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An investing lesson from iPhone 16 and Coldplay

Vivek Kaul

5 min read | Updated on September 25, 2024, 17:41 IST

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SUMMARY

In this day and age, social media helps spread this dynamic of wanting what others want—at a much greater speed—than was the case earlier. This essentially promotes the fear of missing out or FOMO, which in turn leads to people wanting to buy an iPhone even when they cannot afford it or wanting to buy concert tickets even when they really have no real interest in the music that will be played at the concert.

Recent frenzy for iPhone 16 and Coldplay offers an interesting investing lesson.

Recent frenzy for iPhone 16 and Coldplay offers an interesting investing lesson.

Two recent consumption events set me thinking.

People lined up physically to buy a phone which cost close to a lakh or even more. And millions queued up online to buy tickets to three concerts being performed by a British band whose music they had perhaps never heard before.

Of course, I am referring to the phone brand iPhone 16 and the music band Coldplay. Now, there is a basic difference between the two events. There were only so many Coldplay tickets going around and they sold out within minutes. On the other hand, iPhone 16 continues to remain available if you have the money to buy it or are willing to borrow money to buy it.

Apple can manufacture as many units of the mobile phone to satisfy the demand as it chooses to. The same does not hold true for Coldplay. They can only sell as many tickets as the number of people that the stadium they are performing at can accommodate.

This has led to a situation where tickets for the concert are still selling at very high prices on secondary websites. As a Business Standard news report pointed out regarding the Coldplay tickets being resold: “A ticket originally priced at ₹12,500 was sold for ₹3.36 lakh for Coldplay concert… Standing tickets, initially priced at ₹6,450, were being resold for up to ₹50,000.”

But that apart, there is something common with both events: the zeal of people to be seen with an iPhone 16 pushing them to line up to buy the phone as soon as it was released and the zeal of people to be seen at the Coldplay concert pushing them to buy tickets at huge prices from websites on which tickets are being resold.

The question is, is it really worth it. A phone which costs considerably less can fulfil the functions meant of a mobile phone. You can call. You can WhatsApp. You can scroll all the reels you want. So, why spend so much money on a mobile phone, especially when you really cannot afford it? A Times of India report points out that: “70% of iPhone purchases in India are on EMIs.” Similarly, why spend so much money buying tickets of a British rock band whose songs you have perhaps never heard? Or as a friend put it, most people hankering for the concert tickets won’t be able to name even three Coldplay songs.
We live in a world where spending decisions don’t always depend on whether they are affordable or not. That’s so 1980s. Or as Luke Burgis writes in Wanting—The Power of Mimetic Desire in Everyday Life, “The imitation of superficial things is a part of everyday life… Humans learn—through imitation—to want the same things other people want…Imitation plays a far more pervasive role in our society than anyone had ever openly acknowledged.”

In this day and age, social media helps spread this dynamic of wanting what others want—at a much greater speed—than was the case earlier. Or as Burgis writes: “Before Facebook [or Instagram or Twitter for that matter], a person’s models came from a small set of people: friends, family work, magazines and maybe TV. After Facebook [and all other social media], everyone in the world is a potential model.”

This essentially promotes the fear of missing out or FOMO, which in turn leads to people wanting to buy an iPhone even when they cannot afford it or wanting to buy concert tickets even when they really have no real interest in the music that will be played at the concert. They just want to be seen there. Make reels, post pictures, and generally be able to talk about it in the days to come with their friends and families. It’s really not about the music. Of course, it’s a life choice that they have chosen to make.

But this yearning to be seen somewhere or to be seen with a product one cannot afford, leads to money being spent: And money being spent by youngsters who really aren’t making that much to start with.

If I were to put it in slightly simplistic terms, money has been spent by many buying an iPhone 16 to click pictures and make reels of the Coldplay concert and post them on social media. And this is how the positive feedback loop of this dynamic will keep working in the time to come. Or as Burgis writes, “Smartphones project the desires of billions of people to us through social media.”

So, this dynamic in its totality explains why what economists call deferred gratification—the ability to resist the temptation of an immediate reward in order to build future savings—is no longer the order of the day for many youngsters.

And given this, they might be missing out on the most important money lesson. Or as Morgan Housel writes in Same As Ever:Timeless Lessons on Risk, Opportunity and Living a Good Life, “Spending less than you make, saving the difference, and being patient is perhaps 90% of what you need to know to do well.”

The problem is that this point is so obvious, it's often not taken seriously. Indeed this has been visible amongst those chasing iPhone 16s and Coldplay tickets.

Nonetheless, the fact of the matter remains that the first step towards any investing is saving and the first step towards saving is spending less than what you make. But then that takes some sense of control over the choices that we make in our lives and that is becoming more and more difficult these days. As Burgis puts it, “Our addiction to the desires of others, which smartphones give us unfettered access to, is the metaphysical threat.”

That, friends, is the long and the short of it.

Disclaimer: Views expressed in this article are the author’s own.

About The Author

Vivek Kaul
Vivek Kaul is an economic commentator and the author of Bad Money.

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