Skip to content

Archive for

27
Apr

Don’t Average Down Your Life

 

One of my interests is watching the market. The action can be as exciting as any MMA match, with bulls and bears tussling for a grip, a stranglehold and a pin.

 

Recently, watching the NASDAQ take a tumble and many momentum stocks plunging, something was obvious: the attempts by hopeful traders to catch a falling knife with many previous high-flying darlings, and then continued buying as prices kept falling.

 

 NASDAQ

They see a stock drop really low, hope it’s about to make a turnaround and head up, and start to buy. Unfortunately it’s often a false recovery, and as prices continue falling, what do they do next? They average down.They buy more at a lower price, thinking when the stock turns around, they’ll be able to reap greater rewards from their continued investments of cash.

 

In the end, many of them end up with huge losses, sometimes unrecoverable.

 

It struck me that in Life, many of us do the same thing. We may not realize it, but anytime we accept a bad situation and pour more into it hoping things will turn around, we’re effectively averaging down our lives. In fact, many lessons from the stock market can be extrapolated to Life in general, because much of the underlying psychology driving the action is the same. Indeed, the emotions of greed, fear and hope are present in all aspects of Life, and can bring us to equally ruinous endings.

  Read more »