BIO

Cliff Mason is the author of Millennial Money. He is the Senior Writer of CNBC's Mad Money with Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at TheStreet.com during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Rich and Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like. Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.

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Jan.22

10:58 AM ET

Thursday, 22 Jan 2009

Aesop Was Wrong And Now We're Paying For It

Posted By:Cliff Mason

Topics:Stock Market

Photo By: Kenny P.
When it comes to money there are two kinds of people, grasshoppers and ants. Aesop nailed this distinction 2,500 years ago, but he messed up the moral of his story and we’ve been paying for it ever since.

Grasshoppers are all about immediate gratification.

They don’t bother to save money or try to plan for the future. Ants are the exact opposite. They think ahead, saving and investing their money so it can grow over time. We think ants are responsible and grasshoppers are foolish. But the truth is, it just doesn’t matter all that much at the end of the day.

Photo By: ViaMoi
In Aesop’s original fable the grasshopper spends the entire summer chilling out, while the ant works to store up food for the winter. Long story short, winter comes, the starving grasshopper begs the ant for food, the ant refuses because the grasshopper was lazy, the grasshopper dies, and we all learn about the value of hard work and long-term planning.

That’s the fable. What about the facts? In 2008 the ants got crushed underfoot, as virtually every asset class was torn to shreds. Even the rich ants, who put their money in hedge funds lost an average of 19%.

The grasshoppers? Same as always: they may have spent all of their money, but at least they got to use all of it, when most ants probably lost over 30% of the money they tucked away, if they tucked it away in stocks. Aesop should've accounted for spoilage.

There may be a lot of difference between the grasshoppers and the ants, the irresponsible people and the responsible ones, when it comes to their behavior. But at the end of the day, even the most responsible ant can’t protect himself from an earthquake. We believe we have much more control over our finances than we really do. It’s a pleasant myth, a nice fable.

The truth, as I see it, is that we’re all just a bunch of insects, subject to forces way, way beyond our control