Loss aversion has been a mental block for many in the game of risk in the market.
Why take a risk in the market?
Is it really worth the dreaded feeling of when you, or any investor, suffers such a psychological blow when they lose as opposed to when they gain?
Well, yes. One can’t win if they don’t play. And at this point, in this very tumultuous economy where many Americans are going paycheck-to-paycheck — one has to play. And of course win and achieve success.
For one to achieve success, and most importantly — successes, in the market and any form of investing, one must be able to overcome this mental block. For it is the true secret to achieve financial success.
“But it differs from investor-to-investor. So some investor may say, ‘For me, a five-percent loss is enough to off-set the pleasure of a 10% gain…but that differs from person-to-person,” Bleiberg said.
With the exuberant amount of volatility in the markets over the last few years — the challenge for one to maintain a level-head has made coming out on top that much more challenging.
Yet, still, many of the wisest and most prudent investors are having more success in the markets than ever before.
It isn’t entirely about just maintaining a clear mind. Democratized media is creating another barrier in an age of so many pens and so many voices.
Therefore, one has to be vigilant in reading and listening to the right people such as famed financial historians like Jim Grant, Evan Lorenz, and of course, subscribing to Grant’s Interest Rate Observer.