Why You Should Get Used To Losing Money

in hive-126009 •  last month 

Hey JessInvestors

I listen to a lot of investment advice, I read a lot of financial content, and I speak to people to get a feel of what they do with their money to try and improve their lives so that I'm not missing opportunities or make a mistake due to my biases. It's not easy and earning money may be hard, it's the thing we focus a lot of our waking hours on, but managing money is even harder and its the place at which a lot of people fail.

One of the main reasons people lose money is because they have not gotten used to losing money. Losing money isn't an easy thing to handle, and with so many emotional investors and emotional ties to money, it drives us more often than not to make the poor decision.

losingmoney.png

Riding the wave

Most investors want only the upside and will always look to pile in when something is going up, which is why markets tend to become overvalued, and we have bull runs and bubbles. Everyone reinforces the next one's trade and as greed kicks in, so the runs continue.

If you're always trying to chase the update you will make money for sure, but it leaves you vulnerable to when the market corrects and believe me, it will correct eventually, the longer it goes up, the quicker it comes down and leave many hurt.

Losing money is key to a balanced portfolio

When you're investing on your own or using an investment manager, there are two questions you should be asking yourself. One where am I making money, the other is where am I losing money. In some cases, if it's in the same asset class its time could be time to cut, if it's not in the same asset class, it could be time to price in.

You see if you're losing money in a non-correlated asset class, it means people are selling in one class to try and make gains in the other class. A savvy investor sees this and can allocate capital into a place where they will get more stake, so once the market corrects you have a position in that asset class which you picked up at a steal.

Losing money isn't a bad thing

So you can see losing money isn't a bad thing if you know how to read the signs, it's all about gathering as much information as possible and putting your capital to work as best you can. Yes you will make bad calls, yes you will lose, but in doing so, you gain a wealth of information that puts you ahead of traders for the next round.

Have your say

What do you good people of HIVE think? Have you gotten used to losing money?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

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it's a great point, and nuanced, obviously just plain losing is a problem, but one has to get the stomach for loss otherwise it can be emotionally crippling... i've been there (-: giving up on dogs also key... and also not wanting the world to conform to you, and pride ... i'm still looking for my big haul, of course a little is never enuff, especially in crypto ! (-: peace

I think taking losses for one great trade is well worth it! As someone who leans more to the macro side I tend to take positions based on cycles and not on what’s going up or down. I look what a number of trends and

I’m willing to take short term losses to do so! I figure I’m already losing by just holding fiat so I might as well put some of that purchasing power to use in other areas!

I think once you learn nominal value is not the end goal but purchasing power you tend to fair better in the markets

you ever check out keith mccullough and the guys at Hedgeye ... they're all about cycles and data and following volatility and rates of change ... plus they are totally on the side of calling out how the Fed has ruined markets, price discovery, and created monumental bubbles and inequality

Thanks for the tip, always like getting new insights from different market perspectives it helps paint a better picture.

  ·  last month (edited)

This is a very interesting topic as not many people talk about it... When people win, they brag about it big time... but, when they lose, they usually "skip" that part...

It's important to show that part of the story, as it IS a PART of the story... You can't win always, and sooner you realize that you will invest more wisely... ;)



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I agree man this curating your wins skews the conversion and understanding and then people are fearful and Miss out on opportunity or worse follow liars and then eventually lose their money

It takes talent and work to make money but brains and knowledge to keep it and grow it

Lost money by lending.
I never did any risky investment so it is always little gains but did not lost money by investing as such.

That's a shame, what do you mean lending? Lending to an individual or to a platform? Oh for sure, less gains naturally means less risk but if you're on the good side of compound interest time can make all the difference when those gains continue to compound

I lend money to someone in my workplace , afterwards I come to know he collected money with everyone with some pretext and fled from his rented home and job. Not sure that guy scammed more $100K USD in a month. He scammed workplace colleagues.

We come to later on how much amount he scammed after he fled.

Wow that is horrible 100K USD is a crazy amount, it's really sad that people think that this is the way to get rich or get out of a certain situation, and it makes you not want to help people at times

!ENGAGE 20

yup, It was really big office having 500+ people, we come to understand when we started talking to each other. He was a contract worker and everything is loaned to him in good faith. Not even in my dreams I thought we can get scammed by office colleague.

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