Thursday, October 19, 2006

asset portfolio theory, Partial Friends, & why your friend is a slut

Portfolios theory is pretty easy to understand. Instead of taking exposure to one stock and experience the highs and lows with it, you can diversify your assets, diminish your risk, but potentially keep at least the same returns. The reason of course that you don't want single-name risk is because more often than not, there doesn't really exist that one asset class which has everything that you're looking for. So you take little pieces of other things here and there and you can customize and create the investment profile you're looking for.

Stocks as it turns out are much like people. They all have different risk profiles and things you like. But very rarely does find everything in one person. To extend the metaphor a little bit, an arranged marriage would be akin to being forced to invest in a stock that you don't really know a ton about...however after a few years you'd grow to accept it and start thinking "you know what, I was leery about investing in Russian farm equipment manufacturer stocks, but now I'm quite happy I did and if I had to do it all over again under my own volition I would do the same thing."

The parallels as you can see are rather stunning.

That being said, enter portfolio theory. In the absence of finding the one person who has everything we're looking for we end up piecing together this person synthetically by hanging out with people who have small characteristics that we like. Enter the Partial Friends. Partial Friends are who contain these Partial Elements that we look for. More importantly from the outside, no one else in your Normal Friend circle can understand the role of these Partial Friends. Partial Friends (PF's) come in all shapes and sizes and tend to fall under these themes:
  • The Funny PF - they have great personality, but they don't have any common interests and sometimes have lapses in maintaining personal hygiene

  • The Goodlooking PF - their sole role is to be eye-candy; if you're going out in a small group setting, they're perfect to have around as you make other strangers jealous; they make up for their good looks by lacking anything of interest to say
  • The Cultured PF - they have differing political views, they sometimes seem sketchy, but they like going to cultural programs with you when no one else does
  • The Understanding PF - they seem to like hearing about your hopes, dreams, and struggles....on a daily basis.... and they're more interested in your life than you are, which is also they're downfall
  • The Going Out PF - these people are sketchy, morally vacuous, have odd personalities, and are not terribly amusing...but they like to go out and more often than not when you're trying to think of someone to do something with they're game
  • The Crazy PF - "look at Pedro!, he's dancing on tables again with a flaming glass on his head! he's sooooo crazy! I love hanging out with him, except when I want to talk about things of interest, my political views, or anything conversation typically not done in a bar with generic house music in the background"
  • The Desi PF - they are simply brown; what can brown do for you?
Now much like smurfs there are potentially millions of other variants of Partial Friends that I left out due to time contraints (e.g. the PF who's so weird and goofy looking everyone else seems to better looking and funnier around). That being said the funny thing is that I'd like to imagine most people like a dose of these elements in other people, but it's hard to find one person who has it all.

The thing about Partial Friends is that only a very very small number of people share the view that the Partial Friend satisfies their niche. For example few people would end up agreeing that the Funny PF is in fact funny. As I said before, the rest of the Normal Friends don't understand another person's Partial Friends. Hence all we see is your friend hanging out with all these random people. In fact Normal Friends can hate this because they think you're cheating on them with these people who seem rather unexceptional. (this is why you think your friend is a slut)

All of this is hard to digest at once, I know, but the next thing to really think about is the fact that all of us serve the role of a Partial Friend in some periphery friend circle...those people you don't really know too well but see often. They are people who are more like acquaintances or friends of friends.

Which Partial Friend are you?

No comments: