The point is that, in fact, I've become better off in recent weeks simply because the stock market's rise has made me more money than the cost of a laptop.
Why then do I feel worse off? It's because of something pointed out by Richard Thaler of the University of Chicago back in 1985 - the phenomenon of mental accounting. I don't think of stock market profits as spending money in the way I consider part of my salary to be so; my equity investments are in a different mental account. I therefore think that unexpected outgoings have made me poorer because I don't regard stock market profits as offering offsetting compensation.
Strictly speaking, this is irrational; a pound is a pound whether it is in my pocket, current account, Isa or pension.
Worse still, such mental accounting can encourage irrational behaviour. It can cause us to take more risk after we've made money because, as Professor Thaler says, we think we are "gambling with the house's money" rather than our own. And Drazen Pralec and Duncan Simester at MIT have shown that credit cards can encourage us to spend more, because credit card bills are a different mental account from our ready cash - an account that we fell freer to run down.
Where does momentum investing fit into this? Mark Grinblatt at the UCLA and Bing Han of the University of Toronto explain. Many investors, they say, have mental accounts for each stock and they hate to be down in any account. This generates the so-called disposition effect; they sell winners quickly but hold onto losers in the hope of getting even. This means that past winners will see undue selling pressure causing them to be underpriced while past losers will see too little such pressure, causing them to be overpriced. This generates momentum as underpriced winners subsequently rise while overpriced losers fall.
If all this makes mental accounting seem irrational, it shouldn't. When I put my equities into a separate mental account I'm saving my sanity. If I reacted to every daily fall in prices by thinking 'I've lost thousands' I'd go potty and would hold few shares, thus missing out on possible long-term good returns. In this sense mental accounting protects me from what Professor Thaler elsewhere calls "myopic loss aversion" - the tendency to be too jumpy about short-term losses.
What's more, by not thinking of stock market profits as spending money, I force myself to save from current income, which I hope will benefit my future self.
In these senses, mental accounting is quasi-rational behaviour. When I decide how much to save I don't solve Euler equations as economic theory says I should - and in fact nor does anybody else. Instead, I rely upon rules of thumb, one of which is: don't spend stock market profits.
If enough people think like me, consumer spending will be insensitive to stock market fluctuations.
And they are. After the stock market crash of 1987, some economists feared a recession. In fact, we got a consumer boom in 1988. And the bursting of the tech bubble in 2000-03 led some to fear a sharp slowdown - but in fact we got only a mild one. All this has been confirmed by Yale University's Robert Shiller, who has found only "weak evidence" that consumer spending is affected by stock markets. This is more consistent with people following my type of mental accounting than with conventional economic theory.
And here's the problem. If rising share prices don't encourage extra spending, one channel through which quantitative easing (QE) stimulates the economy is blocked. This doesn't mean QE is wholly ineffective - there are other channels - but it does limit its effectiveness. The fact that the eurozone economy is still weak despite months of QE is consistent with this.
Perhaps, therefore, mental accounting warns us that at zero interest rates fiscal rather than monetary policy is a better way to boost economies.
