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James Montier’s piece from the other day got me back to reviewing some of his past work and these comments on happiness really jumped out at me.  Investors are a funny lot.  They’re in the constant pursuit of profit, but few actually know what money is.  And in most cases money is mistaken as the end and not just the means to an end.  That end of course if some form of happiness.  Granted, happiness is different things to different people, but we seek profits for the same reason – this means helps us achieve some end that satisfies a personal desire generally resulting in happiness.  And it’s easy to mistake money for the end in this pursuit.  But of course, the two are not the same thing.  Money is not wealth.  Money is not happiness.   Anyhow, I’ll get off my soapbox and let Montier take it from here:

“Don’t equate happiness with money. Materialistic pursuits are not a path to sustainable happiness.

The industry I work in is very money-oriented. People measure success or failure in terms of monetary gain. Yet when I discussed with my wife, friends, and colleagues what people define as happiness, money rarely came up. Beyond a certain level of wealth, it seemed to make little difference.

People in this business work insane hours for ludicrous amounts of money, but they don’t have time to enjoy it. I didn’t understand it. We equate wealth with happiness. But the more people I spoke with, the weaker that relationship seemed to be.

We have evolved to value relative happiness over absolute happiness. But just because we developed that sense of relative standing in caveman times, is that really today’s ultimate goal? If I am content with what I have, why do I need to look over the fence at my neighbor’s car?

…If you are after specific investment advice, stop reading now. We seek to explore one of Adam Smith’s obsessions: what it means to be happy. We also discuss why that’s important to investors, and how we can seek to improve our own levels of happiness. The list below shows our top ten suggestions for improving happiness.

  • Don’t equate happiness with money. People adapt to income shifts relatively quickly, the long lasting benefits are essentially zero.
  • Exercise regularly. Taking regular exercise generates further energy, and stimulates the mind and the body.
  • Have sex (preferably with someone you love). Sex is consistently rated as amongst the highest generators of happiness. So what are you waiting for?
  • Devote time and effort to close relationships. Close relationships require work and effort, but pay vast rewards in terms of happiness.
  • Pause for reflection, meditate on the good things in life. Simple reflection on the good aspects of life helps prevent hedonic adaptation.
  • Seek work that engages your skills, look to enjoy your job. It makes sense to do something you enjoy. This in turn is likely to allow you to flourish at your job, creating a pleasant feedback loop.
  • Give your body the sleep it needs.
  • Don’t pursue happiness for its own sake, enjoy the moment. Faulty perceptions of what makes you happy, may lead to the wrong pursuits. Additionally, activities may become a means to an end, rather than something to be enjoyed, defeating the purpose in the first place.
  • Take control of your life, set yourself achievable goals.
  • Remember to follow all the rules.”

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