The Secret To Happiness

Expect less

“The secret to happiness is to lower your expectations. That is what you compare your experience with.

If your expectations and standards are very high and only allow yourself to be happy when things are exquisite, you'll never be happy and grateful. There will always be some flaw.

But compare your experience with lower expectations, especially something not as good and you'll find much in your experience of the world to love, cherish and enjoy, every single moment.”

Charlie Munger

A couple of weeks back Nvidia, one of the biggest and most important companies in the world, reported knockout quarterly earnings. Revenue of $30 billion, more than double what it was just a year prior, and earnings which were 168% higher than they were twelve months previously.

Nvidia are the sole dealer in the Artificial Intelligence arms race. They can’t miss. This is, by any definition, explosive growth and these are, by any metric, knockout numbers.

And yet, the stock was down 10% off the back of these numbers.

Why? Expectations.

Short term moves in the stock market are driven entirely by sentiment, and that sentiment is entirely driven by the relationship between outcome and expectation.

Put simply, are things better or worse today than I expected them to be yesterday? Do I feel more positive about this company’s prospects, or the prospects of the world at large, than I did yesterday?

This phenomenon explains why a company like Nvidia which is killing it can be marked down following results while a company which is just barely getting by, but which reports earnings ahead of expectations, can rise markedly in price. It’s all relative.

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When we invest, the line that divides success and failure is invisible to us in real-time. We cannot possibly know where the aggregate expectation level of investors all around the world has been set.

We can look at the valuation of a company and a market and get a sense of how investors feel about it, but we cannot definitively know for sure. Where this line sits is entirely outside of our control.

In life however, we are entirely in control of what defines success.

Although it may not be particularly fashionable to admit, but there comes a point where the relentless grind for more might not be all that appealing. Not all of us can take over the world.

Ambition is no bad thing. The world relies on it. But the internet and social media shine an artificial light on what represents success, what is and isn’t realistic.

Spending your life striving towards a goal that is unattainable doesn’t sound much like fun to me.

It’s all the more sad when the dream that you’ve been flogged in the first place, and worked so hard towards, was a lie. A mirage painted by a charlatan to flog a pyramid scheme.

We can all do with a dose of reality occasionally. If you earn more than $60,000 (£45,700) a year, you are in the top 1% of earners globally.

Just let that sink in. In the great biological lottery, the man upstairs lined up 100 people and ended up planting you in a household based in a safe country with a stable government with a good education system.

Yes, you sure worked hard and you made the best of your talents but of all the raffle tickets to pull, being born when and where you were was the most valuable I can think of.

However because my neighbour over the fence went to Italy this summer and puts his children through private school I feel a fraud. Hard luck chief, should have worked harder.

Graft and consistency offer the keys to financial freedom, and doing hard stuff offers its own reward through satisfaction. There is beauty in the struggle.

But there has to come a time when we all need to step back and appreciate just how lucky we all are.

Humour me for a moment here. If we get to define what success looks like in each of our lives, what would happen if we moved the goalposts a little closer? Would that make us appreciate the moment a bit more? Take things a bit slower?

Lunch in Mallorca. Beats a rainy dash to Pret any day of the week.

In those quiet moments of contentment, that’s where the magic happens.

Have a great weekend.