"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 47 mins 5 Big Drivers of Higher Inflation Rates Ahead
  • 2 hours U.S. And China To Face Off Over Aramco IPO
  • 5 hours Gold Bulls, Brace Yourselves – Fed Hikes Are Coming!
  • 8 hours Stocks Fail to Hold Gains, But Still No Correction
  • 10 hours Cryptojacking: A New Threat Vector To Critical Infrastructure
  • 1 day Why The Next Oil Boom Will Be Fueled By Blockchain
  • 1 day 5 Things Investors Should Know About China this New Year
  • 1 day Is The South Korean Crypto-Drama Finally Over?
  • 1 day Miners’ Rally? What Rally? Watch Out for More Fake Moves!
  • 1 day Four Percent 10-year Note Yield Will Be a Floor Not a Ceiling
  • 1 day The End Is Near
  • 2 days 5 Record Breaking Gemstones Even Billionaires Can’t Buy
  • 2 days Irredeemable Currency De-tooths Savers
  • 2 days CFTC Offers Bounty For Crypto Pump And Dump Whistleblowers
  • 2 days Have You Been Getting Run Over By This Stock Market Action?
  • 2 days Decision Time
  • 2 days 1 Week Later, Risk Remains ‘On’ as 2 of 3 Amigos Ride On
  • 3 days The Most Polarized Commodity Ever
  • 3 days Commodity Coins and Us: What To Expect From The "Tokenization of Everything"
  • 3 days U.S. Dollar Bull and Bear Markets

VIDEO: Losses Hurt More Than Gains Help

Watching stock quotes

What Prospect Theory tells us

As biological organisms, humans are motivated by pain and pleasure.

But interestingly, while we tend to think of these as equal motivators, they aren't. We humans are wired to be more risk averse than pleasure-seeking. As the works of Nobel recipient Daniel Kahneman explained:

Humans may be hardwired to be loss averse due to asymmetric evolutionary pressure on gains and losses. For an organism operating close to the edge, the loss of a day's food could amount to death, while the gain of an extra days food could lead to increased comfort but (unless it could be costlessly stored) would not lead to a corresponding increase in life expectancy.

And through the related findings of Prospect Theory, we actually know how much more we hate losses than we like gains. About twice as much:

Prospect Theory

The short video below uses these insights to deliver a simple message: In today's over-inflated, over-leveraged, over-manipulated markets, why on earth would a rational person not be prioritizing protecting their financial wealth?

Given the outsized risks, as well as our natural programming to feel losses more severely, pursuing incremental gains at this point is downright dangerous if one doesn't already have a contingency plan in place for a market downturn.

While most PeakProsperity.com readers already appreciate this message, there are many people out there who are still simply following the herd. We created this video for each of you to share with anyone you know who might benefit from a brief but direct "wake up call". Please take a moment to share it, and let us know any feedback you receive.

 

Back to homepage

Leave a comment

Leave a comment




Don't Miss A Single Story