Should we pay attention to rich people?

Welcome to the twelfth post of The Invested Counsel—thoughts about financial planning for young lawyers.

I recently finished the novel Trust by Hernan Díaz. It tells the story of Andrew Bevel, a fictional investment banker from the early 20th century who became wildly successful during the 1920s (when he was popular with the public), as well as during the Great Depression (when he was hated by the public). The novel is structured in four sections, each of which is intended to give a Rashomon-style, incomplete understanding of who Bevel was: a novelization of Bevel’s life; a draft memoir written by Bevel through a ghostwriter meant to refute the novelization; a memoir from the ghostwriter about helping Bevel write his draft memoir; and the diaries of Bevel’s wife.

The book is great, as evidenced by the fact that I liked it, and it won the Pulitzer Prize for fiction in 2023. I think litigators in particular would be attracted to the unique structure of the book, which invites the reader to develop their own narrative of what actually happened based on the evidence available, which can be untrustworthy and incomplete. As you move forward through the book, you both learn more with each section and understand less (since what comes later in the book casts doubt on what happened earlier in the book).

A rich person I pay attention to: Warren Buffett

In last week’s post, I quoted a long passage from The Snowball, a biography of investor Warren Buffett, and his realization at an early age that compound growth is a crucial factor to success in investing. In the context of that post, the passage accomplished at least three distinct goals. First, it provided another example of how compound growth works. Second, it provided an appeal to authority: if someone as rich as Warren Buffett thought that compound growth was important, then you should think it is important too. And third, it provided a compelling narrative: an 11-year-old read a book, realized the magic of compound growth, declared to his friend that he would be a millionaire by 35, and then became one of the richest people in history. Boom.

In addition to The Snowball, I’ve read some of his letters to shareholders, and watched videos of him take questions at Berkshire Hathaway shareholder meetings. He seems to be a smart, hardworking, straightforward guy who has done extremely well for himself and his shareholders. He’s definitely not perfect (he was pretty neglectful of his family for a long time), but he doesn’t seem to be a terrible jerk.

But reading Trust reminded me that we don’t really know the people who are in the public eye. How sure can I actually be of my opinion of Buffett as a pretty good guy? The image of Buffett that is available to the public (i.e., to me) is one that he has cultivated over decades. And it is an image that has surely accrued to his benefit over the years.

Should we be paying attention to rich people?

Even if we can trust our understanding of someone like Buffett or the protagonist in Trust, does it matter? Should we care about rich people?

In Trust, it is a given that the life of Andrew Bevel, an extremely rich and successful investor, is important, and thus worthy of delving into to determine what is true and what is not. Likewise, in the world of investing and finance, people love to study and learn about the Buffetts of the world. People (like me) read their biographies. People (like me) read their written analyses and commentary. People (like me) watch them speak.

Sometimes people like Buffett do have quotes and stories that can be useful to regular people. The snowball anecdote from last week’s post is one of them. But these serve more as pearls of wisdom or parables than actual lessons about investing your money.

And many of the lessons taught by someone like Buffett (an extreme outlier) are likely not entirely relevant to the regular investor. The circumstances that make someone extremely wealthy are likely circumstances that virtually no one else will enjoy.

Instead, maybe the function that studying people like Buffett serves is aspirational or inspirational. We don’t learn much of anything substantive from Buffett himself. Instead, we learn that people can become successful, and so we think that we can be successful, and so we think about how we can become successful, and then we start to do the things that might make us successful.

But is that a good idea? We already pay so much attention to the very rich. This is true in broader society, but has become increasingly true in the law, where there is so much focus on rainmaking partners going from firm to firm in search of more and more money, or private equity trying to "invest" in law firms. Reading these sorts of stories over and over and over again reinforces the idea that the predominant focus of our careers and our lives is to become as rich as possible. Which it probably shouldn't be.

My apologies for continuing to pay attention to rich people.

I’m sure I will quote and reference many such rich people in the future in these posts. I do find them interesting and useful, and so I assume any readers would find them interesting and useful as well.

But there is something about this practice that makes me at least a little bit uncomfortable. As Trust shows, it will always be very difficult to develop an accurate understanding of an extremely successful person, even though there may appear to be plenty of information about them available to the public. And even if we can trust our perception of an individual, it probably isn’t great that we spend so much time thinking about them, since for most of them, their main attribute is that they are very rich.

So I’ll let this post serve as something of an apology and a disclaimer for all future mentions and discussions of the rich. Reader beware.

That’s all for now. Have a wonderful week.

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