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Stewart Cowley: it's a wonderful life
by Stewart Cowley on Jan 16, 2014 at 14:05
I have some corporate bonds that I’ve held for about five years that mature in 2019.
The bonds are investments in companies that pay their interest on time and will hand back the original sum invested at maturity; the income they produce pays for my children’s school fees. They have gone up and down in price a lot during the financial crisis but I have never touched them because they satisfied my needs. I am very happy.
I have been advised from time to time to sell them and buy something else because I should want more, even though my needs are already being met. People have pointed towards indices and told me that I am, in all respects, a fool for not switching from one thing to another.
This is an interesting phenomenon to me because, as far I can tell, there are no cases where human beings are any happier when they switch from what they need to what they want or are told they want. There is always a residual sense of discontent afterwards.
To illustrate my needs/wants dilemma it would be useful to become a student of the film ‘It’s a Wonderful Life’.
It seems to me it is the receptacle for all that you could conceivably need to know about finance and banking; it contains all the frailties of the psyche’s relationship to money whilst illustrating the needs/wants dilemma more lavishly than should be possible.
There is a scene at about 55 minutes where there is a run on Bailey Bros Building and Loan Association because the local venal banker, Mr Potter, calls the loan it has made to its smaller rival. Uncle Billy has to hand over all the ready cash that keeps George Bailey’s Building and Loan afloat.
They now have no reserves. Savers get wind of it and cause a run on the bank, demanding their money back. In a moment of self-sacrifice Mary, George’s new wife, holds up two thousand dollars they were about to spend on their honeymoon.
The gathered hoard approaches the till:
George Baily (GB): Alright Tom, how much do you need?
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