For many it’s a good time to be an investor — the stock market is moving up, as is real estate; as are many Internet startups. Yet, gold is sliding back down from its once-dizzying heights, and ridiculously low federal lending rates mean that banks aren’t really all that interested in borrowing your money. If you’re looking for a promising gamble that could pay off for you, there’s a new investment opportunity on the horizon: hedging marriages.
“What?”, you say? Sounds ridiculous, sacrilegious, and maybe even just wordsmithing.
Yet, betting on marriages may now be possible, thanks to Wedding Gift Refund, a new service for wedding guests. Recognizing that many couples move quickly from the the altar to the divorce court, the company gives guests a chance to ensure that the money spent on today’s gift won’t transfer into disappointment after tomorrow’s divorce. After buying a gift, guests simply register on the company’s website, pay 8% of the gift’s purchase price, and upload a copy of the receipt. If the marriage dissolves within three years, Wedding Gift Refund will reimburse the full price of the present.
On the surface, this doesn’t seem like a great investment opportunity: After all, even if a couple gets divorced, the 8% cost of a gift insurance policy means that — at best — you would only receive 92% of your initial investment. But what if you could insure presents that you didn’t buy?
This idea isn’t as farfetched as it sounds — in fact, it has a firm backing in recent history. Credit default swaps, the financial instruments that threatened to destroy the global economy a few years ago, were little more than insurance policies taken out on risky loans. Originally, these were designed to ensure that lenders would not lose their money when loans failed, but several investors, including Jeff Greene and Michael Burry, discovered that it was possible to take out insurance policies on loans that they didn’t actually hold. Thus, when the loans failed, they didn’t lose any money on the actual loan, but profited mightily from the insurance policies.
The trick, then, lies in taking out insurance policies on gifts that one doesn’t actually buy. On the Wedding Gift Refund site, this wouldn’t be too hard: The website allows customers to insure multiple gifts, as long as they can produce receipts. In fact, their only restriction seems to be that presents have to cost between $50 and $500.
Getting other wedding guests to surrender their receipts could be a bit more difficult, but it seems likely that many would be willing to sell their receipts for a small sum — say $10. In other words, for an insurance policy on a $100 gift, one would have to invest about $18. Alternately, if you’re a member of the wedding party, you could collect receipts under the pretense that you’re gathering them for the bride and groom (although, admittedly, this might count as insider trading).