Page 98 - Morgan Housel - The Psychology of Money_ Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

Money has many ironies. Here’s an important one: Wealth is what you don’t
COBACOBA
see.

My time as a valet was in the mid-2000s in Los Angeles, when material
appearance took precedence over everything but oxygen.

If you see a Ferrari driving around, you might intuitively assume the owner
of the car is rich—even if you’re not paying much attention to them. But as

I got to know some of these people I realized that wasn’t always the case.
Many were mediocre successes who spent a huge percentage of their
paycheck on a car.

I remember a fellow we’ll call Roger. He was about my age. I had no idea
what Roger did. But he drove a Porsche, which was enough for people to
draw assumptions.

Then one day Roger arrived in an old Honda. Same the next week, and the
next.

“What happened to your Porsche?” I asked. It was repossessed after

defaulting on his car loan, he said. There was not a morsel of shame. He
responded like he was telling the next play in the game. Every assumption
you might have had about him was wrong. Los Angeles is full of Rogers.

Someone driving a $100,000 car might be wealthy. But the only data point
you have about their wealth is that they have $100,000 less than they did
before they bought the car (or $100,000 more in debt). That’s all you know
about them.

We tend to judge wealth by what we see, because that’s the information we
have in front of us. We can’t see people’s bank accounts or brokerage
statements. So we rely on outward appearances to gauge financial success.
Cars. Homes. Instagram photos.

Modern capitalism makes helping people fake it until they make it a
cherished industry.