“Economics is the study of the allocation of scarce goods and services. What could be scarcer or more precious than love? It is rare, hard to come by and often fragile.” A quote from Ben Stein, lawyer, writer, actor and economist in last month’s New York Times.
I was quite blown away as I read this article, as it seemed a concise description of many of my thoughts in a time characterized by learning about both Finance and Love. As I learned the inner workings of the stock market I noticed familiar trends in how the stocks behaved. The result, my theory of Return On Emotional Investment:
- The greater your investment in a stock, the more your earnings will fluctuate with their movements.
- Similarly: the more you are emotionally invested in a person, the more your happiness will fluctuate with their actions.
- It follows that pursuing a risk management technique by diversifying your portfolio would be financially sound.
- Dissimilarly: Love (romantic love) is a monopoly. Argue if you’d like, but here I speak to my personal preferences.
The strategy that applies to both: research. Research historical data, generate projections and forecast trends. Granted, this involves a research procedure more qualitative and opinion-based in nature, but with a little common sense, I would say the method could hold even more credibility than its numerical counterpart.
I would like to finish with the poem I wrote that incited a friend of mine to send me Stein’s article in the first place. Maybe now you’ll understand why I was stunned at the overlap.
ROEI
Up and down my money goes, this businessgirl is stressed
I'd gain so much in peace of mind, if I knew how to invest
My public image took a hit, I lost accountability
When I invested all my love-bucks in this stock of volatility
Margins won't get larger, I'm always saying I'll finally sell
Then justify not doing so with bogus forecasts on Excel
For a while I did pursue a risk management technique
'Til my diversified portfolio made me subject to critique
Down and down it plunges, this stock only disappoints
The tiny hopeful upturn, and then down two-hundred points
Historic market data, future trends, they all say "pull!"
Oh! Though my stock is bearish, this situation sure is bull.