An Investing Lesson From The Greek Philosopher Epicurus

I’m a sucker for ancient Greek and Roman philosophers that made observations about life two thousand years ago that still hold up today. One of my favorite is the observation that the Greek philosopher Epicurus famously made about “the rich man’s new vase.”

It goes like this:

(1) A rich man buys a new vase, and feels a moment of pleasure with his new purchase.

(2) The feeling of joy begins to dissipate, and so he shows his friends the new vase he bought. The joyous feeling returns.

(3) The rich man repeats this demonstration—showing the new vase to his friends—until all of his friends see it. The feeling of joy fleetingly returns each time he shows it to a friend, but after the final friend sees it, the new vase no longer brings the rich man joy.

The observation that Epicurus made 2,300 years ago still holds true today: most people normalize their blessings and good fortune.

When I first went to Washington & Lee, I was completely mesmerized by the beautiful colonnade and the Robert E. Lee Chapel. By the time my second semester classes rolled around Freshman year, I would walk past the colonnade without hardly thinking about it at all—the act of walking by it every day normalized the experience and diminished my feeling of wonderment with each passing moment.

The bottom line is this: newness wears off. That’s why people actually fall prey to the “keeping up with the Joneses” syndrome, even though it is the most clichéd and oft-repeated idioms in personal finance columns. People can’t help themselves. Buying a big home may bring satisfaction at first, but that happiness wears off. So you buy a second home to generate happiness, but that also comes with an eventual expiration date. So you get a boat. That generates some short-term happiness. You can see how this can take over someone’s life.

There is a reason why I spend most of my time writing about dividend investing. It directly related to Epicurus’s observation and the constant human desire for more, more, more. To state the obvious, when you own a dividend growth stock that raises its dividend each year, you are favorably appeasing this “more, more, more” tendency that Epicurus saw in the case of the rich man’s vase.

Look at a twenty-year chart of Johnson & Johnson, courtesy of Chuck Carnevale’s F.A.S.T. Graphs service.


Look at that blue-highlighted teal box. The amount of money that Johnson & Johnson sends your way each year keeps going up, up, and up. It is satisfying, in a very straightforward way, the very human appetite for more, more, more. The $314 received in 1995 dividends doubled around 2000-2001. That amount doubled again around 2005. Those $1,200 dividend checks doubled again around 2013. All from one single $10,000 investment in Johnson & Johnson twenty years ago. And by the way, this assumes no dividend reinvestment, otherwise the doubling would have happened much faster. It’s an entirely passive process that keeps giving you more money from a single decision you made a generation ago. You get a couple Johnson & Johnson’s under your belt over the course of a lifetime, and fun things start to happen to your household balance sheet.

Having a stock pay you more money each year is a great way to fight that “normalization” of life’s fortunes and blessings that Epicurus. Seeing $2,000 dividend checks turn into $2,100 dividend checks the next year, and then turn into $2,225 checks the year after that can be a great way to see your financial house constantly improving. The acquisition of a material good is a momentary pleasure that proves fleeting, and this is why someone people fall into that “more, more, more” trap. If you feel that energy inside you, a great way to harness that impulse is by purchasing the usual suspects of the dividend universe so that you can see more, more, more income hit your checking account each year.

Originally posted 2013-08-08 10:37:32.

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3 thoughts on “An Investing Lesson From The Greek Philosopher Epicurus

  1. says:

    Great post Tim. Two years ago I bought a 500 share block of PM for ~33K. It's currently 533 shares valued at almost 50K and I'm expecting a dividend increase next month to boot. Can't ask for better than that. I'll never sell either since I bought at a 4.5% yield point.

    I'm 44 years old and while I've done pretty well from a savings standpoint over the years my biggest regret is that I didn't convert to DGI earlier on. I was an index person for many years and while it did okay for me I really think I'd be much further along had I just purchased DGI stocks from the get go.

  2. Jeff says:

    This is a really great post Tim. As humans, we all "suffer" from psychological traits such as this one. Reframe the psychology so that the trait is expressed in something that is healthy (purchasing assets) vs something that is generally unhealthy (participating full boar in a consumer lifestyle). Great post.

  3. ZaVodou says:

    Yeah, Epicurus was a great philosopher. That's why I can't understand people like Warren Buffett. He has billions of Dollars. And his only target is to make more money.

    I read that he reads 500 pages every day to find companies that are undervalued to make more money. But I don't know if fnding undervalued companies is the meaning of life.

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