Graph related to this issue: https://i.imgur.com/0VMBY1q.png
One of the many pearls of wisdom dispensed by Warren Buffett is “Rule No. 1: Never lose money. Rule No. 2: Don’t forget rule No. 1”. Unfortunately this is easier said than done in the real world. Fund managers are acutely aware of investor aversion to losses.
Losses on portfolios can be due to market movements in the price of the investments or when investments go under or default on their obligations. The latter is permanent capital loss, as there is no opportunity to recover the losses suffered. African Bank is an example of this. Investors may get some of their capital back, but will unlikely get a material portion of it back.
When suffering losses, an investor requires a return higher than the loss to return to breakeven.
How do you deal with losses?
Submitted May 05, 2018 at 10:26AM by gorillaz0e https://ift.tt/2HSGKiQ
No comments:
Post a Comment