The Pain Of Losing
“Market tops and bottoms are caught by two people: fools or liars.” – Basant Maheshwari.
The author argues why this is such a common feature of an investor's life that cannot be eliminated. The pain of loss arises from both permanent and temporary capital loss, but an investor should understand that someone who cannot bear the pain will find it difficult to participate in the gain.
Companies don't grow at 40% on an individual basis. There must be a sector tailwind for which these stocks are leaders. The author also suggests that one should not buy immediately when the market crashes and should wait on the sidelines and wait for the 'blood to dry'.
Risk vs. Return
“Most investors get rich by avoiding risk and not by taking it.”- Basant Maheshwari
Investing can be a highly effective way to grow your money and lay the groundwork for the life you want to live. It's also important to remember that investing is not a risk-free strategy, and there's always the possibility of losing money or not making as much as you expected. All investments are risky due to factors such as inflation, taxes, economic downturns, and market drops.
Different types of investments have varying levels of investment risk as well as varying returns. In general, the greater the potential investment return, the greater the investment risk. Cash offers lower returns and a lower risk of loss, whereas growth investments such as stocks offer higher returns and a higher risk of loss.