With huge volatility in shares markets in the last few months, many investors are sitting on large notional losses on their investments made over the past few years. In many cases these losses led investors to sell out at wrong time and lose out on sharp rally seen since March 2020. How investors should look at the losses during their investing careers. We turn to some of the respected investors to get clarity.<\/p>\n
“Even the most conservative investors can be paralysed by large<\/em> losses<\/strong>, whether due to mistakes, premature judgements, or the effects of leverage.\u00a0If losses<\/strong>\u00a0impair your future decision making, then the cost of a mistake is not just the loss<\/strong>\u00a0from that investment alone, but the impact that loss<\/strong>\u00a0may have on the future chain of events.\u00a0If a loss<\/strong>\u00a0freezes you from taking full advantage of a great opportunity, or pressures you to make it a smaller position than it should or would otherwise be, then the cost may be far greater than the initial\u00a0<\/strong><\/em>loss<\/strong>\u00a0itself” Seth Klarman<\/p>\n \u201cIt is easy to underestimate what a<\/em> 30% decline<\/strong> does to your psyche<\/em>. Your confidence may become shot at the very moment opportunity is at its highest. You \u2013 or your spouse \u2013 may decide it\u2019s time for a new plan, or new career. I know several investors who quit after losses because they were exhausted. Physically exhausted. Spreadsheets can model the historic frequency of big declines. But they cannot model the feeling of coming home, looking at your kids, and wondering if you\u2019ve made a huge mistake that will impact their lives<\/em>.\u201d Morgan Housel<\/p>\n “I learned early in my career to be skeptical and flexible, not stubborn about a stock. I also learned to take quick, small losses<\/strong> rather than get emotionally involved in a stock that was dragging me down. When I am wrong about a security, I try to take my loss <\/strong>at the 10% level” Roy Neuberger<\/p>\n “There is no shame in losing money <\/strong>on a stock. Everybody does it. What is shameful is to hold on to a stock, or, worse, to buy more of it, when the fundamentals are deteriorating. That’s what I tried to avoid doing.” Peter Lynch<\/p>\n \u201cA person who has not made peace with his losses<\/strong>\u00a0is likely to accept gambles that would be unacceptable to him otherwise.\u201d Daniel Kahneman<\/p>\n \u201cProfits always take care of themselves, but losses <\/strong>never do.\u00a0 The speculator has to insure himself against considerable loss<\/strong>\u00a0by taking the first small loss<\/em>.\u201d Jesse Livermore<\/p>\n “I like to repeat to myself a rule of Philip Carret, written some 86 years ago: ‘Be quick to take<\/em> losses and reluctant to take profits<\/em>‘.”\u00a0Francois Rochon<\/strong><\/p>\n Source: www.masterinvest.com<\/p>\n","protected":false},"excerpt":{"rendered":" With huge volatility in shares markets in the last few months, many investors are sitting on large notional losses on their investments made over the past few years. In many cases these losses led investors to sell out at wrong time and lose out on sharp rally seen since March 2020. How investors should look […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[74],"tags":[],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/1137"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=1137"}],"version-history":[{"count":1,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/1137\/revisions"}],"predecessor-version":[{"id":1138,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/1137\/revisions\/1138"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=1137"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=1137"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=1137"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}