"A coward dies a thousand deaths, but the valiant taste death but once" This is from Act 1 Scene 2 Line 32 of "Julius Cesear", written by William Shakespeare.
What are you afraid of? All of us are afraid of something. Fears that seem small or even laughable to us are deadly serious to their owner.
Often times when people invest money they are irrationally exuberant that the investment will continue going up and up and up and never stop. They want to make a killing. What happens when the investment goes down and down and down. Loss aversion comes into play.
In a wonderful book called Sway, Ori and Rom Brafman tell a story of a founder of a company which trades at $45. He sells his company but retains the value in shares. His accountant urges him to sell. He finally agrees to sell 10% of the shares. The stock starts to drop. It comes to a rest at $42. His accountant urges the owner to sell but he refuses. He knows his baby is worth $45 and will wait until it bounces back to that level before selling. Well, he waited and waited until the stock dropped to almost nothing. For all his troubles he managed to hold onto the 10% that the accountant advised him to sell initially.
Today’s question is:
What are you afraid of losing so much that you are willing to hang onto until it is worth nothing?
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