I heard a Chris Rock joke many years ago. He said, “If Bill Gates woke up with Oprah Winfrey’s money, he would jump out the window.”
Like most comedy, it’s funny because there’s an element of truth in it.
All wealth is relative. There’s no such thing as an objective measure of what wealth is.
A rookie baseball player in the US would earn around $500,000 per year. He is by any definition rich. But let’s say he is friends with Rory McIlroy (the golfer). Rory signed a contract with Nike in 2017 that sets him up to earn $300 million through the next decade. That’s $30 million a year.
By comparison, the rookie baseball player is broke. But then let’s think about Rory. $30 million a year is an insane amount of money. To make it on the list of the top 10 highest-paid hedge fund managers last year, you need to earn at least $400 million a year. So relative to them, even Rory looks broke.
And then let’s compare those highly paid hedge fund managers to one of the top 5 highest-paid hedge fund managers. To be on that list you need to earn at least $800 million per year. So compared to them, even the $400 million hedge fund manager looks like they are falling behind.
And now let’s compare those hedge fund managers to a person like Warren Buffett, whose personal net worth went up by $30 billion in 2021. And then compare Buffett to someone like Elon Musk, whose net worth went up by $200 billion in 2021. Which, if you’re keeping score, equates to more money per hour than what Rory makes every single year.
There’s virtually no limit to the comparison game. No matter how much money you are making, there is probably someone earning not just more money than you, but way more money than you. And when you realize that you realize that the comparison game of trying to sum up how wealthy you are or might be is a game that’s almost impossible to win.
Wealth is completely relative. Someone who feels completely poor in one context could actually feel rich and look rich in a different context through someone else’s eyes. It’s all relative.
The most difficult financial skill is getting the goalpost to stop moving. And today’s level of global wealth has moved it a town over.
Median household income adjusted for inflation has more than doubled since the 1950s, but I guarantee that most people don’t feel twice as wealthy today than in the 1950s. Because their expectations have shifted.
It’s always been like that, and it always will be.
