FYI: It is risky to ride a bicycle blindfolded. It is risky to walk over broken glass barefoot. It is risky to drink a hot beverage without checking its temperature. These foolish risks are one-sided in that they have a downside, but no real upside.
Buying stock is different. In the stock market, risk simply means uncertainty — not knowing which way stock prices will go next. The risk is two-sided, in that things may turn out worse than expected, but they may also turn out better.
How do investors weigh the upside and downside risks? Most investors are risk-averse. They are not interested in a stock that has a 50% chance of going up 20% and a 50% chance of going down 20%. They want stocks that, on average, have positive returns. In fact, studies of loss aversion suggest that the pain of a prospective loss is typically twice as powerful as the pleasure of a possible gain — most people would not buy a stock with a 50% chance of a 20% loss unless there was a 50% chance of a 40% gain.
Regards,
Ted
https://www.marketwatch.com/story/why-you-probably-have-less-money-invested-in-stocks-than-you-should-2018-05-23/print
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