So, I had another post worked out to finish up today, but then got distracted by a few articles that I read in the past week that relate more to stock picking than to bankruptcy.
The first was in the Wall Street Journal and discussed how women are having a hard time finding Mr. Right and are more willing to start to pursue alternative means of having children, etc. The article itself was mildly interesting as it touched on educational differences and comfort with success, however, the comments from the other readers were almost more irritating than the subject matter. Men responded by saying that it’s the fault of feminism that a woman is single and that it is our fault that we haven’t landed a man. A few of my friends noticed that how the blame was completely shifted to the female and these imprinted gender roles handed down over generations; that we’ve made advances in our professional lives, but in our personal ones we still must find someone to “complete” ourselves ala Jerry Macguire?
Now, a person can read a prospectus, have a methodology and criteria, and watch the market before they chose to invest, but there is no foolproof system, and even the most seasoned investor can finish with an unexpected loss. There are a significant number of intangibles that affect every stock and irrational forces can shift the entire market leaving you continually searching for the next hot stock.
The next article that touched on similar elements of the WSJ one was in the Guardian and implied that women should settle for Mr. Second Best because you need to be matched up. It was a condensed version of an article in The Atlantic which I believe lost some of its intrigue in this shortened overview — it comes off as a terse statement that happiness can only come from coupledom and nothing else.
Now, I’m not skeptical enough to believe that “the one” doesn’t exist and that I’ve reached the point on my to-do list that I should just find a warm body to fill my bed nightly, in fact, I generally enjoy being single and having fun with my friends, and following my own timeline, etc . I mean, I actually was dating the blue chip stock of guys: He treated me extremely well, called when he said he would, bought me gifts unexpectedly, had a great job, and he was funny and smart. However, after a couple months, I just had to call it off — I just wasn’t feeling it. There were no signals of a crash, his intrinsic value was high, I guess I just didn’t have enough funds of my own to put into the market.
And for me that’s where I have issue with these articles: that they try to say relationships and getting married are as easy as saying “ok, i’m ready, sign me up” and then poof, you can get paired up. Last time I checked, it still takes two people to have a mutually beneficial relationship and its not settling, but rather really thinking about what you want and what is just gravy.
Now, there are articles and articles about the different methods of valuing stocks, as well as hundreds of money management firms with there own proprietary formulas on how to beat the market and pick a winning stock but what each of them comes down to, are best guesses, and your own available level of risk.
So, I broke up with the guy I was dating… and this happened a bit ago, but I’ve been pretty distracted by work, the relationship ending, and some other family things. Even though I’ve been hypothesizing on the similarities of bankruptcies to break-ups, I haven’t been totally ready to put it out there till now. (I’m probably still not ready, but the words are down, so I’ll just post it!). Every break-up is different, just like every relationship is different, so this is gonna get divided into a few posts.
First, we are gonna look at the most common form of bankruptcy (as well as the most common form of break-up): Chapter 7, Liquidation of Assets. As opposed to Chapter 11, Reorganization (which I will delve into later), Chapter 7 has a certain level of finality and end; There is no attempt to see if there is an underlying structure that is worth saving.
*Chapter 7 bankruptcy is also called a “straight” bankruptcy because its supposed to be more cut-and-dry and is a “faster way of getting a fresh start”. Its faster because all assets of the debtor are sold off and the proceeds go directly to the creditors to pay of what is owed. Now, in a break-up, we aren’t talking about you selling off the stuff that your partner gave you — the gifts, the t-shirts — a lot of reminders need to be removed so you aren’t constantly thinking about the other person. You need to start to decrease the level of intertwined aspects of the relationship. Cut the communication ties of gchat, the facebook reminders, and the text messages.
'get of the same old path'
*Provided there are no objections from the other parties, the procedure can move more easily… This is a tougher one, in some respects. Unlike a real chapter 7 there is no “order of relief” for a break-up: You can’t stop the relationship process from unraveling in front of you and hold it like you can hold creditors from seizing your assets. I have a good friend, Molly, who broke up with a guy and they just stopped talking: they weren’t really friends before, so their paths didn’t have to cross in the future. He respected her wishes and didn’t reach out to her. Molly kept herself from contacting him, and though the pain was tough, the lack of interaction helped her to heal without any confusion or undue information from him. Molly wanted to know how he was doing, what he was thinking, but she kept strong to keep focused on her needs and recovery process to that “fresher” start.
