Cutting losses
Cutting losses

Barry Ritholtz posted this table detailing the relationship between percentage losses and the consequent percentage rises needed to return to your starting point:

He makes the point that:

“It’s not the ones that you sell that keep going up that matter. It’s the one that you don’t sell that keeps going down that does.”

You can’t argue with that point. But it also makes me question the whole extent and pretend philosophy underlying many governments reactions to the Global Financial Crisis. Surely it highlights just how important it is to recognize losses promptly and rapidly take remedial action. Changing accounting standards to hide them does not seem to fit unless you are certain the losses will reverse themselves. If they do not then the above chart suggests it gets very difficult to rapidly make your money back.

It also emphasizes how damaging the cognitive bias against recognizing sunk costs really is.



35 Comments
  1. 415291 964311I besides believe therefore , perfectly composed post! . 156968

  2. 689869 381933An intriguing discussion is worth comment. I feel which you need to write a lot more on this subject, it may well not be a taboo topic but typically folks are not enough to speak on such topics. Towards the next. Cheers 113716

  3. 317464 781322Likely to commence a business venture around the refers to disclosing your products and so programs not just to individuals near you, remember, though , to several potential prospects more via the www often. earn money 345669

  4. 651546 924811Very well written story. It will be useful to everyone who utilizes it, as well as myself. Keep up the good work – i will definitely read more posts. 867975

  5. 770387 426682Sweet site , super layout, actually clean and utilize genial . 394383

  6. 288259 37217Completely composed content material , thankyou for info . 760424

  7. 621507 110718light bulbs are very good for lighting the home but stay away from incandescent lamps because they produce so considerably heat;; 73937

  8. 833129 212424Sweet internet internet site , super layout, real clean and utilize pleasant. 83776

  9. 998328 954620Some really interesting info , well written and broadly speaking user pleasant. 453114

  10. 362844 585120Some really great info , Gladiola I found this. 154833

  11. 499273 501400Proper humans speeches need to seat as properly as memorialize about the groom and bride. Beginer sound system about rowdy locations need to always not forget currently the glowing leadership of a speaking, which is ones boat. finest man speeches brother 331490

  12. 805482 29537i would have to make much more christmas cards becuase next month is december already- 890711

  13. 22085 454842Nice article. It does shed some light on the issue. By the for those interested in binary options can get an exclusive binary options bonus. 868214

  14. 507383 447634Rattling clean web site , appreciate it for this post. 314808

  15. 544497 396857Hiya! awesome blog! I happen to be a daily visitor to your site (somewhat more like addict ) of this website. Just wanted to say I appreciate your blogs and am looking forward for more to come! 151342

  16. 750200 101004I like this weblog its a master piece! Glad I discovered this on google. 738422

  17. 453877 866383I like this weblog so significantly, saved to fav. 176202

  18. 719791 706852hi this post help me full . .if you want watches men visit my sites is very help you for men watches. .thank man good job. 411210

  19. obviously like your website but you need to check the spelling on several of your posts.
    Many of them are rife with spelling problems and I in finding it very troublesome to tell the
    reality however I will surely come back again.

  20. 395340 737127Fantastic article. I appreciate your attention to this subject and I learned a great deal 662356

  21. 551223 109519What a lovely blog page. I will definitely be back once more. Please keep writing! 280445

  22. 69703 793154Oh my goodness! an incredible write-up dude. Thank you Nonetheless Im experiencing challenge with ur rss . Don know why Unable to subscribe to it. Is there anyone obtaining comparable rss drawback? Anybody who knows kindly respond. Thnkx 130591

  23. Howdy! Someone in my Myspace group shared this site with us so I came to
    check it out. I’m definitely loving the information. I’m
    bookmarking and will be tweeting this to my followers! Outstanding blog
    and excellent style and design.

    My blog: weight loss supplement

  24. Useful information. Lucky me I discovered your website accidentally,
    and I’m stunned why this twist of fate did not happened in advance!
    I bookmarked it. http://yellowdevilz.com/?option=com_k2&view=itemlist&task=user&id=199477

  25. At this time I am ready to do my breakfast, later than having my breakfast coming over again to read more news.

  26. Great weblog right here! Additionally your web site lots up fast!
    What host are you using? Can I get your associate link for your host?

    I want my web site loaded up as fast as yours lol

  27. 758463 157795I was suggested this web website by my cousin. Im not certain whether this post is written by him as nobody else know such detailed about my issue. Youre incredible! Thanks! 180518

  28. I want to to thank you for this very good read!! I certainly loved every bit of it.
    I’ve got you bookmarked to check out new things
    you post…

  29. 971780 505028Perfect just what I was looking for! . 47448

  30. Hi there, i ead yojr boog occasionally annd i oown a similar onee
    annd i was just wondesring iff youu gett a loot of spamm comments?
    If sso how doo yyou protyect against it, any plugin oor anyhing yyou
    caan recommend? I gget soo much laately it’s ddriving mee razy so anny helkp iis very muhch appreciated.
    I lioke it whyen peope get together and share ideas. Great blog, keep iit up!
    Hi there, i read yoour bloig occasionally and i
    owwn a simiklar onee aand i wass ust wondering iif yyou gett a lott off
    spam feedback? If soo how ddo yyou protect agajnst it,
    anny plugin orr anything yyou ccan suggest? I gget sso uch lately it’s driving mme crazy soo anny awsistance iss
    vewry mucfh appreciated. http://foxnews.co.uk/

  31. 983294 361642This really is a very good topic to speak about. Sometimes I fav stuff like this on Redit. I dont feel this would be the top to submit though. Ill take a appear about your internet site though and submit something else. 873013

  32. Great post. I was checking continuously this blog and I am impressed!
    Very useful information specially the ultimate part 🙂 I take care of such
    info a lot. I was looking for this particular info for a long time.
    Thanks and good luck.

  33. I like looking through a post that can make men and women think.
    Also, many thanks for allowing for me to comment!

    Here is my site; dr oz (Olive)

  34. 328565 912567magnificent submit, quite informative. I ponder why the opposite experts of this sector dont realize this. You ought to proceed your writing. Im confident, youve a terrific readers base already! 563582

  35. Hi there to all, how is all, I think every one is getting more from
    this site, and your views are fastidious designed for new users.

    Also visit my page: garcinia cambogia extract
    dosage – Julius,