We’ve all heard the term conspicuous consumption, but do we really know what it means? It’s a concept that’s been around for over a century, thanks to Thorstein Veblen, a man who clearly had a lot to say about luxury goods, egos, and spending. In his 1899 work, The Theory of the Leisure Class, Veblen argued that conspicuous consumption is all about buying things that are far beyond our needs, not because we need them, but because we want to impress others. Think of it as the luxury version of “keeping up with the Joneses” (and doing it in style) 🏎️💨.

The Ego and the Ferrari: Ego Fuel, Meet Gasoline 🏎️💥

Let’s start with something that makes the concept real—the classic Ferrari. Imagine this: you’re sitting at a traffic light, and you see a Ferrari roll up next to you. What do you think? Wow, that person must be doing really well, right? What about you? You feel a little envious, maybe a little insecure. But let's be real: you aren’t thinking about the person driving it. You’re thinking, “I want that car.”

And there you have it. The Ferrari isn't about the person driving it—it's about the statement the car makes. The purchase isn't about utility, it’s about impression. Veblen nailed it when he described people’s need to show off. But spoiler alert: Veblen wasn’t exactly a capitalist—he wasn’t too fond of the idea of flaunting wealth, let alone buying items that don’t make sense purely for the sake of boasting.

That shiny Ferrari? Not exactly a smart investment. Spoiler #2: Ferrari stock has been great since it went public in 2015, but RACE is still expensive as of 2025, and let’s face it, the return might not justify the ego boost. (Although, in all fairness, some quality stocks never stop being expensive, do they? It's like a Vuitton bag; discounts are rare, and some brands do have extraordinary pricing power. For this very reason, there's a chance RACE will be a winning long-term investment; beware!) Still, do we even need the car? Maybe not, damn! 😬🚗

The Paradox: Luxury Goods and Inflation 💎📈

Here’s where it gets interesting. Inflation, as we know, tends to eat away at the value of currency, but luxury goods have been one of the rare assets to thrive in inflationary times. Sounds a bit weird, right? You’d think that in times of high inflation, people would be more cautious, but in reality, luxury brands—whether it’s gold, art, or, yes, Ferraris—tend to hold or even increase their value. Why? Because as the world gets more unstable, people still want to look rich, feel rich, and yes, impress others.

We see this across various sectors. Commodities like oil, gas, and precious metals (gold, silver) skyrocket during inflation. Bitcoin, an even newer “asset” class, is similarly seen as a hedge against currency debasement. Yet Ferraris, luxury watches, and designer handbags stay at the top of their game.

Spoiler #3: For the record, I’d rather take a Camry (not a Ferrari). It’s practical, efficient, and most importantly, it won’t give me a financial panic attack. As long as it’s red, I’m good. Ahem, but maybe not, damn. 😆

Psychology of Money: Ego Over Logic 🧠💸

We’ve all seen it—the person buying the fancy watch or expensive shoes, not because these products are outstanding and they need them, but because they want to impress. In the real world, financial decisions aren’t made with spreadsheets and logic. They’re made over lunch or at the dinner table, with a little or not-so-little ego on the side or front and center! Maybe you're trying to impress a date, maybe you're trying to one-up your rival—or maybe, just maybe, you’re trying to feel a bit better about yourself. The ego—that sneaky little voice telling you to buy, buy, buy—is a powerful force that doesn’t always care about practicality or financial sense. The end goal is to impress, and who cares if that purchase makes sense? 🎯

In the 2020 book The Psychology of Money by Morgan Housel, he explores (amongst a multitude of other invaluable insights) how our financial decisions are often driven by our ego and pride. Housel writes that financial decisions are made based on how we feel in the moment—often trying to impress others rather than making sound investments. And guess what? This is how inflation keeps self-perpetuating—the desire to buy for ego keeps the economy churning. 🌀

In fact, that feeling of trying to impress at lunch, or buy that flashy item to look good at the dinner table? It’s all part of why inflation doesn’t just go away. It feeds on our constant need to show off (and, granted, countless other factors), even if we end up paying for it later (literally).

Inflation Hedge or Ego Boost? Gold, Bitcoin, Art & Ego 💰🎨

Let’s talk about inflation hedges: you’ve probably heard about gold, Bitcoin, and art as popular choices. They’re seen as "safe" investments during uncertain times. But here’s the thing—while these assets do hold value, they also inflate our egos. Spoiler #4: The car may be one thing, but what about the artwork hanging in your living room or that gold bar in your safe? Sure, it’s valuable, but is it really about the investment, or is it just another way to impress (others and even ourselves)?

When it comes to stocks, they might be a better inflation hedge in the long term, but sometimes, we buy shares in companies not because we think they’ll do well, but because they look good on paper (or on Instagram) or, even better, because others buy it too. Isn't it what Wall Street calls momentum, which soon fuels...

Bubbles. 🫧

The Takeaway: Inflation and Ego Are Both Real 📉📈

So, as you think about alternative investments, just remember: inflation and ego go hand in hand. Whether it’s a Ferrari, gold, or even Bitcoin, people buy things to feel good and to impress. But in the end, maybe the best investment is the one that makes you feel good without making you broke—and hey, if that’s a red Camry for you, well, more power to you. 🚗

But whatever you do, don’t forget: it’s not always about the asset—it’s the ego behind it that might be driving your choices. 💡