By: Nathan Ma
An investment banker has recently been sold on a stock he has no prior information on. After a quick glance over current company conditions and finances, he deems it an attractive buy, and subsequently invests a relatively small percentage of his capital in the company. Several weeks pass, and his investment has reaped exceptional returns. I’m talking some of the best “dividends” he’s ever had in his life. Our investor is keen to invest a majority of his money into this hidden gem of a firm, still relatively ignorant to the history of the company.
At the quarterly meeting, the CEO of the firm, now a close companion to our banker, pulls him out of the boardroom and into the office for a drink with his partner, as they have on numerous occasion since the fruitful arrangement commenced.
“Goddamnit man, things have been great. I truly hope this ride never ends.”
“Hah. Why would it? You guys run a tight ship here.”
“Haha, man you have nooo idea what it was like before you got here. We almost declared chapter 9 two times after some suppliers from Brazil screwed us behind our back. Just last year we took a massive beating after our managers approved tons of terrible projects that blew up in our face. But that’s all changed now, as you can see.”
“Yup, good to hear. Give me a quick sec, I gotta make a call.”
Our banker downs the drink, and glides out of the office, and sneaks into the stairwell. And calls his stockbroker.
“Hey. Kelly? Kill my latest market order for Sitwell. Yah, just do it. We gotta be careful with this one.”
Now if you couldn’t parse through my thinly veiled analogy, everyone in this world is an investor. Instead of money, we deal with our energy, time, and most importantly, our love. When investors deal with stocks, they take a wide variety of variables and intangibles into consideration. But the one constant that is always observed and respected is past performance. Past performance is one of the most consistent predictors of future movements.
Our investor’s best case scenario is that the firm he has invested his money and trust in continues to reward him, but he now must account for the new information he has learned. Where at one point he might have been ready to buy a majority stake in the company, he is now acting cautiously, risk-averse. He might even pull some of his money out and keep a keen eye on other up and coming assets and IPO’s.
Same applies for your potential partner. Most of the time, these courtships begin with just an exchange of names and faces. It doesn’t take long before feelings and desires cloud, and eventually turn off the exact organ you actually needed to operate optimally: your brain. Don’t use dating history and past romances as mere talking points, but rather as valuable information on how you should proceed with your level of emotional investment.
One could argue that it is undeniably unromantic to explain love and relationships in this way. “You’re being too cold!” is code for “you’re being too sensible”. But answer me this: will sentiment and emotions save our banker when his portfolio tanks after the company reverts to old ways? Will romanticism and optimism make you “feel better” when she leaves you or cheats on you when the evidence was staring at your face the entire time?