Counterintuitively, when I focus hard on not losing money, I become too risk averse, I fail to take appropriate risk, and my returns are stuck in the low single digits.
I can't count the times I sold great companies like Apple and Netflix and Tesla years too early because I was afraid to lose money and wanted to "lock in" a 50% gain.
By focusing on potential for high returns instead of not losing money, with a diverse portfolio of assets that don't correlate perfectly with each other, total returns are much greater even though individual bets can show big losses for months or years.
Counterintuitively, when I focus hard on not losing money, I become too risk averse, I fail to take appropriate risk, and my returns are stuck in the low single digits.
I can't count the times I sold great companies like Apple and Netflix and Tesla years too early because I was afraid to lose money and wanted to "lock in" a 50% gain.
By focusing on potential for high returns instead of not losing money, with a diverse portfolio of assets that don't correlate perfectly with each other, total returns are much greater even though individual bets can show big losses for months or years.