On the flip side, its nice to know that you are being thought about. You kind of wish that there will be an objection from the other party. That the break-up is wrong, that maybe its not time to liquidate — that maybe you should reorganize under Chapter 11 instead. However, in most cases this is just the fear taking hold. Its a worry about what the future will bring because the past seemed like it was good. Even if you are going through the process, the other person is going through their own “bankruptcy” proceedings, and there is very little need to put more pressure on the other person throughout it. Sometimes there are things that need to be talked about, but frequently, you have said more than you need to say to each other and each person needs to just think and move forward on their own and at their own pace.
*Bankruptcy stays on your credit record for up to 10 years… just like it can potentially mar your future attempts for getting a loan or investment, your previous relationships can have an effect on your ability to connect to a subsequent partner. Even if you feel that you have successfully removed the physical and social reminders of your relationship by cutting the communication, you might be hesitant to open yourself up to emotions and feelings the next time. You might keep people at arms length or be quick to dismiss the possibility of a future with the next relationship.
*Bankruptcy proceedings aren’t necessarily ‘private’ — for chapter 7 filings, they may get listed in local newspapers. Just like break-ups: you try to resolve the issue and not share it across the general public. But if you had gone so far as to “facebook it” you have to remove that marring statement from the record. Like in a bankruptcy, you have your legal assistance and subject matter experts; in a break-up you have a supportive group of friends and people who have gone through similar relationship issues.
Chapter 7 bankruptcy is a difficult decision and situation to put yourself through. When things “seem to be going well” and there are no ‘major’ issues (its not cheating, or abuse, or serious emotional harm), you have to really evaluate the benefits and consequences of the bankruptcy proceedings. However, it is a way to stop the escalation of these small issues before they severely impact your life to a point where you can not rebuild healthfully and satisfactorily.
The 4th quarter began last month and so with it, expectations for gifts of profits and revenue growth are twinkling in the eyes of many. Even though the recession continues to plague the economy, many businesses are being cautiously optimistic in their earnings calls. There was a mixed bag from GE chief Jeff Immelt, an optimistic Eric Schmidt at Google, and as earnings season wraps up a variety of other reports will show how this past quarter is ultimately received. Similar to how corporations take stock of their business, I started to think about the performance of my relationship over the past quarter and my own future outlook for its earnings and expectations. Less optimistic than most NYSE-listed businesses, I was unable to continue to spin the earnings, and ultimately shuttered the relationship.
As a little background on earnings: US Companies are required by the SEC to publicly disclose their results in a 10-Q. At the file time, they couple this submission with an earnings call a way for investors and stockholders to better understand the change in value of the business and what kind out expectations they have for the future. There is time at the end of the call where the reporting corporations answer the Wall Street Analyst’s questions about future operations.
There is no similar requirement for those dating someone else to report on the growth of their affection or the reduction in interest in the relationship stock, but that doesn’t stop people from trying to figure out what the experiences and the time means. Have I been introduced to his friends? What does Facebook say about us? How much time do we spend together on a daily or weekly basis? These internal questions and valuation calculations can cause even the most seemingly positive couple to re-evaluate their investment decisions.
Just as the real corporations have anticipatory analyst expectations of where operating results and the earnings will come in, girlfriends everywhere have their idea of what the relationship means to them. And just as Wall Street will adjust to results falling far from analyst expectations, people will take drastic steps in their relationship if they find out that their feelings aren’t matched.
The expectations ratio is a stock market indicator that looks at these earnings vs expectations in a more direct comparison–many investment firms have their own calculation and metric for this. A similar indicator that is easy to calculate is the P/E (share price to earnings).
A ratio of 1:1 shows that earnings and expectations are exactly aligned — an idealistic result that would only occur in the extremes or a world of perfect information.
An average expectation ratio for an earnings season is 3:1, implying that there are a fair amount of companies that will exceed expectations in the future.
This past earnings season had a ratio closer to 6:1 which is twice that average rate and shows that a large amount of companies have had such depressed earnings that it doesn’t take too much to be better in the future.
For people looking at their relationship stock, its unsure what the average ratio is: You always want to grow and build your relationship quarter after quarter, but you both have to have similar expectations for those earnings. If one of you believe the R-Stock has a high P/E and will grow fast and furious, while the other believes that you have a low P/E stock, then it doesn’t matter what the earnings are now. In the future they will be far from in alignment and there won’t be any amount of conversation or understanding that will change what has to happen — a stock sell-off.
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do or do not... there is no try.
