Have you ever lost money on your investment?
In the Lehman shock in 2009, many funds of some businesses had defaults (loan debt) and suffered a loss of about trillion dollars. It makes us feel uncomfortable when we lose money on investment. How should we organize those feelings and recover mentally?
It’s quite difficult, but I’d like to introduce some hints.
When you make a big loss on your investment, everyone is shocked first.
We in loqudity think that only those who have actually experienced the feeling of losing the funds that they have worked hard for many years in an instant can understand.
Next, various emotions arouse.
- Sense of loss
- Anger (to businesses, people who recommend investment, etc.)
- Regret that I shouldn’t have invested
- Remorse for making the wrong decision
- Feeling embarrassed about the people around you
- Anxiety about what will happen in the future
- A sense of helplessness
Being dominated by these various emotions can lead to a mental state that makes you sleepless at night.
However, you must avoid panicking and acting carelessly.
When we are trapped in these emotions, humans lose their calm judgment. In such a case, you should avoid being upset and rushing to make decisions and actions.
How can you get out of this state of mind and quickly regain your composure?
The first thing to do is to organize the current situation and grasp it objectively. The following techniques may be effective for that purpose.
Talk to people
If you have friends or other people who will listen to you, it will help you to sort out the current situation. However, people who are too close to you, such as family members, share the shock of loss, so it may be better for people who are not related to some extent.
Write down the current situation on paper
You can get an objective grasp by writing down the current situation on paper.
- How much did you specifically lose due to this loss? Also, how much can the loss increase?
- How many years of annual income is that? How long will it take to get it back?
- How much assets do you have left?
Imagine the worst possible situation
What is the worst thing that can happen with this loss? Imagine that. If possible, write this on a piece of paper.
- Will you be unable to pay off your debt and go bankrupt?
- Do I have to let go of my house or car?
- Will you be in trouble with your living expenses from tomorrow?
If you invest with surplus funds, no matter how much you lose, you will not lose your job or your life.
Well-known investors such as George Soros and Donald Trump have also experienced significant investment losses.
In the book written by Jack Pan Roling Inc.: “Hundred People and 100 Colors of Investment Laws: A Collection of Trade Ideas Taught by 100 Investors” is a compilation of interviews with many investors’ thoughts on investment.
Some investors have also talked about how to recover mentally when they make a big loss.
“When you actually make a large loss cut, take a long interval of several hours and eat something, have a cup of tea, take a bath, read a book, sleep, take a walk, etc. Make time to get away and change your mood. Doing things that aren’t related to the market can make you feel calm. “(Equity investor Tyun)
“When I make a loss, I try to think about things comprehensively. What I mean is,” Even if I lose today, I think it’s okay if I look at it on a monthly basis and make a profit on a yearly basis. It is something like. Not all of them can win. Well, I try to think that 6 wins and 4 losses is fine. At that level, you won’t be impatient. (Stock Investor BB Adventure)
These examples will also be helpful.
Immediately after making a big mistake, not just investment, the shock tends to narrow your horizons. First of all, let’s aim to escape from that state.
If you’re in that situation right now, I hope you find this article helpful.