La medida de lo suficiente

This year's market presents an unconventional face. Despite the surge of artificial intelligence in headlines and conversations, sectors such as industry and finance, which are less trendy, are experiencing a significant revaluation whenever they deliver strong results. The name of the moment coincides with the silent return of once forgotten companies.

Let's consider some figures. A globally diversified portfolio accumulates 14.3% in euros throughout the year, which is a good result. Yet, it is still unsettling, as just beside it lies a much more eye-catching figure: the semiconductor index rises by around 74% so far this year. Rarely do we compare our portfolio with the market or with what has gone wrong.

Instead, we compare it with what is rising the most. This question eventually reaches the offices: why do I earn less than this person? The question seems innocent, but it hides something interesting. What bothers us is not having lost money; our portfolio has actually gained. What bothers us is that someone else has earned more.

Envy in investment pushes us to sell what we understand and buy what we do not. We start measuring ourselves against others instead of our objectives, and envy becomes a bad advisor, pushing us to sell what we know for what we do not. The number that hides another face is the semiconductor index, which rose by 74% in the year but also fell by 28% from its highs and is currently 15% below.

We usually look at the result and rarely at what it took to maintain it: behind that 74% there are months of declines and perhaps more than one night wondering if selling was the right decision. The diversified portfolio beside it may seem boring, but it is not: it has delivered very good returns with fewer surprises, and with something not seen in any table: peace of mind.

Ultimately, this is no longer a market problem, but one of expectations. In Morgan Housel's latest book, The Art of Spending Money, he defends an uncomfortable idea: our satisfaction with money depends less on the return we obtain and more on the difference between what we obtain and what we expected. And of all that enters into this account, the only thing we control entirely is the expectation.

The problem is that expectations are rising very quickly. Psychologists call it the hedonic treadmill, and it describes what happens to us with money: after a good year, the satisfaction is short-lived, as it quickly becomes the new benchmark, and we start looking upwards again. We run, but the ground moves beneath us. That's why earning more rarely calms the unease for long: the benchmark rises almost at the same pace as the portfolio.

A good year in numbers can end up feeling mediocre, not because we have earned little, but because we expected more. That's why the important question is not how much the other earns, but what is enough for oneself. When we copy another's expectation, we assume their risk without knowing their context: their horizon, their goals, what they can tolerate when things go wrong.

Setting what is enough for oneself focuses the goal on a personal one rather than a borrowed result, and puts an end to the continuous comparison that often leaves us unsatisfied. Returning to semiconductors: those who have endured that position all year, with its ups and downs, are not more clever by force. They simply play a different game: a different tolerance for declines, a different timeline, a different risk profile.

The case of Situational Awareness illustrates this well. It was a hedge fund, one of those for large investors with the freedom to concentrate their bets and use borrowed money to multiply them, and became one of the most talked-about names: it earned more than 400%, managed tens of millions, and was led by a young former OpenAI researcher who many saw as one of the minds of the moment.

However, when the market turned in July, that very borrowed money that made it shine forced it to sell almost its entire portfolio at once, and lost two-thirds of its value in a single month. What's revealing is that the companies in which it invested continued to do reasonably well: it did not make a mistake in the idea, it made a mistake in the dosage.

And that's the problem with looking at the neighbor's profitability: we almost never see the dosage of risk it carried. It's one of the most common and uncomfortable conversations in advising. In a market as dispersed as this one, what threatens the tranquility of an investor most is not their portfolio, but the mirror in which they decide to look at themselves.

No one can win all comparisons. What can be done is to help set own and realistic expectations, the only thing truly in our hands. The market will always have someone who earns more than us. It is what it is and will not change. With time, one ends up understanding that it is rarely a lack of return that leaves us wanting; what we struggle with is knowing when we have enough.

Perhaps that is the most difficult and least taught skill of all: not the one of earning more, but the one of recognizing when we have enough.