Tuesday, April 10, 2012

A lesson in Vagina Economics

Today's economics lesson, from Finem Respice. A snippet:
... Even if Jezebel's editor were not terminally mathematically challenged (and this is putting the case very mildly) the basic premises that underlie the thrust (so to speak) of her utero-call-to-arms are patently absurd.

After listing out a litany of drugstore and prescription items ranging from cranberry juice to toilet paper our heroine tacks the annual expense for a pair of ovaries at between $2,663.02 and $4,228.02.

Taking this decidedly amateurish analysis at face value, by implication this puts the present value of my vagina's ten-year discounted cash flow at between -$17,949.96 and -$28,498.77, or about on par with a Chevy Volt.

With the 10 year treasury yielding 2.05%2 and an implied equity risk premium hovering around 5.85%3 I use a 7.90% discount rate for my vagina here. This is befitting my highly conservative valuation approach as one could easily make the case that cost of capital for a vagina far from the end of its useful life is extremely low given the exceedingly strong borrowing power one commands on the highly liquid (as it were) global vagina market.

Certainly, the beta for long maturity AAA, AA, or A rated vagina vis-a-via the S&P 500 would be under 1.00, but I use 1.00 here. One can verify the conservative nature of these figures simply by observing the fact that top quartile and 1SD vaginas are effectively "same as cash" in most global (meat) markets with friday and saturday trading days.

In addition, there are active vagina futures and options markets with high open interest (forgive the jargon), particularly around the contracts with January 1st and February 14th expiration dates and those that fall near investment bank bonus seasons. (Unfortunately, a discussion of the vagina swap market and vaginal rehypothecation is beyond the scope of this piece). ...
Go read the whole humorous thing here.

No comments: