Friendship Analysis

In many ways, friendship is like investment. If you can only have so much friends in your life, how will you invest your friendship – who will you befriend, how do you decide when to start or end a friendship?

Perhaps by borrowing some of the concepts of financial analysis – be it fundamental or technical – one could gain some insights.

Balance Sheet – Assets – integrity, good will, positive personality. Liabilities – weakness, personality flaws, addictions
Market Capitalization – How popular is your friend? The higher the MC the more stable he/she is.
Price – Is your friend worth the attention you pay to him?
Income – Does your friend return favor? Or are you the one who’s been giving all the time? How much is he/she around when you need him?
Dividend – Does he/she treat you dinner or buy you gifts once in a while?
D/E ratio – Is your friend more of a giver or a taker? Does he/she take advantage of you all the time?
P/E ratio – Is he/she overrated, average, or underrated? Do you treat him/her as good as he/she treats you?
P/B ratio – Is he/she really worth what he/she appears to be?
365-Day Moving Average – How stable is your friendship over the past year?
Average volume – How often you make contact?
Short Ratio – Is he/she making more enemies than friends?

The key to financial success is due diligence, strategies, money management, and disciplines. You’ve got to know what you are investing in, why you are investing in it and not something else; how you are going to invest it; how much risk you can take, how much you are going to risk (each time); and you need to stick to the plan and not let emotions influence your strategy.

Predicting future stock performance based on historical data is never reliable if at all possible. There’s no holy grail in investing, you’ve got to find the way that works for you. And it could very well be as simple as following your instinct. Friendship is no difference.

Hope accountants and financial analysts out there have mercy on this humble opinion of mine.