Facts Determine Value, Expectations Determine Price. For the Most Part, Price and Value Are Divergent.
Precisely because of this, there is something to speculate about and profit from through price differences. Value is a straight line; price is a sine wave. The two lines intersect when price reverts to value, but most of the time, price is either above or below value.
Most of the time, price is either above value or below it.
Consider the same scenario with a guy who likes a girl. He has two options.
Option A: He uses his entire savings of 1,500 yuan to buy a necklace and give it to his crush.
Option B: He spends 1,000 yuan to book a room at a five-star hotel, then uses 499 yuan to take her to dinner at the hotel restaurant. After the meal, he gives her a one-yuan rose and invites her back to his room to see the city nightscape.
Option A is quite pragmatic. The guy buys a necklace—maybe made of pure gold—and gives it to his goddess with full sincerity. Because of this, the goddess knows his financial situation. Spending such a small total amount on solid gold, priced by the gram, shows he isn’t willing to pay extra for design, fashion, or brand premiums. These details reveal that 1,500 yuan is actually a significant sum for him.
In contrast, if he takes his goddess to dinner at a five-star hotel and says he’s staying there because it’s convenient, she’ll think differently. She might assume he lives in five-star hotels every day—spending 1,000 yuan per night, or hundreds of thousands per year. She’ll start imagining all sorts of things about his annual income. Then, he treats her to another meal for 499 yuan, leading her to picture that this is his daily lifestyle. This further suggests an even higher annual income. Dining at a restaurant downstairs from the hotel where he “normally” lives, claiming it’s for convenience, and gifting her merely a one-yuan rose—what does this indicate? It shows confidence, that he isn’t short of goddesses around him, and that he wouldn’t act like a simping novice who jumps at the first opportunity.
Who knows what reality looks like after marriage? Many end up heavily in debt. Choice is a two-way street.
Price and value diverge most of the time, just as facts and expectations rarely align. This means you can, if you choose, manipulate others’ expectations of you. You can let people overestimate you, or you can let them underestimate you. Option B represents overestimation—the man used this strategy to win over the goddess.