Scenario 1
Imagine, I come to you and made you two offers:
Offer A: You have a 50% chance of making $3300 and a 50% chance of losing $3300. Offer B: You have a 100% chance of making $2000.
Which will you choose? I reckon most people will choose Offer B. I probably would take Offer B.
Scenario 2
Now I come to you again, and again made you two offers:
Offer A: You have a 50% chance of losing $3300 and a 50% chance of losing $0. Offer B: You have a 100% chance of losing $2000.
I reckon most of us will choose Offer A.
Of course, not all of us will make the above decision eg. Choosing Offer B in Scenario 1 and Choosing Offer A in Scenario 2.
In fact, for many Singapore retail investors now, the above scenarios are very real.
In Scenario 1 ......
