!
The Market
Speaking of hating and loving the game, the stock market is on an emotional rollercoaster. Yesterday’s rebound reinforced one key fact about this rally, sellers are reluctant and buyers just need an excuse. I love the resolve as it suggests a major breakout is possible when the right news hits. In meantime, equities have been spinning their wheels as profits are being consolidated. The trading range is tight with solid support around 11,000 for the DJIA and stubborn resistance around 11,200. Right now it feels like a big move is right around the corner, but in which direction? You have to bet to the upside until it’s clear that the direction has changed. Right now one could argue that stocks have entered into a secular bull market, but some believe equities are in a secular bear market.
While investors await Friday’s jobs data they will grab any news that could be construed as positive. That brings us to yesterday’s auto sales results.
Charles Payne is the CEO and Principal Analyst of Wall Street Strategies . This post was republished, with permission, from his company’s column, WStreet Market Commentary.
