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Today at a Glance:
Lesson From the Book: Myopic loss aversion
Tweet: Understand Bear Market from 25+ Year’s Data
Quote from Peter Bernstein
Snippets: 4 Snippets from different books
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Myopic loss aversion (Book)
If you don’t check your portfolio every day, you will be spared the angst of watching daily price gyrations; the longer you hold off, the less you will be confronted with volatility and therefore the more attractive your choices seem.
Put differently, the two factors that contribute to an investor’s unwillingness to bear the risks of holding stocks are loss aversion and a frequent evaluation period.
Perhaps it is not surprising that the one individual who has mastered myopic loss aversion is also the world’s greatest investor—Warren Buffett. Buffett has benefited greatly from this unique perspective. Paraphrasing his teacher and mentor Benjamin Graham, Buffett has claimed he is “a better investor because he is a businessperson and a better businessperson because he is an investor.
By way of example, Buffett the businessperson understands that so long as the economics of his companies continue to advance in a steady manner, the value of his investment will continue to march upward. He does not need the market’s affirmation to convince him of this. As he often states, “I don’t need a stock price to tell me what I already know about value.”
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One Tweet
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One Quote
Survival is the only road to riches.
- Peter Bernstein
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Interesting Books Snippets/tweets shared during the Week
1. 4 Simple Investing Lessons from Joel Greenblatt. (Book)
2. Why an investor should never sell out of an outstanding situation because of the possibility that an ordinary bear market may be about to occur. (Book)
3. A cheap price alone is not a sufficient reason to invest. If something is forever cheap, then it has no recognized value, and its stock may very well remain a worthless piece of paper. (Book)
4. Your asset allocation will never be perfect. In fact, a search for perfection can only lead to problems. (Book)
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