Monday, December 28, 2009

What is the ROI of a spouse ?

A story has been going around that an ordinary Joe took his girlfriend to a jewellery outlet and got her to choose an engagement ring. The ring she chose cost him eventually close to $30,000. Apparently the single men who heard the story were a little upset because this dude did something to "spoil the market". As a consequence, some friends are asking some tough questions to bait lady friends on facebook to define what's the ideal ROI of a spouse.

I think this question has intellectual merit and we can apply the three approaches to fundamental analysis to answer this question.

a) Discounted cash flow.

One way to define the value of a spouse would be to project the future cash flow he/she can generate for the family. In such a case, even if a spouse contributes $500 to the family a month, at 5% interest, the spouse will easily be valued at $120,000. That does'nt even consider the cost of housework in the case of women or some DIY around the house for men. In such a case, the ROI can be extremely high. If you believe that spouses are each other's possessions, the value of human capital when marriage occurs is priceless and that dude is justified in paying $30,000 for an engagement ring. The lady in return will probably have to spend about $100,000 in lingerie in preparation for the big wedding night.

b) Comparative method

Another way to value the spouse is to compare with other people their valuations and employ historical precedence to perform valuation. In such a case, some guys are justified to say that the dude overpaid because many people pay less than $5,000 for an engagement ring. Extremists may even cast blame on the lady because she chose the ring and was exploiting the dude towards her own ends.

c) Sum of parts method.

A most cynical method which is still valid would be consider the amount of finances that can be extracted if a marriage fails and both spouses will try to pick out whatever is left. In such a case, given the Women's Charter, many wives will be given a negative valuation but husbands may have positive valuation because the judgments typically places men at the losing end in a divorce settlement ( this is somewhat changing with recent rulings ). This method is extreme but has valid use for people who may have failed in marriages before or come from broken families themselves. If you use this valuation method, the lady should have been the one paying for the engagement ring and not the poor dude.

Now in fundamental analysis for stocks, three methods will generate numbers which are rather close to each other and can facilitate decision making. SPH can be $3 using one method, $4 using another and $5 using the third. But if SPH is trading at $6, you know that you can avoid it. Applying this towards a spouse will reach conflicting solutions, so perhaps an ROI analysis is not the right answer.

My conclusion...

Personally, as a dude who was a single man longer than a married man, I think we men have a lot of insecurities. I used to get upset when some other dude drives a girl home in a phallic symbol otherwise known as a car. Instead of getting upset, I should have been focusing on making myself more attractive as spouse material myself. And that focus is by pursuing my ambitions and meeting my goals. That's what men fundamentally are : economic units to facilitate the rearing of successful and productive children.

And the discipline of fundamental analysis does have its merits in spouse-hunting.

Please bother to do your due diligence. Get to know the family and understand your target sufficiently well so that you can tolerate their flaws. If the woman is neurotic and gets all ape-shit over small matters, don't expect a happy or productive marriage moving forward,DTMFA. Same goes for the man who is deadbeat and only goal he meets is to stay alive.


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