When Nothing is Guaranteed – Managing Risk in Finance and Relationships.



“To hope is to gamble. It’s to bet on the future, on your desires, on the possibility that an open heart and uncertainty is better than gloom and safety. To hope is dangerous, and yet it is the opposite of fear, for to live is to risk.”

-Rebecca Solnit

My Mamaiay is an avid reader and she’d always bring home the local Ethiopian newspaper. She’d translate and read the joke and anecdotal sections to me. There was one story that still resonates with me to this day, it was about a woman who was working with God on finding her ideal spouse. God built a shopping mall where both women and men could come to “window shop” their partners. There were six floors total, and each floor had a different spouse option. You could opt to leave with that spouse or move to the next floor. The only caveat is that you could only enter the shopping mall and access each floor once. So, a woman set out to find her husband.

On the first floor, the sign read: “Men with jobs.” The woman was unimpressed as that was expected, and she moved onto the second floor. On the second floor, the sign read: “Men with jobs and love children.” Again, she decided to move on and went to the third floor. On the third floor, the sign read: “Wealthy men that love children and are extremely attractive.” She’s finally enticed and thinks this description could be spouse material, however, she decided to move onto the fourth floor. On the fourth floor, the sign read: “Wealthy men that love children, are extremely attractive and handle the household chores.” She’s excited at this prospect, and grateful that she didn’t settle with the man on the third floor. She thinks to herself there must be someone even better for her and decides to proceed to the fifth floor. On the fifth floor, the sign read: “Wealthy men that love children, are extremely attractive, handle the household chores, and are very romantic.” The woman states that this is all she desires from a prospective spouse and is ready to make her selection. Yet, she’s worried she could be missing out on her best option. So, she decides to make the final visit to sixth floor. On the sixth floor, the sign read: “You are visitor number 43,214,028 on this floor. There are no men here.”

The morale of the story was that it’s important to be cognizant of when what we have is enough, lest we blow off opportunities in pursuit of something of better. Mastery of contentment is important to living fulfilling lives. I understood this in theory, but never in practice. I always want more, the absolute best, and the target is ever-changing. I grapple with understanding where the line is between being content and settling. I’ve meditated, prayed, read books, watched Ted Talks, and listened to podcasts in search of the perfect formula. A quick Google search had me come across the diagram below which visualizes the scenarios between being content and settling.


The best state is in the top right section of the quadrant, and the worst state is in the bottom left section. Right now, I’m in the top left quadrant – I’m content yet, settling. My basic needs are all being met, yet – I feel underutilized, I don’t feel that I’m living up to my full potential. I’ve taken a few strides recently that would possibly move me over to the ideal content and not settling state. When I analyzed this diagram, I thought about how the funnels into each section, are a direct indication of one’s risk appetite. Risk appetite impacts how we live, think, operate our finances, and interact in our relationships. In an exercise to make finances more human and relationships quantifiable I decided to explore this further.

In finance, the term “return on investment” (ROI) essentially measures whether what you get back will be worth more than what you put in. Your input could be different metrics such as time, energy, or financial resources. We assess ROI when making decisions that range in importance. The high importance items touch on financial investments, job opportunities, where we live, diets, and relationships. The lower items of importance impact every day decision making e.g. “Should I snooze my alarm for five more minutes?”. In addition to ROI, sound investors also evaluate “opportunity cost”. In finance, opportunity cost requires analysis that the expected rate of return for your investment is greater than an alternative investment prospect, or the rate of return in the stock market, which is 7% annually. In other words, opportunity cost assess whether something is worth it in comparison to other options.

In relationships, we also assess ROI and opportunity cost. We analyze ROI by vetting through potential partners and determining if they’re worth the effort, if they’ll bring in more pleasure than pain, and if we’ll gain satisfaction out of investing our time, energy and resources into that individual. Opportunity cost is calculated through comparison; What does this partner offer me in comparison to other potential partners and does it warrant exclusivity? When the ROI doesn’t provide a better outcome than the sum of other options, individuals typically continue to play the field and juggle multiple partners, as opposed to putting their eggs in one basket with one love interest. Exclusive and serious relationships occur when individuals decide that investing 100% into one person meets their needs and reaps more rewards than investing smaller percentages across multiple partners.

Once an individual decides to invest, they must come up with a buy/sell methodology. In the stock market, the three popular types of orders are: market order, limit order and stop-loss order. A market order is when an investor immediately purchases or sells a share regardless of the price, it ensures immediately execution but not the most competitive price point. A limit order is when an investor sets an order to only buy or sells a share at a specific price, this provides a more competitive entry and exit point but doesn’t guarantee execution of the order if there’s not demand on the other side for that price.  A stop-loss order is when an investor implements an order set at a specific price point in which an immediate sale (market order) is executed to keep their losses low and controlled if the market trends unfavorably.

The stock market is white-collar gambling, you’re betting on the trajectory of companies, on whether they boom or bust. If an investor believes a company will increasingly improve their performance they’ll go “long” and hold onto the stock while it appreciates. On the contrast, in an investor believes a company will underperform they’ll “short” the stock. What this means, is that the investor sells a share at the current rate and repurchases it at a later date, assuming the share is worth less later the investor then pays the lender the difference and pockets the rest. When shorting a market, an investor must borrow capital from a broker – in essence, shorting is “selling now, and buying later.” Shorting a market is considered riskier than going long because an investor is taking on debt, as opposed to working with their own source of funds. Shorting a stock is just one method of margin trading. Margin, is when you borrow money from a broker to increase the size of your potential jackpot. Brokerages are incentivized to allow margin trading because it drives trading volume, which churns them profit via the trading fees. In addition, they charge interest on the loan to the investor until the amount is paid back in full.

