Greed

What is greed exactly. One of my hobbies for the past several years has been speculation in stocks and more recently foreign exchange markets. I've made relatively decent profits, but have also had some truly painful losses. They say fear and greed are the two strongest human emotions driving market movements. I would add to that hope.

Greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures, the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge, has marked the upward surge of mankind and greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the U.S.A. - Gordon Gekko from Wall Street

Gekko's quote inverts the traditional view that greed is evil, but does little to explain what greed is.

a selfish and excessive desire for more of something (as money) than is needed. - Merriam-Webster.com

The dictionary definition introduces the concept of excess and desire. But what exactly is excessive? Is this limit self imposed or imposed by society. And who defines what is needed? For example, is it excessive for a billionaire to want a new yatcht? Is it excessive for someone from the working class to want a new yatcht? Who really needs a new yatcht anyways? I mean, don't we all just need basic food and shelter? In that case, are we all guilty of excessive desire?

Or is the concept of greed just another tool of social control to justify limiting a person's potential for growth? That is, if greed is bad, then wanting to improve your station in life is bad and we should maintain the status quo. This definition seems to be created for the benefit of those who have everything that one would desire to have and to the detriment of those who seek what those who have have.

It also mythologizes a hierarchy of value between the haves and the have nots. That is, by creating a prohibition against the desire for accumulation, it implies that desire is a one way street to more but why isn't there a analogous prohibition against sacrifice? Or a warning against the desire for less than what is needed? It seems like sacrifice is a virtue while greed is a vice. Now who would want people to give up what they had and not want more than what they have? Perhaps, those who have it all and want to keep it. Those who write the dictionaries, run the churches and those in "power"?

Greed is an excessive desire to possess wealth or goods with the intention to keep it for yourself; Greed (Latin, avaritia), also known as avarice or covetousness, is, like lust and gluttony, a sin of excess. Greed is inappropriate expectation. However, greed is applied to a very excessive or rapacious desire and pursuit of wealth, status, and power. St. Thomas Aquinas wrote that greed was "a sin against God, just as all mortal sins, in as much as man condemns things eternal for the sake of temporal things." In Dante's Purgatory, the penitents were bound and laid face down on the ground for having concentrated too much on earthly thoughts. "Avarice" is more of a blanket term that can describe many other examples of greedy behavior. These include disloyalty, deliberate betrayal, or treason, especially for personal gain, for example through bribery. Scavenging and hoarding of materials or objects, theft and robbery, especially by means of violence, trickery, or manipulation of authority are all actions that may be inspired by greed. Such misdeeds can include simony, where one profits from soliciting goods within the actual confines of a church. As a secular psychological concept, greed is an inordinate desire to acquire or possess more than one needs or deserves, especially with respect to material wealth. - Wikipedia

The wikipedia definition goes a little deeper into the dictionary definition, but essentially is saying the same things.

Greed is a concept for social control, but I think it has the potential to be of true value if defined properly. And the basis of this will be my experiences in the financial markets. The term excessive needs some unpacking here. Excessive in relation to the benefits of greed should be defined in terms of your capacity to manage your desires in relation to your capacity to possess your desires. That is, it is healthy to have desire for more but it becomes a problem when that desire for more interferes with your ability to acquire more.

For example, if you want to make a millions dollars and you are so sharply focused on making a million dollars that you make overly risky bets with your one hundred dollars, I would consider that an unhealthy greed. The healthy thing would be to maintain that desire to make a million, but to also realize that a gain of ten here or twenty there is an incremental and reasonable gain given the amount of capital one has. It's a bit of an exaggerated example, but illustrates the differences between when greed is healthy and when it becomes unhealthy.

In terms of my experience, I sometimes made the error of setting a definite short term profit goal that overrode my sense of the reality of the markets at a given moment in time. That is, I was set on making a certain profit and I would fail to take a smaller profit because that was not what my goal was. Often times, this would lead me to hold on to a position that I eventually took a loss on. I may have made an accurate speculation in terms of market direction but my sense of magnitude was distorted by unhealthy greed.

I'm not sure if this applies to professional portfolio management because they work on a completely different level of complexity. I'm a hobbyist in terms of financial markets, but I find that it is a great place to test hypotheses like my above concept of greed, because the feedback is immediate and quantifiable. Though, perhaps I'm creating a moral myth where none exists and success in financial markets depends largely on access to information, experience and training. And my desire to draw ideas about concepts of virtue and vice is delusional...