An Anatomy of Loss Aversion

Just ask…

…a doctor…

…about the toughest course at medical school.

He or she will probably say…

…anatomy.

Well, cut to the stickiest field in market play.

You got it.

Loss aversion.

Is a thing, and is…

…not a thing.

Depending on the on-off switch.

Switch is off, and you don’t need to bother about how much your stock is down.

There is something in the story telling you that the broad market is wrong.

Gross discounting and mispricing.

So gross that you’ll buy more?

Maybe.

So gross that it scares you into capitulation?

Because you’ve lost faith?

Your story not sticking?

Welcome to a world where this particular switch has, for you, just turned…

…on.

And in this world, the Sun doesn’t shine so bright.

Your food doesn’t taste so good.

Your mood is below par at best.

Your ego just took a huge hit.

You were wrong.

Now you are either facing up to it, or…

…averting the gaze of your loss.

This is a common storyline. Happens all the time. To all of us. Please…

…don’t beat yourself up about it.

1). Since belief is gone, so must the stock … go.

2). From the remnants, buy into something where the story is rock solid, and where perhaps some margin of safety exists too. Basically buy where your maximum tick-marks hit.

3). Move on. There’s so much to do in life.

Once a switch goes on, please…

…keep the torture phase down to…

…zero.

By following steps 1). 2). and 3).

Till the time that a switch goes from off to on, till that time comes, please…

…enjoy your life in your world where the switch is off.

Please…

…don’t sacrifice off-time by behaving like it’s on-time.

Off-time means time and space to make some great calls elsewhere, those that come in handy, especially when a switch turns from off to on.

You know the next step.

Leave a comment