Arjun Badola

Dating and market

One page image: link

Three questions everyone faces when they are going on dates:

  1. How does one know they have found the right person?
  2. Should they go all in?
  3. What if that person is not the right one?

The answers to these questions are simple, and the stock market, in some sense, can help us to figure out answers to these questions.

How does one know they have found the right person?

You would never know beforehand. One could only make an educated guess and not speculate.

How does one make an educated guess? You look for core values. These are values on which one would not compromise. Having these values helps in reducing the probability of making an error.

Core values doesn’t mean that if you believe in capitalism, so should they. Rather a core value would be both people being open about it and accepting and respecting each other’s views which is not interfering with how they spend their time with each other.

Another example of core value could be how one treats other people. Is their good behaviour only towards people from whom they have some incentive to get or is it common for all? I have met people who make friendships only if there can be quid pro quo relationships.

In stock markets as well, one never knows beforehand whether the stock is going to perform or not. One makes an educated guess by setting some criteria they are looking for in a stock/company depending on their style of investing and time horizon. Some prefer not to comprise on management quality, and some might focus purely on charts.

Should you go all in with this person?

In markets it is advisable to not go all in because here you need to protect your downside. Just holding one stock can be very dangerous as there can be black swan events, information asymmetry, etc. Hence some sought of diversification is needed.

But when maintaining that connection with the special one, going all in is the BEST way. There are reasons for it:

  1. You don’t fake around and stay transparent to your core: This ensures a goodnight sleep and the connection built is felt on a deeper level.
  2. Whatever you say you mean it and it is not something which is coming from a repetitive form via going on multiple dates (I have seen people copy pasting the same line on different chats, which could be a violation of core values in my case).
  3. All the efforts and thought process is towards that one person, which also means you won’t be forgetting what you spoke about during your conversation.
  4. The feeling the other person gets when your full attention (not limited to one conversation but in general efforts towards that one person) is towards only that one person is very special.

In the stock market you should flirt with many and marry none but in life you tag along with only one.

What if that person is not the right one?

There is no solution/risk management to this question and there shouldn’t be. Similar to the world of investing where each style comes with some trade-offs. Value Investors are prone to Value traps, short term traders find it difficult to hold for long, growth investors have the risk of multiple de-rating, etc.

I hold the opinion of going all in and if I turn out to be wrong, I will consider it as bad luck and take the hit. The mindset which one has when they are all in is way more important to me rather than thinking to protect my downside. As in hindsight one would find out that all the efforts put in were worth it, as you only have to succeed once.