My primary life study has been about love. Second comes economics, so here, in the form of a few rules, is a little amalgam of the two fields: the economics of love.
1. How to Achieve High Returns
In general, and with rare exceptions, the returns in love situations are roughly proportional to the amount of time and devotion invested. The amount of love you get from an investment in love is correlated, if only roughly, to the amount of yourself you invest in the relationship.
If you invest caring, patience and unselfishness, you get those things back. (This assumes, of course, that you are having a relationship with someone who loves you, and not a one-sided love affair with someone who isn’t interested.)
2. How to Realize the Greatest Yield
High-quality bonds consistently yield more return than junk, and so it is with high-quality love.
Stay with high-quality human beings and once you find that you are in a junk relationship, sell immediately. Junk situations can look appealing and seductive, but junk is junk. Be wary of it unless you control the market.
(Or, as I like to tell college students, the absolutely surest way to ruin your life is to have a relationship with someone with many serious problems, and to think that you can change this person.)
3. Do Sufficient Due Diligence
Research pays off. The most appealing and seductive (that word again) exterior can hide the most danger and chance of loss. For most of us, diversification in love, at least beyond a very small number, is impossible, so it’s necessary to do a lot of research on the choice you make. It is a rare man or woman who can resist the outward and the surface. But exteriors can hide far too much.
4. Don’t Diversify
In every long-term romantic situation, returns are greater when there is a monopoly. If you have to share your love with others, if you have to compete even after a brief while with others, forget the whole thing. You want to have monopoly bonds with your long-term lover. At least most situations work out better this way. ( I am too old to consider short-term romantic events. Those were my life when Lyndon Johnson and Richard Nixon were in the White House.)
4. Keep MERs Low
The returns on your investment should at least equal the cost of the investment. If you are getting less back than you put in over a considerable period of time, back off.
5. Buy and Hold
Long-term investment pays off. The impatient day player will fare poorly without inside information or market-controlling power. He or she will have a few good days but years of agony in the world of love.
6. Set Realistic Objectives
Realistic expectations are everything. If you have unrealistic expectations, they will rarely be met. If you think that you can go from nowhere to having someone wonderful in love with you, you are probably wrong.
You need expectations that match reality before you can make some progress. There may be exceptions, but they are rare.
7. Keep Your Winners
When you have a winner, stick with your winner. Whether in love or in the stock market, winners are to be prized.
8. Embrace Your Dogs
Have a dog or many dogs or cats in your life. These are your anchors to windward and your unfailing source of love.
Ben Franklin summed it up well. In times of stress, the three best things to have are an old dog, an old wife and ready money. How right he was.
There is more that could be said about the economics of love, but these thoughts may divert you while you are thinking about your [financial] future.
Let me close with another thought. I am far from glib about the economy. It has a lot of pitfalls facing it. As workers and investors, we know that many dangers lurk in our paths but so far, these things have always worked themselves out and this one will, too. In the meantime, they say that falling in love is wonderful, and that the best is falling in love with what you have.
The comments above & below are edited ([ ]) and abridged (…) excerpts from the original article by Ben Stein
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