Greed in Investing: When Ambition Loses Its Purpose
By Diego Alcalá The relationship between money and emotion is more complicated than we often acknowledge. In investing, where our decisions directly affect our
By Diego Alcalá · Tue Sep 29 2026 · Investing
By Diego Alcalá
The relationship between money and emotion is more complicated than we often acknowledge. In investing, where our decisions directly affect our wealth, emotions can help us succeed or lead us into failure. Of all those emotions, greed may be the most dangerous, and one of the quietest ways to erode a fortune.
For Canadians and other international investors looking at opportunities in the United States, the distinction matters as much as it does at home. Entering another market does not leave our emotions behind. The question is whether our desire to build wealth is still guided by a purpose, or whether the pursuit of more has become the purpose itself.
Ambition and greed are different forces
Ambition drives us to set clear goals for building wealth, seek investment opportunities, and maintain the discipline needed to reach those goals. It is constructive: it pushes us to learn, assess risk, and plan strategically.
Greed, by contrast, is an excessive desire to accumulate wealth without a clear purpose. It can lead us into irrational decisions. In the spirit of Warren Buffett's thinking, investors need to control the emotions that make them pay exorbitant prices in periods of great optimism and sell at very low prices in periods of pessimism.
There is nothing wrong with seeking to maximize returns, provided we do not sacrifice the basic principles of risk management along the way. In the comparison I use to illustrate the distinction, ambition has us pursuing a 15% annual return with discipline, while greed has us chasing 100%. Those numbers illustrate the contrast; they are not a forecast or a promise of what any investment will deliver.
When leverage becomes an emotional decision
Leverage is a double-edged tool in finance. It becomes especially dangerous when greed is the reason for using it. I have encountered investors who were dissatisfied with the returns their assets generated and borrowed excessively to multiply their positions, disregarding the sharp increase in risk.
Financial history is full of examples of leverage and the pursuit of extraordinary returns ending badly. From the collapse of Long-Term Capital Management to the mortgage crisis of 2008, the consequences extended beyond the immediate investors to entire economies.
The problem is not leverage itself. It is using leverage because of emotion rather than clear analysis. When we borrow to amplify returns without examining the risks thoroughly, we are letting greed take control of the decision.
A Canadian buying a U.S. property or an international investor evaluating a business faces the same underlying question: am I using debt because the analysis supports it, or because the unleveraged return no longer feels exciting enough? A different country does not change that distinction.
Greed often calls itself optimism
One of greed's most dangerous disguises is optimism. “This time is different.” “The market will keep rising indefinitely.” “This asset will never fall.” These are warning signs that greed may be influencing our decisions under the cover of confidence. We can observe this in stocks, cryptocurrencies, and real estate alike.
Legitimate optimism rests on analysis and recognizes that markets move in cycles. Greed dressed as optimism ignores warnings and basic investment principles. Howard Marks emphasizes the importance of consistently avoiding serious mistakes, rather than treating investment success as a succession of spectacular achievements.
This becomes especially visible during prolonged bull markets. Investors begin to believe prices can move in only one direction. Selective memory allows earlier crises to fade, and we construct stories that justify valuations increasingly detached from reality. Does any market that seems never to stop rising come to mind?
The distinction is not whether an investor feels enthusiastic. It is whether that enthusiasm still allows room for evidence that the investment could disappoint.
An advisor should be an emotional counterweight
Financial advisors are in a distinctive position to identify and counteract greed in their clients. But that role is not free of ethical and practical conflicts. Should an advisor accommodate a client who insists on taking excessive risks? Or should the advisor hold a firm position, even if doing so could cost the relationship?
In my experience, the best advisors provide an emotional counterweight. They manage expectations and emotions as well as portfolios. They continually explain the relationship between risk and return, and they have the courage to say no when a proposal is clearly driven by greed. A good advisor will challenge your investment thesis.
That is particularly useful when we are excited about an opportunity abroad. For a Canadian or another foreign investor considering the U.S., the useful advisor is not simply the person who echoes enthusiasm for the destination. It is someone willing to question the reasoning behind the investment.
A good advisor is not the one who promises the highest returns. It is the one who helps you build a portfolio aligned with your actual goals, protects you from your emotional impulses, and helps you sleep at night.
Recognizing greed without abandoning ambition
Greed is a common emotion. All of us need to recognize it and learn to control it. Our task as investors is not to eliminate emotion altogether, which is probably impossible. It is to understand how emotions influence our choices and develop ways to limit their most harmful effects.
Wanting to build wealth is not the problem. Losing sight of why we want it, and abandoning risk discipline in pursuit of ever-larger returns, is where the danger begins.
Have you identified moments when greed, rather than ambition, guided your investment decisions?
Read the original Spanish article: Avaricia en las inversiones.
This article is educational and does not constitute investment, legal, or tax advice or a recommendation to buy or sell any asset. All investments involve risk, including loss of capital. Evaluate decisions in light of your own circumstances with qualified professionals.
Image: Midas’ daughter turned to gold, Walter Crane, 1892. Public-domain artwork. Collection and photograph: Art Gallery of South Australia.