Loss Aversion Investing: Why Market Downturns Feel Worse Than They Are

S&P 500 market downturns since 1980: an average intra-year decline of 14.2%, yet positive calendar-year returns in 35 of 46 years

A market drops 3% in a week and it feels like the beginning of something bad. A market climbs 3% in a week and it barely registers. That imbalance isn’t a coincidence, and it isn’t a personal flaw. It’s called loss aversion: the tendency to feel losses far more sharply than gains of the same … Read more