Expectation Theory

This is totally arbit - and not intended for you to understand (However, if you do see a method to this madness then Yayy!)

There are relationships - all kinds of them. All it takes is one common interest - one little time of need - one little 'bitching' session - one little going-beyond-expected for there to be a real bond. And its great. Great to have people who care for you - great to feel wanted - great to feel respected - great to know they might do anything for you?

Nope. Don't believe that. There is no 'unconditionality'. There are 'times' and there are 'states of mind'. When these two variables continuously evolve, a static equilibrium is all but impossible - bleeding money is inevitable with an option. Add to this the Agency problems (of lets say, maximising your own value), and you can all but kiss your positive NPV dreams goodbye. There are definitely no 'economies of scale' in the picture and diversification is a cruel joke with all your projects being perfectly 'positively' correlated - if anything down you hit might just get worse with increasing numbers (they should coin a term for that - Ooh Beta greater than 1?? Nope inherent correlation with the market is still present :P). (I still am talking about relationships :D)

So then, is not investing the best way? Well, yes and no. Maybe cut the scale down to one, maybe two? Perhaps. And then be done? No - if only life were that simple. Maybe for one, the risk-reward, though rough n crazy, might still be hugely beneficial. With two, you get dizzy. And then, 'erm what was I saying?' :). So for the rest of the world, we build our walls - cut our losses, look for the positive - and most important of all - defy expectation theory. Do what you would do anyway - and not expect a return (Yes, Markowitz would certainly turn in his grave, if he is dead i.e.) and Live. Walls help rationality and rationality at the very least offer an illusion of control. Control helps sanity. And sanity helps success. Success helps happiness (Yayy :|). Course, walls are an expense - and I would absorb it into cost of the one positive NPV project that I just 'might' consider. Oh and beware of the 'Gail Wynand Syndrome' (Of Ayn Rand's 'FountainHead' fame) - Never mistake the 'conditional approval' of the masses for 'control' over them.

One a 'slightly' tangential note - I think Pink Floyd's Wall was fantastic - especially the 'The Trial'. A few of my favourite excerpts:

Good morning, Worm your honor.
The crown will plainly show
The prisoner who now stands before you
Was caught red-handed showing feelings!!
Showing feelings of an almost human nature;
This will not do. Call the schoolmaster!

I always said he'd come to no good
In the end your honor.
If they'd let me have my way I could
Have flayed him into shape.
But my hands were tied,
The bleeding hearts and artists
Let him get away with murder.
Let me hammer him today?

.
.
.

The evidence before the court is Incontrovertible,
there's no need for The jury to retire.
In all my years of judging
I have never heard before
Of someone more deserving
Of the full penalty of law.
The way you made them suffer,
Your exquisite wife and mother,
Fills me with the urge to defecate!

Since, my friend,
you have revealed your Deepest fear,
I sentence you to be exposed before
Your peers.

Tear down the wall!

:))