Rotate the wheel to see the emotional results of checking your investments too often!
Your chance is % to see a gain
That’s roughly a good-to-bad ratio
Typically this is how you feel
Because you gain Units of Emotion*
While you lose Units of Emotion
Prospect Theory
*Prospect Theory states that for every good result a person sees, 1 Unit of Emotion is gained. But, when a bad result is seen, 2 units are lost, since a loss has twice the impact. Excessive checking can therefore lead to stress…leading to poor decisions. Someone might even abandon a plan as successful as the one used in this wheel’s calculations:
Period invested = 20 yr | Annual return = 15% | Volatility per annum = 10%. After the period, an initial $100,000 investment would total $1,636,654. The examples contained herein are for illustrative purposes only. Source: Fooled by Randomness: The Hidden Role of Chance in Life and the Markets, by Nassim Nicholas Taleb. Publisher: W. W. Norton & Company (October 2001) ISBN-10: 1587990717
Calculation assumptions (period invested = 20 yrs, annual return = 15%,
volatility per annum = 10%) should not be taken to represent the historical
or future performance of any product managed by Bridgehouse.
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Bridgehouse and its sub-advisors have taken reasonable steps to provide accurate and current data. The data has been gathered from sources believed to be reliable, however Bridgehouse and its sub-advisors are not responsible for any errors or omissions contained herein.
