Getting rich and getting famous are two major life goals for many people. When we grow older, we keep hope in spite of the grotesque odds that most of us will fail during our lifetime. Our pursuit of becoming rich and famous is relentless, costly and always trumps the more easily accessible goals of happiness and health. Why do we engage ourselves in doing this? Is it because we think getting rich and famous are the media through which we expect to reach happiness and a healthy life?
The investment to richness seems most affordable and even ridiculously small: for just $2, 1/8th of the predicted price of a barrel of crude oil, you can buy yourself a ticket to play the Powerball Jackpot, which today stands at $1.3 billion. Mind you that this jackpot only exists, because we collectively purchased many tickets and there has been no winner yet. What also helped, just a bit, is the change in rules instated by the consortium of states, which run the Powerball: those changes made sure that our chance to win the jackpot went from 1 in 75 million, to 1 in 292 million, albeit in combination with a much higher jackpot prize. It seems the ploy worked because ticket sales are exploding, awakening the old dreams to win big. Had I been close to a convenience store right now, I might have been tempted to grab a pack of milk and a Powerball ticket myself.
You see, we think nothing of $2, but “oh boy” do we think everything of $1.3 billion. However, spending $2 every day for an entire lifetime adds up to a truly significant number. We (US households) tend to spend on average $1,000 per year on lottery tickets, while most likely never winning anything back. Collectively, US households spend about $100 billion per year on lottery tickets. With such an amount and as an alternative, over the past two years, we could have collectively purchased Mastercard Incorporated and Boeing Company and still have about $10 billion left to play roulette, buying start-up companies like Workfusion and Narrative Science.
Furthermore, it is likely that Mastercard and Boeing will return at least 25% per year over their Invested Capital (ROIC) for the next 10 years. So, in 10 years time, we could reasonably expect them to be worth 4.5 times more or close to $1 Trillion. Not a bad return, for a rather certain bet. Yes, I know: most of us don’t have the patience to wait 10 years. Clear. We want it now: instant success and instant fame. So forget Mastercard and Boeing and together with our carton of milk let’s just buy that lottery ticket now.
You probably know that nine out of the ten largest mega yachts are owned in the Middle East. The world’s largest mega yacht is called “Azzam” and owned by the President of the United Arab Emirates. He is not alone: his prime minister and deputy prime minister own respectively the world’s third and fifth largest mega yachts. You wonder what they talk about before a cabinet meeting about the oil prices these days… If you were so lucky to win the Powerball Jackpot, you should send your yacht broker there to see if there are any sellers: you might get lucky twice.
And within this lies the endless battle of rational investing and irrational desires, that complicates our lives. We collectively could do so much better by investing in great companies, delaying instant gratification, but often relish this opportunity for an instant winner-take-all-chance to win huge. Together with absurd large winnings, we wish for rare and exquisite products, as well as services often defined by exorbitant high prices, that attract only a few. Being able to afford these price tags makes us seemingly happier and therefore maybe healthier. Who knows? I think the consortium of states knows best: the higher the winning, the higher the sales. Ticket sales have indeed exploded and the Powerball Jackpot is rising. Mastercard and Boeing are getting cheaper.