2022-02-20: Portfolio Suffering vs. Elation
I just started reading Transparent Investing: How to Play the Stock Market without Getting Played by Patrick Geddes, and found reference to the “losses hurt worse than gains feel good” argument along with the implied suggestion that this is irrational. I believe it is true, but also mathematically correct. A 20% loss (\(100 => (80) takes a (80 => \(100 or 25% (\)20/\)80 ) return to recover or a 40% (\)40/\)100) gain to get to where you’d be with a 20% gain on the original amount. An initial 20% gain is just $20 but it would take $40 to get to the same place after the initial loss – OUCH.