Losses Loom Larger Than Gains

Everybody hates to lose.  One of the trends that many people experience in the world of investing is a noted tendency to become ‘gun shy’ when they experience volatility in their investments.  The reason for this is because our psychological makeup is much more afraid to lose than joyful over gains.  This leads many people to either become irrationally risk-averse or to take risks that they are not aware of in a desire to achieve safety.  The problem this creates is that fear of loss can make people blind to the opportunity for gain.

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