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I bloggen min skriver jeg om det som faller meg inn der og da. Derfor har den ingen rød tråd eller samlende tema, med den konsekvens at kategorien Diverse ganske stor. Bloggen min inneholder meninger, anekdoter fra dagliglivet, konspirasjoner, anvendt finans, filosofering, dikt jeg har skrevet og mye mer. Den dagen det bare er tørt […]

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Finance applied to dating (1) – Time horizon

In analysing the concept of dating it can, as in many other areas, be useful to apply the excellent concepts of Corporate Finance. Because what is dating but transactions in a market?

Dating is a market where it is essential to know in which submarket the counterparty wishes to settle a deal.

There is the OVERNIGHT-market. This is the market with duration from today until tomorrow. And prices are bid and offered on this basis. My impression is that a lot of men are in this market. There is negative interest paid in this market. This is something all women know.

There is the SPOT-market. This is the market from today until two days from today; a weekend for example. No interest is calculated in this market. Most women know this; however think that there is indeed interest paid in this market. However, usually it is non-existent.

Then there is the FORWARD-market. This is the market from today, until some given point in time in the future. The duration is agreed between the contractual parties, and the contract can be renewed when it matures. Interest is calculated. Usually, the relationship between risk and return is such that the higher the risk, the higher the interest. However, this is not always the case. Some times low interest projects can be more risky than high interest projects, something which unfortunately is not known in advance. Most women are in this market, and most men know this. Even the men who are in the overnight- or spot-markets know this.

Hence, it is often the case that men pretend to offer forward prices, while they are, in reality, offering overnight, spot or maybe weekly prices. Or they won’t be getting any. Most women already know this, if they consider carefully and use their heads, but unfortunately, often they don’t use their heads. When a forward price seems to be offered, with high interest and a long duration, women want to believe that it is indeed a forward price. Even though they do know that it is most likely a disguised overnight offer with negative interest they are being offered.

Naturally this causes a lot of anger. My recommendation is to do a thorough analysis up front, and not just go for the first offer which is seemingly a marvellously good forward price, of the desired duration. A proper risk analysis should be done, all variables need to be examined; the price calculation itself needs to be scrutinised I depth before one accepts that an offered forward price really is a forward price in the clear light of day.

I have been told that women pretend to offer overnight prices, when in reality they offer forward prices. Again, my recommendation is to do an in depth analysis, with all the nitty gritty, to check if one is really getting what one wants, when bidding in the overnight market. And it is a good thing to have a clear head when the analysis is done. Large amounts of alcohol is not really consistent with a clear head, meaning that where alcohol is concerned, less is more.

If everyone had been better at up-front analysis, I believe both the daughters of Venus and the sons of Mars would have a better life here on Tellus. Of course I am not always good at it either. But I think I will become good at it. Better as a minimum. Decent, at least. I hope.


Lastly, something all women know:

What’s the difference between government bonds and men? Government bonds mature.

(Originally written in Norwegian)

Iskwew ©

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