How much loss in profit can an average person stomach?

[taquito]

When you buy a stock and set some ridiculous goal like not cashing out until 5 million profits and it goes in a roller coaster ride like 1m to 500k then to 3m and back to 1m. Are you able to stomach such wild swings and sleep well at night? Just wondering how much an average person can endure?

 

[tesarise]

there is no such thing as an average person

 

[chaoprokia]

When you buy a stock and set some ridiculous goal like not cashing out until 5 million profits and it goes in a roller coaster ride like 1m to 500k then to 3m and back to 1m. Are you able to stomach such wild swings and sleep well at night? Just wondering how much an average person can endure?

if i have 100m i will sleep well.

if i have debt 5m i will have depression

 

[Value.Matrix]

How is that a question? What average are you talking about?

Average person will not stomach wild swing. They will just buy high sell low and never reach that 5million?

Average person check their stock price daily, and like the high of gambling?

 

[Inediblebulk]

The key is to have a plan and stick to it.

I buy monthly and will not chase bullrun. If the price drops, I will average down in 5-10% interval.

I have made most of the money by keeping money in the market and averaging down when crash. I have lost ~40% in crashes previously and made it back.

You just need to train your mind to stomach these temporary losses

 

[Okenba]

Average does not matter. All that matters is how much loss you can stomach.
And most people don't know that answer until they have actually experienced it.
Now is a good time to test your stomach for volatility. Get in the market quick. Maybe not all, but some, so you can test yourself.

 

[havetheveryfun]

Always maintain like 20-50% cash position. Makes it easier to withstand the losses

 

[artered]

If you invest with cash you don’t need in short or long term you won’t be so worried

 

[sanzhu]

Well, my threshold of pain is about -50%, but that's a 1% event base on my stress testing.

I've had friends who bankrupt 5 times or more before they made their first million.

Very subjective.

Hope this helps.

No need pay back?

 

[OngHuatHuat]

I lost close to 100 k sgd on one single counter before, life still goes on.

 

[polyglob]

Maybe you could speak to a friend from risk management of a bank, insurer or commod firm about this if you are interested? Those instis run very big risk books.

But that's OPM leh

 

[Opps-gal]

-80% in one stock out of many stocks? Or -40% for overall amount?

 

[Opps-gal]

If you are thinking about stomach and endure probably means you are not very good at risk taking. Like they say, a fool and his money are quickly separated.

A pro risk taker like a biz man or trader sees it in terms of drawdown, confidence level and recovery time.

Say -99% drawdown, 100% confidence to make back in 3 days is a very different proposition from -30% drawdown, 100% confidence of never making it back.

Maybe you could speak to a friend from risk management of a bank, insurer or commod firm about this if you are interested? Those instis run very big risk books.

Risk is a number not a physiological or emotional reaction.

Hope this helps.

Rich family got help them get out bankruptcy?

 

[Opps-gal]

The key is to have a plan and stick to it.

I buy monthly and will not chase bullrun. If the price drops, I will average down in 5-10% interval.

I have made most of the money by keeping money in the market and averaging down when crash. I have lost ~40% in crashes previously and made it back.

You just need to train your mind to stomach these temporary losses

Need to ensure is not throwing more good money after bad stocks.

 

[Project_Xco]

I think once I have a huge amount, I'll start throwing more bonds or any lesser volatile asset classes so if market really takes a dive, my dive is shorter.

Having emergency cash set aside and good cashflow helps too.

But I agree with others, the real test for yourself is when you are vested in the market during volatile times.

 

[Inediblebulk]

Need to ensure is not throwing more good money after bad stocks.

I normally buy ETF and CEF. Some small amount in single stocks like tencent, baba and xiaomi

 

[Mecisteus]

When you buy a stock and set some ridiculous goal like not cashing out until 5 million profits and it goes in a roller coaster ride like 1m to 500k then to 3m and back to 1m. Are you able to stomach such wild swings and sleep well at night? Just wondering how much an average person can endure?

It all depends on your networth.

For someone with 1B networth, what is a 1-5M daily swing?

So probably best to look at the % swing.

 

[3dfxplayer]

I don't know if I'm the average person, but I've never suffered a total account drawdown (peak to trough) thats greater than 20%, for individual stocks, never more than 10%. I've been investing/trading for nearly 15 years.

The average person is not going to be able to sleep well if his entire portfolio is getting cut in half on a regular basis, a 50% drawdown will happen at some point to even the best investors though, it should be tolerable if it only happens once in a decade.

 

[OnePunchMan]

I have experience a lost of 50% portfolio when I first started 3 years ago.

The only reason I managed is because, its basically my entertainment and gambling part of my expense. The journey taught me a lot too.