Right before graduation this year, a good friend of mine sent the following email:
“My little sister is graduating from college in a few weeks and I was hoping to give her sage advice for the near future as she enters the Big Bad World. I thought it would be fun to collect words of wisdom from friends. I’m wondering if you wouldn’t mind taking a moment to e-mail me a few of your thoughts — lessons you’ve learned or things you wish you had known in those first few years after leaving the safety and comfort of college life.
Please be frank, creative and brief. “
I left the email sitting in my inbox till today. I kept thinking about answering this, but my own summer was a rough one job search wise. I never felt I had uber-inspiring information to pass onto anyone. Last night though, I did a spur-of-the-moment trapeze lesson with some current MBAs (for a course called ‘Fostering Creativity’). The course itself is experiencial and focuses on tapping into the more creative side of your psyche to challenge the patterns and routines that you build up through the more analytical and case-based courses in the MBA program. The end goal is to be able to apply these methods within a business context so that you can be more successful.
The overall course experience made me recognize something short and simple that I learned last year: Be thoughtful in your actions, but don’t overthink them.
It’s good to be prepared and study, but if you analyze every choice you don’t trust your instincts.
Though flying on a trapeze isn’t a typically instinctual action, if you don’t listen and respond to the instructors who are calling the body positions, then you will miss your chance to fly through the air and you’ll end up on the net below…
I had done the trapeze class the first time last year. After four successful trips on the bar (upside-down!), I stressed myself out when it came to “the catch” and couldn’t even get my legs over the rung. This year, because I wasn’t even planning on participating, I didn’t allow myself the chance to think about what I had missed the year before. I just focused solely on the caller and did each movement when specified.
…jump… legs up… arms off…
gotcha!
…awesome!
So, I didn’t get a job today. In fact this was probably the 50th job I didn’t get in 50 days, but today’s reason was one of my favorites and it generated a lot of thought related to relationships and, of course, investments.
The guy on the phone said, “You are great, we really liked you, its just… uh, timing”…
I think people around the world have heard that statement not just related to the job search, but in the quest to find the right person and even a variation of that is a disclaimer on every annual report this year.
When you look for any sort of investment (stock, mate, job), there is only so much due diligence that can occur… and that asset strategy has been discussed a bit already but one of the other major factors is with timing… and its the least controllable.
different people, different outcomes
People talk about fate, destiny, and even serendipity that leads you down a particular path towards a job or in life, but its not that simple. Its not a straight-line that we march up, with a constant return and dividend payout… its curve, with peaks and valleys, and cycles. As such, each person has the potential to intersect with another at multiple points along their curve. There is even a possibility, if you intersect when one of you in on an upswing, while the other decreasing, that the timing is not optimal, and the relationship will fail… on the the other hand, if you are both in the right place at the right time, it can be meant to be.
Utilizing this timing element within the relationship connection and moving it beyond a one point connection is similar to the management of a mutual fund or index fund. The ‘mutual fund relationship’ is one where the fund manager (or the members in the couple) are actively managing their relationship in relation to the timing of the market in order to get the best return. They pick aspects of the other person and of themselves to generate higher returns agains the market and perform even when the overall Dow Jones or S&P 500 is off.
The ‘index fund relationship’ is targeted off of the general market index (or your friends and the community around you). In relationships, this can be particularly detrimental at certain times… It can often seem like “everyone is getting engaged” or “all my friends are pregnant” and a friend of mine had three weddings in three weekends in the month of August, but changing your relationship just because you have reached a certain quote-unquote milestone is not an appropriate way to grow your own relationship fund.
The major thing that holds up either of these performance funds and relationship in general is the inherent level of chance or randomness. Yes, you can look at things like the yearly return, 5-year average return, or other past performance indicators to potentially predict the growth of your stock in the future. Traders surround themselves with data about the market, seasonality and other cycles, to potentially predict the best way to optimize the trading of a particular fund. Depending on how risk-adverse or risk-loving the fund is, timing can be predicted to some extent, but cannot be guaranteed.
In that end, you also shouldn’t try to force timing, or beat the market, bccause if your investment is gonna tank, its gonna tank, and you can’t make a company hire you, or recover all the loses in your portfolio in one quarter, or make someone date you. You can analyze your past relationships and how those experiences taught you a thing or two about how people are, and how you can be better in the future, but that doesn’t necessarily mean that your forever is ever gonna be predictable or at all similar to any other relationship in the market.
