George Soros had a commentary run in the FT late on Thursday and while the main focus was not of great utility there was a comment in passing that got me thinking a little bit. In talking about the Goldman Sachs story and derivatives he noted that “whether or not Goldman is guilty, the transaction in question clearly had no social benefit.”
The notion of social benefit is interesting. Does anyone have any obligation to even consider social benefit? Is it better to assume that no one cares about social benefit instead caring only about themselves or their bonus or their clientele or their own account as the case may be?
Everyone needs to answer this sort of thing for themselves as there are plenty of right answers.
For individual investors I cannot imagine why anyone would have social benefit in the context of financial matters as a priority. Between benefiting society and not benefiting society I would prefer the former (I’ve been a volunteer firefighter for seven years and counting, been giving away content on the internet for five and half years and my wife is a full time volunteer in animal rescue) but where personal finances are concerned the typical individual does not have the opportunity to be an agent for social benefit or the like.
Making a high priority out of social benefit for individuals becomes even less important if the typical social safety nets (entitlements) end up not being there. perhaps a little Ayn Randian looking out for your own makes the most sense–that is making sure you can take care of what benefits you first and foremost and if you have time left over for the other so be it. Let me be clear that I believe in a living a life of service but successfully protecting your finances from dishonest people, overly flawed investment products and your own emotions is what makes the other stuff possible.
I will tie this in to properly understanding what is important financially. For most people it is simply giving yourself the best chance possible for having enough money when you need it. A point I make often is that beating the market in a given year means a whole lot less than having enough when the time comes. The best way to come at this, IMO, is to save a lot and have some strategy to avoid the full brunt of down a lot (smooth out your ride).
My personal priority is our clients for the selfish reason that is is where my bread is buttered. Thanks to a low overhead we save more than we live on and I have no intention of retiring from this which means very little of our savings needs to be exposed to risk assets so doing anything to jeopardize this dynamic would be sheer lunacy. I am acutely aware of our good luck.
To the original point, taking care of your own yoga mat first and then sorting out everything else will help you solve a lot of this for yourself. I can appreciate the extent to which this sounds preachy but I am very personally motivated to eliminate stress and negative energy from my life and I think this happens by figuring out priorities and avoiding certain situations like being down 50% in your portfolio.