tag:blogger.com,1999:blog-8078379512095504946.post7439629245908513586..comments2024-03-26T06:17:49.527-07:00Comments on Had Enough Therapy?: Learning to WinStuart Schneidermanhttp://www.blogger.com/profile/12784043736879991769noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-8078379512095504946.post-69334462576526118222008-09-04T09:55:00.000-07:002008-09-04T09:55:00.000-07:00Perhaps the most important but least mentioned asp...Perhaps the most important but least mentioned aspect of “Learning to Win,” is learning to lose. By this I don’t mean that losing should be a learned, habitual behavior. Learning to lose means learning to manage losses, whether they occur in romantic or professional life. <BR/><BR/>In financial markets in particular, learning to lose ~ managing losses ~ is the key to winning (making money), and may offer a fair analogy for how to view managing losses other areas. <BR/><BR/>If you buy a stock for $10 and the price declines to $5, do you “average down,” and hope an increase in price compensates you for both your bad decision, current loss and additional risk exposure? <BR/><BR/>If you experience a significant loss of value in a personal relationship, should you average down, invest in years of couples counseling, and hope for restoration of trust or a soothing of deeply felt injury? <BR/><BR/>I say, “hope,” as one has no control over market direction, just as one has no control over another person. Hope is ephemeral. The stock doesn’t know that you own it. Yet credible research in behavioral finance shows that averaging down on a stock price is the reflex action of the majority of investors. The same happens in relationships of all sorts. <BR/><BR/>Winning traders employ rules for managing losses. Strict adherence to these rules helps them avoid the emotional trauma associated with severe drawdowns of financial capital. Following rules in relationships may also help us avoid the emotional trauma associated with severe drawdowns of personal capital. <BR/><BR/>A successful trader’s rules for managing losses are not ones he tries to impose on the market. This would be a futile and self-destructive program. A successful trader designs rules to follow himself, and works constantly to avoid the temptation of breaking them. <BR/><BR/>Many relationships are based on attempts by the participants to each impose rules on each other. This is often a futile and self-destructive program. It may well be more useful to impose a behavioral framework on one’s self, including how one should behave when faced with losses in love or at work. <BR/><BR/>If we do this, when (not if) such losses occur and we have followed our rules, at least we can say, “I followed my own rules, behaved with honor,” and thus either rebuild or exit the situation garbed in dignity rather than the trauma provoked by misconduct. <BR/><BR/>Thus armed, we are better prepared to win. <BR/><BR/>Adam.Adamhttps://www.blogger.com/profile/12837083577644888719noreply@blogger.comtag:blogger.com,1999:blog-8078379512095504946.post-69353089106345770302008-09-02T17:40:00.000-07:002008-09-02T17:40:00.000-07:00Terrific article, and oh so trueTerrific article, and oh so trueANNE-MARIEhttps://www.blogger.com/profile/17306191228297028025noreply@blogger.com