Every investor has their own strategy when scoping opportunities and waging their bets. Some trade with their emotions and follow their “gut” and others prefer to do in depth research and technical analysis to identify trends. Technical analysis is a method for forecasting price outcomes of the stock market through historical data made up primarily of volume and price. However, some investors question the validity of technical analysis and state that stock market prices are essentially unpredictable.

With the rise of transactional relationships, these financial tools transfer well to real world applications in relationships. A market order would be an individual going after a love interest impulsively, they want to pursue the individual immediately regardless of the cost. A limit order is when someone has a love interest, but they don’t act immediately, they set their terms and wait for the right timing before making their move. A stop loss is the deal breaker – the point at which an individual walks away from a person of interest. The individual sees the relationship trending downward and wants to cut their losses, so they no longer invest into the person. Going long means an individual sees a positive trajectory with their love interest so they continue to invest into the person. Going short means an individual thinks a relationship will go south down the road and so they milk it for what it is in the present. Margin is when someone borrows money to impress a love interest hoping that they’ll get their desired outcome quicker. Technical analysis would be when an individual does research on their love interest and digs up their past to get an idea of trends and predict future actions. However, some aren’t as interested in their lover’s past and don’t think it’s an indication of what’s to come so they act on their emotions, rather than rationale.

I’m fascinated with the methods in which humans prescribe value, in present, future and past states and how these methods seep into every aspect of our lives. The two highest stake decisions we make in our lives are heavily influenced by our finances and romantic partners. I’ve lost track of elders with regret on how they managed their finances; some feel they were too frugal and didn’t enjoy life, others wish they had taken their personal finances more serious. I’ve also lost track of the time I’ve spent listening to stories of when people were with the wrong lover, and the devastating impact it had on their lives. Exploring the decision-making process and how financial tools can be applied in the most complex areas of our lives was a fun activity to explore. Different tools appeal to others based on their appetite risk; and nobody can be 100% of their relationships or their finances. I wonder if there’s a metric for hope that fills the gaps of data and control.

Lately, I’ve been hearing a lot people discuss how they want to go to graduate school but are concerned that it will prevent them from building wealth. I did my own ROI analysis of my own before making the decision to leave Amazon and get my Masters. At Amazon I was making $55,000 base and working on average 12 hour days – this translates to a wage of about $19.10/hour. I decided to go back to get my Masters because I wanted to quickly boost my incoming earning potential. My Masters program was one year and cost $25,000. The amount of debt I’d take on for school in addition to the opportunist cost of no longer working totaled a deficit of $80,000. I took an educated gamble that by getting my Masters I could recuperate my costs in short time span. Once I graduated, I received a salary that was shy of 4x my pay at Amazon. I not only recovered the $80,000 in my first year, I made money in addition. It would’ve taken me four years to make at Amazon, what I’m making at my current employer. A one year investment reaped me 4x returns. Beyond monetary rewards, I improved my resume, expanded my skill-sets, and developed a broader network. In all, my decision to get my Masters provided a greater ROI than I could’ve imagined. When exploring getting a PhD I ran similar calculations: How much do I make now? How much money will I miss out on by going to school for X years? How long will it take me to recover those costs? What’s my financial trajectory thereafter? If I didn’t get my PhD, how long would it take me to attain the financial trajectory of having a PhD? Am I better positioned in an increasingly competitive market? By what degree am I increasing my level of autonomy?

When you find yourself in analysis paralysis, and are unsure how to measure whether an opportunity is worth it – whether it be with an investment, a decision to go to school, switch your career, or start a new relationship use this framework as a starting point:

  • What does my ideal end state look like?
  • How will I know once I’ve reached my ideal state?
  • Can X take me there?
  • If X can take me there? How long until I achieve my ideal end state? Without X, how long would it take me?
  • Is there an alternative method that would take me to the ideal state quicker, cheaper, with less effort or more enjoyable?
  • How long will it take for me to recuperate any losses?
  • What guard rails will I put into place to ensure if the ship is sinking, I don’t go down with it?
  • What’s my walk away point?
  • If I must walk away: What did I lose? What did I gain? What do I do next?

Our whole lives are a series of calls and gambles with no guaranteed outcomes. So it’s important to make smart bets and play accordingly. I’m still trying to find out what my own definition of contentment is, but until then, I’m going to keep climbing towards the apple at the top of the tree. I wonder sometimes whether I’ll dig a hole and find myself in the same predicament as the woman in the story that my Mamaiay read to me. What if my best moment is passing and I don’t even realize it? I guess, I’m just willing to take that risk and have faith that there is something better to come that is truly meant for me. Maybe once I find that thing – whatever it is – I’ll understand why I couldn’t settle.

One of my favorite poets, Rudy Francisco, captures my sentiment of doubt and faith for the future perfectly:

“I hope I haven’t already
driven past my greatest moments.

I hope there is something beautiful on the horizon
That’s just as impatient as I am.
Something so eager,
It wants to meet me halfway.

A moment that is diligently staring at it’s watch,
Frustrated, and bursting at the seams,
Wondering what’s taking me
So long to arrive.”


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