Loss Aversion - Deepstash
Loss Aversion

Loss Aversion

Losses hurt more than the joy we receive from equivalent gains. The pain we feel with a $100 loss is about the same as the joy we get from a $250 gain. Loss aversion explains why so many investors sell the winners and hold on to the losers. Especially when we face a sure loss, we will hold on to losers for even longer.  

Even if market participants are irrational, it doesn’t mean the market is not efficient. That’s highlighted by the difficulty of consistently finding arbitrage opportunities in the market.

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thomgutie

Academic librarian

A classic guide that blends history, economics, market theory, and behavioral finance to offer practical and actionable advice for investing and achieving financial freedom.

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