Research shows stock market losses hit us twice as hard as gains feel good.
One of the privileges of my years providing individual 401(k) investment advice.
Is noticing how real people make investment decisions.
I keep coming back to work of psychologist Daniel Kahneman.
Alongside the late Amos Tversky.
Their research explains individual investor decisions.
These two research giants uncovered simple and powerful human behavior.
Loss aversion.
Loss aversion means this:
We feel the pain of losing money.
About twice as strongly as the pleasure of gaining it.
Not losing feels better than winning.
I see it every day with 401(k) investors.
Long-time 401(k) investment advice clients.
Individual 401(k) investors I meet for the first time.
Last year’s 401(k) stock market investment gains are unclear.
Recent 401(k) account losses are crystal clear.
The U.S. stock markets are volatile again.
Realize staying 100% invested in your 401(k) is a choice.
You can’t fight cycles and events you can’t control.
Geopolitics, wars, inflation, gas prices, stock markets, and the economy.
Your 401(k) principal is at risk now.
Let Loss Aversion guide your 401(k) principal preservation strategy.
Ready to learn the lesson of past 401(k) stock market losses?
If so, let’s get a LinkedIn connection started here.
P.S. Hoping your 401(k) stock market losses stop is not a strategy.
