I read a blogger’s this week’s take on whether we have what it takes to withstand the bear market. I agree whole heartedly that knowing, being educated is one thing but doing it is another thing.
Its like understanding that jumping out of a helicopter with a parachute and the proper procedure and another matter jumping out all together. I learnt this from my commando friend that a lot of macho man freeze at the door before they jump out.
Its easy to talk about percentages of losses but we forget that we visualize our gains and losses in the magnitude of actual dollar and cents. A study shows that when we look at investment gains and losses in dollar and cents its rather different than percentages. We become much less tolerable.
When your portfolio is $250k and its left with $125k, what goes through your brain is that “I ......